FRUIT OF THE LOOM LOSES 43.7M IN QUARTER
CHICAGO — Battered by $100 million in restructuring charges, Fruit of the Loom Inc. lost $43.7 million in the fourth quarter and showed a 70.9 percent decline in profits in the year.
The charges covered the consolidation of licensed sportswear operations, increased inventory write-offs to eliminate slower-moving and less profitable lines and the devaluation of the Mexican peso.
FTL told analysts in a conference call the first-quarter results would include “spill-over” charges of $10 million to $15 million from the restructurings.
These charges related to the downsizing of the Mexican operation, 1995 peso devaluations and additional reductions in expenses. After the news, Moody’s Investor Service Inc. placed FTL’s debt under review for a possible downgrade.
The extent of the charge surprised Wall Street analysts, although shares of FTL on the New York Stock Exchange Wednesday slid only 3/4 to 24 3/8. The company said it was confident sales at its core businesses – T-shirts, fleece and underwear – would remain strong in 1995 and scheduled price increases would stick.
It said the charges taken in the quarter would lead to more profitable business in the future.
The loss in the quarter compares with year-ago earnings of $61.6 million, or 81 cents a share, which included a extraordinary gain of $42 million, or 55 cents, on the sale of Acme Boot Co. Inc. Sales rose 30.3 percent to $584 million from $448.3 million.
In the full year, FTL’s earnings, including the charges, tumbled to $60.3 million, or 79 cents a share, from $207.5 million. Sales advanced 21.9 percent to $2.3 billion from $1.88 billion.
Besides the charges, higher raw material costs, pricing pressures and higher acquisition costs depressed results in 1994, the company said.
— Fairchild News Service