GARAN QUARTER NET OFF 64.2%
NEW YORK — Garan Inc. reported earnings dropped 64.2 percent in the first quarter ended Dec. 31 and predicted continued earnings pressures for the rest of its fiscal year.
The manufacturer of children’s, men’s, and women’s wear earned $1.12 million, or 22 cents a share, in the quarter, down from $3.13 million, or 62 cents, a year earlier. Sales declined 14.7 percent to $38.7 million from $45.3 million.
“Ongoing difficult market pressures continue to impact net sales and net earnings in this quarter and we expect this condition to persist through the rest of fiscal 1995,” Garan said in a statement. The company said it will focus on cost control and improving efficiencies at both the manufacturing and distribution levels.
Wal-Mart Stores Inc. was its largest customer last year, accounting for 62 percent of sales, followed by J.C. Penney Co. Inc., at 18 percent.
In addition, Garan said it authorized a repurchase of 750,000 shares of its common stock.
Garan does not normally comment on quarterly results, but in its recently released annual report it forecast continuing pricing pressures in 1995 for both its sports licensing and core children’s businesses, and a sales decline in children’s character licensed products.
It also noted that it closed its women’s sweater business, which had sales of $8 million last year. Garan said the business could not be run profitably going forward.
Garan’s earnings in its year ended Sept. 30 slumped some 44.5 percent to $9.4 million, or $1.84 a share, with sales off 8.7 percent to $173 million.
The decline stemmed from reduced volume in sports licensing, which traditionally has higher margins than Garan’s other lines, and customer orders taken at lower margins to maintain market share.
The sports licensing segment was hurt by saturation in both licenses and products, as well as the baseball strike and the hockey lockout.
Garan children’s wear business, its largest category, faced “severe pricing pressure” in 1994 and was unable to pass through cost increases. — Fairchild News Service