GREENSBORO, N.C. — Burlington Industries reported operating earnings in its apparel fabrics segment for the fourth quarter dipped 2.8 percent but overall results for the company came in ahead of plan.
The company reiterated that the denim glut that hurt results in 1997 is “essentially over” and strength is growing in other apparel markets.
Operating earnings in the apparel fabrics sector slid 2.8 percent to $24.3 million, or 7.8 percent of sales, from $25 million, or 8.2 percent of sales. Sales in the period rose 1.3 percent to $309.8 million from $305.8 million. For the full year ended Sept. 27, operating earnings in apparel fabrics totaled $112.1 million against $121.7 million. The year-ago figure is after a $3.7 million charge from the closing of the knit division. Sales were down 5.7 percent to $1.25 billion from $1.33 billion.
Overall, Burlington’s net earnings for the quarter were up 24 percent to $14.7 million, or 25 cents a share, from $11.9 million, or 19 cents. The difference in the earnings was largely the result of a $3.2 million provision for doubtful accounts in the year-ago period against $866,000 in the latest quarter. Sales were flat at $523.4 million against $523 million. However, the company said that adjusting for business units sold or closed in the past year, continuing business showed a 4.4 percent sales increase.
Jay J. Meltzer, managing director of LJR Redbook Research, said the latest results were “moderately better” than he had expected and that management “is upbeat about the new year.” He said analysts are estimating earnings of $1.30 to $1.40 for the current year, against $1.08 on a continuing basis for fiscal 1997. He said his estimate was at $1.35.
Burlington reported net income for the year of $58.7 million, or 96 cents a share, after non-recurring charges of 12 cents a share. A year earlier, the company reported earnings of $40.9 million, or 65 cents, after nonrecurring charges of 40 cents for the closing of the knits division and a charge of 1 cent for early debt repayment. Sales were off 4.2 percent to $2.09 billion from $2.18 billion. The sales decline was principally because of sold or closed businesses.
On the New York Stock Exchange Tuesday, Burlington’s stock closed at 14 3/4, up 3/4.
In a statement, George Henderson, president and chief executive officer, said he was encouraged that fourth-quarter results were ahead of expectations. He added that during the year, the company repurchased more than 7 percent of the outstanding shares, reduced debt by $32 million and invested $99.3 million in capital expenditures. The capital outlays were used to expand the company’s core business in the U.S., open a joint venture denim plant in India and start construction on new plants in Mexico. Also during the year, the company completed plans to dispose of marginal businesses and continued to cut costs.
On the denim question, Henderson said the oversupply that hurt results in 1997 is “essentially at an end and our other apparel markets are experiencing sold growth.” While markets remain competitive, he continued, “we are optimistic about our prospects to 1998.”