UNFILLED ORDERS UNRAVEL DONNKENNY QUARTER NET
NEW YORK — As expected, unfilled underwear orders hurt profits at Donnkenny Inc., which fell 31.2 percent in the fourth quarter. For the year, though, profits were up sharply.
Earnings in the quarter ended Dec. 3 fell to $2.1 million, or 30 cents a share, against $3 million, or 48 cents, a year ago. Sales of the firm, which primarily makes sportswear, slid 1.4 percent in the three months to to $42.7 million from $43.3 million.
In early November, Donnkenny forecast that fourth-quarter results would fall below expectations due to a government embargo on imports of Chinese-made women’s cotton underwear. This prevented the company from filling about $11 million of underwear orders in the latest quarter. In all, sales were hurt by $16 million because the company was forced to manufacture underwear in other countries and also ran into manufacturing problems at one of the company’s domestic suppliers.
In the year, earnings gained 39.4 percent to $10.1 million, or $1.51, from $7.2 million, or $1.47, before special items in both periods.
In the latest year, a $295,000 charge for the early extinguishment of debt cut earnings to $9.8 million. In 1993, a $453,000 charge for the retirement of debt reduced net income to $6.8 million.
Sales for the year rose 10.2 percent to $158.8 million from $144.1 million.
Richard Rubin, president and chief executive officer, said that earnings for the year were “fueled by continued growth” in all product areas. He noted that Donnkenny’s core sportswear business grew at a steady rate, with particular strength in separates. Rubin added that its Lewis Frimel line saw “outstanding growth” in sales and operating profits with a sell-through at “record levels.”
The company also noted that the licensed Mickey & Co. line featuring Walt Disney characters has had a strong year, helped by robust sell-through of sweatshirts and T-shirts and the introduction of licensed character women’s underwear earlier in the year. The company said it believed the women’s underwear problems were “one-time incidents” and would not affect performance going forward.
— Fairchild News Service