GALEY & LORD MAPS PLANS TO BUILD ON RECORD 1994
Byline: Michael McNamara
NEW YORK — As Galey & Lord seeks its sixth consecutive year of record earnings and sales, it has three key goals.
As outlined by Arthur C. Wiener, chairman and chief executive officer, at the annual meeting here Tuesday, they are:
Further entrenching itself as a top resource for wrinkle-free fabrics.
Taking advantage of a resurgence in the corduroy market.
Increasing business in its synthetics fabrics division.
Wiener told shareholders that Galey & Lord expects to continue reporting record results. In the year ended Oct. 1, 1994, the textile company earned $18.9 million on record sales of $451 million.
“Evaluating our performance for the past year, we are pleased, but we are not going to be complacent,” Wiener told the group. “Fiscal 1995 offers challenging opportunities. Offsetting positive, controllable business issues are the negative effects of extremely higher raw materials costs and much higher interest rates.”
Still, the audience of 36 shareholders, meeting at Club 101 at Park Avenue and East 40th Street, seemed happy with what they heard. There were no questions, and matters were concluded in a snappy 23 minutes.
The new year has already started off with plus figures. As reported, Galey & Lord reported an 11.5 percent increase in profits in the first quarter ended Dec. 31, to $4.8 million, or 40 cents a share, from $4.3 million, or 36 cents, before an accounting charge a year ago. After the $1.6 million charge, year-ago earnings were reduced to $2.7 million. Sales totaled $127.2 million against $99.1 million.
Wiener attributed the sales gains to a 10.2 percent increase in woven fabric sales, 100 percent growth in synthetic fabric sales and the addition of $17.1 million in business from the home fashion fabrics division, acquired from Burlington Industries last April. Partially offsetting these gains was a 10.8 percent decline in printed apparel fabric volume.
In an interview before the meeting, Wiener said, “Our core business — woven sportswear, including wrinkle-free fabrics — continues to be extremely strong.” Woven fabrics last year comprised close to 62 percent, or $277.9 million, of Galey & Lord’s volume.
The wrinkle-free business, he noted, remains primarily a men’s wear phenomenon, and the firm looks to build on this business by moving beyond all-cotton usage, but it’s keeping specific plans under wraps. Galey & Lord derives about 75 percent of its men’s wear sales from wrinkle-free fabrics, Wiener said, noting, “We do see women’s wear growing, but at a small rate.”
As for corduroy, he said, “The business continues to enjoy increased volume, primarily due to renewed interest from the jeanswear segment.”
Galey & Lord is the sole domestic vertical producer of corduroy fabrics.
Wiener also said the synthetics division, begun in 1993 and mainly involved in two-piece dressing for the women’s apparel market, “is having as fine a sales period as ever.” In the effort to keep pushing figures ahead, Wiener said, new fabrications are being developed to coordinate with printed fabrics.
The print business, which has dogged the company in recent years, is showing signs of improvement, although slightly, Wiener said.
“Although not performing to standard, prints seem to be enjoying a much healthier quarter than in the past several years,” he said, citing the formation last summer of Group II for Galey & Lord, a print division specializing primarily in cotton prints.
“Moving forward, the Group II business will make us a much more significant factor in the print market,” Wiener said. At the meeting, Wiener addressed Galey & Lord’s strategy in Mexico.
“We’ve been sourcing goods in Mexico for several years, and that business continues to grow,” he said. “The recent devaluation [of the peso] has accelerated Mexico’s desire to become an exporter.
“On the other hand,” he continued, “we have been selling goods into Mexico for the past year. Since the devaluation, there’s been a high degree of questionability as to the near-term effect on those orders. But I believe once people understand what the peso is worth or not worth, the orders will continue.”
As for other global opportunities, Wiener said the company will “continue to look, and we have several joint venture discussions going on.”
“Nothing, however, is on the verge of being accomplished,” he added.