SALANT DISCONTINUES VERA SCARF; MAY SELL OR LICENSE TRADEMARK
Byline: Catherine M. Curan
NEW YORK — Salant Corp. reported it is discontinuing its Vera Scarf division, resulting in a one-time charge of $11.1 million in the fourth quarter ended Dec. 31.
Richard P. Randall, chief financial officer, said Salant is taking into consideration selling or licensing the Vera trademark and has had several conversations with potential suitors. The Vera charge included noncash writeoffs of $9 million.
For all of 1994, the net charge for the Vera Scarf division was $11.4 million. The division — whose reputation was built on the abstract scarf prints created by the label’s namesake designer, the late Vera Neumann — contributed $5.1 million in net sales in 1994.
Analyst Laurence C. Leeds Jr., managing director at Buckingham Research, said that he believed that management made a smart decision to discontinue Vera, noting that although it is an important brand, it doesn’t fit with Salant’s focus. Leeds had headed Manhattan Industries, which owned Vera, before Salant acquired Manhattan in 1988.
Before the expenses of discontinuing its Vera Scarf division, Salant Corp. lost $1.3 million from continuing operations in the fourth quarter. A year ago, the company earned $2.9 million, or 19 cents a share, from continuing operations.
After the Vera charge, Salant posted a net loss of $12.4 million in the latest quarter. A year ago, after an $11.8 million reversal of a reserve taken for discontinued operations, the company earned $14.6 million, or 96 cents a share. Sales in the quarter were up 3.8 percent to $115.8 million from $111.6 million a year ago.
In the year, earnings from continuing operations fell 55.1 percent to $3.5 million from $7.8 million. Net loss for the year totaled $7.9 million.
In 1993, Salant had a $24.7 million special gain that was related to emergence from bankruptcy in September. Other special items included a $589,000 loss from discontinued operations, and the reversal of the reserve. Net income totaled $43.7 million, or $6.15.
Sales in 1994 rose 4.3 percent to $419.3 million from $402.1 million.
— Fairchild News Service