G&L SEES QUARTER NET MISSING WALL ST. TARGET
GREENSBORO, N.C. — Galey & Lord Inc. said it expects fourth-quarter earnings of between 17 and 22 cents a share, compared to the 35 cents previously expected by Wall Street analysts.
Sales will be even with the year-ago quarter. In the 1996 quarter ended Sept. 30, Galey earned $3.5 million, or 30 cents a share, on sales of $110.5 million.
Galey said record sales in its core fabrics business are causing the company’s dyeing and finishing plant to operate beyond its rated capacity, resulting in manufacturing inefficiencies and excess cost for overtime.
The company’s garment manufacturing operation in Mexico has experienced labor difficulties resulting in lower efficiencies and reduced output, Galey said.
In the third quarter, Galey took a $2 million charge related to the bankruptcy of Arley Merchandise Corp., a home textiles maker. Arley subsequently sold its business at significantly less than the originally announced sale price, resulting in an additional bad debt charge in Galey’s fourth quarter.
“We are aggressively addressing both the dyeing and finishing problems in our core fabrics business and the labor problems in Mexico,” Arthur C. Wiener, chairman and chief executive officer, said in a statement. “We have expanded our dyeing and finishing, which will be fully operational in January 1998. In Mexico we have taken numerous steps to resolve the labor problems and increase output. We believe that we will see significant improvement in the garment operation in the December and March quarters.”
G&L stock closed Tuesday at 18 1/4, off 5/8, on the New York Stock Exchange.
After the $2 million charge, G&L’s third-quarter earnings rose 3.3 percent to $4.2 million, or 35 cents a share, from $4 million, or 34 cents. Total sales in the quarter gained 17 percent to $135.1 million.
For the nine months, earnings nearly doubled to $11.5 million, or 96 cents, after the $2 million charge.