NEW YORK — Burlington Industries reported a 21.4 percent increase in apparel fabric operating profits in the fourth quarter, although it continues to work off excess denim inventory.
The company noted that the demand for denim has been good, but that liquidating the denim inventory will continue to depress earnings through the first half of fiscal 1997. However, the company said that it was optimistic about the second half.
Operating profits in the apparel fabrics segment for the fourth quarter rose to $25 million from $20.6 million before interest and taxes. Sales were up 0.7 percent to $305.8 million from $303.7 million.
In the year ended Sept. 28, apparel fabrics’ operating profits rose 13.6 percent to $121.7 million from $107.1 million. Sales eased 1.4 percent to $1.328 billion from $1.347 billion.
The company said that improved apparel fabrics’ operating earnings in the year reflected better demand in the Klopman and denim divisions, stabilized raw materials prices and reduced costs.
Overall, net income for the quarter slipped 14.6 percent to $11.9 million, or 19 cents a share, just topping the Wall Street consensus estimate of 18 cents. In the year-ago quarter, the company earned $13.9 million, or 21 cents.
Jay Meltzer, LJR Redbook Research, said he was encouraged by the report, particularly the increase in margins in the apparel fabrics segment. He also said that the impact of the denim inventory liquidation was less than he had expected.
“While I’m not changing my estimate for the year of $1.15 a share, I feel better about it after seeing the results for fiscal 1996,” Meltzer said.
For the first quarter, Meltzer said he’s estimating earnings of 11 cents a share compared with 13 cents earned in the year-ago quarter.
George Henderson, chief executive officer at Burlington, said in a statement that although markets continued to be difficult, “we accomplished a number of objectives to prepare us for growth and set the stage for better results in the future.”
He noted that the balance sheet has been strengthened and the firm has shed “significant losses” by closing the knitted fabrics division.
Net earnings for the year were $40.9 million, or 65 cents a share, after nonrecurring charges of 41 cents a share, principally for the shutdown of the knitted fabrics operation. In the prior year, the company earned $68.4 million, or $1.05 a share.
Sales were down 1.2 percent to $2.182 billion from $2.209 billion, largely due to the discontinuance of the knitted fabrics division.
During the year, total debts were reduced by $74.2 million to $838.9 million and the company repurchased 3.4 million shares, or 5.2 percent, of its outstanding shares.