RESTRUCTURE CHARGE SWELLS DANSKIN’S 3RD-QUARTER LOSS
NEW YORK — Hit by a $1.1 million restructuring charge, Danskin Inc. widened its loss in the third quarter ended Dec. 30 to $3.4 million from $1.3 million a year earlier.
The charge covered losses on certain license arrangements and executive employee severance costs connected with the company’s continuing restructuring. The activewear and legwear manufacturer expects to realize more benefits from these efforts in 1996.
Sales in the quarter slipped 3.5 percent to $30.6 million from $31.7 million. At Danskin, the firm’s dancewear and activewear business, sales edged up 1.2 percent to $17.5 million, while sales at Pennaco, its hosiery division, slumped 9.2 percent to $13.1 million.
Danskin’s gross profits in the quarter dipped 1.8 percent to $6.6 million, and Pennaco’s gross profits declined 1 percent to $3.2 million.
In the nine months, Danskin reduced its loss to $3.2 million from $4.3 million. However, the year-ago period included a $1.65 million charge related to acquisition and litigation costs tied to its former parent, Esmark, which was liquidated in April 1995.
Sales in the nine months dipped 2.3 percent to $93.8 million from $96 million; Danskin’s sales rose 3.1 percent to $56.7 million, and Pennaco’s slid 9.5 percent to $37.1 million.
Mary Ann Domuracki, president and chief operating officer, said shipments in the latest quarter were in line with the lackluster results reported for many apparel firms.
“The turnaround efforts that began a year ago are continuing, with reductions in expenses, improvements in gross margins, and new marketing initiatives intended to increase revenues in the coming year,” she said.
Gross margins in the quarter improved to 32.1 percent of sales from 31.6 percent a year earlier, and moved up in the nine months to 33.7 percent of sales from 31.8 percent.
Excluding costs associated with retail expansion, selling, general and administrative expenses were reduced $1 million in the quarter and $3.9 million in the nine months. Howard Cooley, chairman and chief executive officer, said the company’s two Danskin full-price test stores in Manhattan and the South Beach section of Miami Beach are running on plan. The company also operates 43 outlet stores.
The firm announced that James M. Hicks, former executive vice president at Polo/Ralph Lauren, has joined the company in a similar capacity.
Marilyn Werner, a former Kaiser Roth executive, has been promoted to executive vice president for Danskin activewear and socks. Previously, she had been in charge of Danskin socks.
Beverly Eichel, vice president and chief financial officer, has also assumed responsibility for the company’s retail operations.
Danskin’s women’s activewear and dancewear brands include Danskin, Shape and Dance France; its legwear trademarks are Danskin, Anne Klein, Christian Dior, Givenchy and Round-The-Clock.