FTL QUARTER AWASH IN RED INK
Byline: Thomas J. Ryan
NEW YORK — Fruit of the Loom Inc. reported a loss of $38.1 million from continuing operations in the third quarter and said it would take fourth-quarter charges in the range of $100 million to $200 million to further reorganize operations.
The loss from continuing operations in the quarter ended Sept. 30 includes $21.6 million in costs due to reduced work weeks or shutdowns at a number of plants in order to balance inventories built up from less-than-anticipated demand during the back-to-school season.
The loss — which compared with earnings of $47.8 million, or 63 cents a share, in the 1996 quarter — also reflected weak sales in T-shirts as well as problems filling demand for fleece and underwear.
Sales slid 9.3 percent to $569.7 million from $628 million. The 1996 quarter includes $28.6 million in sales of a hosiery division that was sold in November 1996 to Renfro Corp. Excluding hosiery, sales in the latest period were down 5 percent.
The fourth-quarter charges would cover a variety of items, including possible consolidations of sewing, warehouse and distribution operations and consequent layoffs.
The company told Wall Street analysts that it expected all sewing operations to be overseas by January 1998. Only 9 percent was out of the U.S. in December 1995.
“While this action will serve the company well in the long term it has resulted in some disruptions and added costs in the second half of this fiscal year,” said Richard C. Lappin, president and chief operating officer.
“Facility launch and start-up issues at some offshore facilities resulted in delayed shipments of some products, such as fleece sweatshirts, which in turn resulted in lower sales for the quarter. We should have these concerns behind us as we conclude the year.”
The net loss in the third quarter was $139.3 million after a previously reported charge of $101.2 million resulting from a lawsuit originally filed in 1984. As reported, the California Court of Appeals in early September upheld a 1994 judgment of $96 million in a breach-of-contract suit against Universal Manufacturing Corp., which had been owned by FTL’s former parent, Northwest Industries.
For the nine months, the loss was $94.9 million after charges of $101.2 million related to the litigation settlement. Excluding the charge, FTL earned $6.3 million, or 8 cents, against $108.1 million, or $1.42. Sales slid 8.3 percent to $1.71 billion from $1.87 billion.
Shares of FTL slid 3/8 to 28 3/4 on the New York Stock Exchange Wednesday.