LESLIE FAY ONGOING NET GAINS 7.9% IN QUARTER
NEW YORK — The Leslie Fay Cos., which may be nearing the end of its long stay in bankruptcy proceedings, reported operating earnings edged up 7.9 percent in the third quarter ended Sept. 28, to $11.6 million from $10.8 million.
Net profits for the women’s sportswear manufacturer, which filed its Chapter 11 petition in April 1993, climbed to $8 million, or 43 cents a share, from $818,000, or 4 cents, after costs related to its reorganization, interest and taxes.
Reorganization costs dwindled to $2.2 million in the latest quarter from $17.9 million. Sales fell 3.4 percent to $134.9 million from $139.6 million.
The sales decline stemmed from closing of the Leslie Fay retail stores division, the discontinuation of certain labels and fewer sales to unprofitable customers. This was partly offset by the opening of 23 stores in 1995 and 11 more this year under the Kasper for ASL name, which added $3.8 million in sales in 1996. The company also launched Kasper for ASL suits in Europe.
Excluding discontinued operations and new Kasper for ASL businesses, sales edged up 1.1 percent. Growth in new products in its Sassco Fashions division offset declines in the dress and sportswear areas caused by reduced off-price sales.
Gross margins eroded to 24.8 percent of sales from 25.7 percent as a result of heavy markdowns due to excess inventory at Sassco. This was partly offset by higher profits at Kasper for ASL and a focus on higher margin products in the dress and sportswear divisions. The company also noted cost savings from its decision to close its manufacturing facility in August 1995 in a shift to contractors.
Selling, general and administrative expenses were reduced to 16 percent of sales from 17.7 percent because of lower overhead costs.
In the nine months, operating income nearly quadrupled to $20.1 million from $4.9 million. Net income was $14.1 million, or 75 cents, against a loss of $14.7 million. Reorganization costs were reduced to $1.9 million from $10.7 million. Sales fell 7 percent to $339.5 million from $364.2 million.
As of Sept. 28, assets were $266.4 million and liabilities were $408.4 million.
Leslie Fay is expected to file an amended disclosure statement this week that is due to be heard in court on Nov. 21. Parties have been wrangling over the final aspects of the reorganization plan for the last year. As part of the plan, Sassco, which includes the Kasper for ASL business as well as Albert Nipon suits, will be spun off to creditors. Leslie Fay’s remaining business consists of dresses and sportswear under the Leslie Fay, Albert Nipon and Castleberry names.
There will be no payout to Leslie Fay shareholders.