NORTON MCNAUGHTON NET GOES BACK INTO THE BLACK

NEW YORK — Fueled by strong across-the-board demand, Norton McNaughton Inc. racked up earnings of $3.6 million, or 45 cents a share, in the fourth quarter against a year-ago loss of $579,000 after special charges.
At the same time, the firm reported it has terminated negotiations to acquire Beldoch Industries Corp. As reported, the two companies signed a letter of intent last month.
Amanda Bockman, chief financial officer of Norton McNaughton, said expected synergies in production and distribution channels did not emerge during due diligence.
James Hochfelder, president of Beldoch, said both companies had thought Beldoch would be able to source Norton’s knitwear, but Beldoch’s plant is already near capacity. In addition, he said, “there wasn’t as much account-list synergy as we would have liked.” Based on Beldoch’s most recent full year, it would have added about $68 million to McNaughton’s volume.
Both parties said the termination of talks was amicable. Discussing McNaughton’s financial results, Bockman said fourth quarter earnings came in 1 cent a share above analysts’ average estimates. In addition to a $287,000 charge for abandonment of leasehold improvements, Bockman noted that year-ago fourth quarter results were hurt by various other charges, including a reserve for late shipments of sweaters. Bockman said the late shipment problem has been resolved. In the quarter ended Nov. 4, sales climbed 31.4 percent to $56.2 million from $42.8 million. Bockman said sales were strong in all categories. She said a new Kate McNaughton line of suits will be shipped at the end of January and will be on the selling floors at most of the company’s major department store accounts in February. “We’ve had excellent initial response,” she said.
Major customers include May Department Stores Co., Federated/Macy’s, J.C. Penney and Dayton Hudson, she said. McNaughton also added Proffitt’s this year, and Belk’s will have its merchandise in the spring. In the year, after a $401,000 after-tax charge for deferred financing costs, the company earned $8.8 million, or $1.22 a share, against $2.7 million, or 43 cents.
McNaughton completed an initial public offering on Feb. 28, bringing the average shares outstanding to about 8 million from about 5.1 million.
Sales advanced 26.5 percent to $168.6 million, from $133.3 million. Bockman noted that analysts’ consensus estimates for the current year are sales of $202 million and earnings per share of $1.53. — Fairchild News Service

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