CONE QUARTER NET OFF 29.4%; COTTON PRICE HIKES BLAMED
GREENSBORO, N.C. — In the face of higher cotton costs and weak denim demand, Cone Mills Corp. reported second-quarter earnings dropped 29.4 percent to $9.2 million, or 33 cents a share, from $13 million, or 47 cents, a year ago.
Sales were almost flat at $201.7 million against $202.5 million. In the six months ended July 3, earnings fell 27.4 percent to $19.1 million, or 68 cents, before a special charge, from $26.3 million, or 89 cents, a year earlier.
After a $1.2 million accounting charge in the latest half, the company earned $17.7 million, or 64 cents.
Sales were flat at $397.6 million.
In the latest quarter, gross profit as a percentage of sales slipped to 18 percent from 19.9 percent in 1993. The company blamed inability to raise denim prices to cover higher cotton costs, and greater production expenses reflecting below-capacity operation of denim facilities.
J. Patrick Danahy, chief executive officer, added that Cone Mills expects improvement in denim and home furnishings print demand in the second half will help margins.
Apparel fabric sales in the second quarter were down 3.2 percent to $149.9 million. Apparel profit margins were 8.9 percent compared with 11.9 percent for the second quarter of 1993. Sales dipped in denim product lines, but sales of sportswear fabric lines improved, with strong demand for flannel shirtings and novelty fabrics.
The company said that at the end of the second quarter, backlog for apparel fabric sank 18 percent from a year ago to $148 million, but it expects to return to normal operating schedules in the second half. — Fairchild News Service