RUSSELL TO MEET STREET
Byline: Evan Clark
NEW YORK — Russell Corp. said it will hit Wall Street’s fourth-quarter profit targets, while restructuring moves should produce $50 million in additional annual cost savings by 2003.
For the quarter, the Atlanta-based firm projected ongoing earnings per share of 39 to 44 cents, despite soft sales in fleece from the unseasonably warm weather. Year-ago income totaled 34 cents a diluted share, but would have mounted 71 cents excluding extraordinary items.
Chairman and chief executive officer Jack Ward in a statement said the cost-cutting going forward “will substantially improve Russell’s competitive position in the marketplace and enhance top-line growth by building upon Russell’s leadership positions in activewear, outdoor and athletic-related products.” Russell shares moved up 60 cents, or 4.8 percent, Monday to close at $13.20 on the New York Stock Exchange.
The firm, for the first time, was able to quantify savings from previously announced moves to scale back its costs. More than $15 million in savings next year will come from Frontier Spinning taking over its yarn operations, while consolidation of the Cross Creek Apparel division into Russell Artwear will shave costs by $5 million. Over the next two years, Russell will cut back its textile costs by $20 million through the elimination of excess capacity, plant closings and restructuring as well as expanded global procurement. In 2003, the firm expects to realize $10 million in savings by reorganizing one distribution center and closing another.
Beefed-up marketing has helped the sportswear firm procure $40 million in new business for 2002. Brought on board was a new national program of men’s fleece at J.C. Penney Co., while the firm’s business with Kohl’s Corp. and Wal-Mart Stores expanded.
Despite the stepped-up business with these retailers, the lagging economy will keep sales growth to 3 to 5 percent in 2002. Earnings are expected to trail year-ago results in the first half, but build in the latter part of the year to produce EPS of $1.40 to $1.60 for the 12 months. This compares with the operating earnings of $1.25 a share Wall Street is looking for the firm to earn in 2001.