FRUIT OF THE LOOM TRIMS LOSS IN 2000
Byline: Vicki M. Young
NEW YORK — Showing signs of progress, bankrupt Fruit of the Loom Ltd. reported income for the fourth quarter and managed to narrow its losses in 2000 from 1999.
The bankrupt underwear giant posted net income of $27.5 million, or 38 cents a diluted share, for the quarter ended Dec. 30 versus a loss of $398.5 million, or $5.96 a share, in the comparable 1999 quarter. Sales dropped 20 percent, to $332.5 million from $416 million. The company said that the lower sales volume was primarily due to the elimination of noncore product lines and other unprofitable products.
For the year, Fruit of the Loom lost just $126.4 million, or $1.89 a diluted share, compared with $576.2 million, or $8.50, in 1999. Sales fell 13 percent, to $1.55 billion from $1.78 billion. The manufacturer said it “regained the leadership share of the mass merchant men’s and boys’ underwear market,” as its market share increased to 45.1 percent from 1999’s 43.5 percent in that category. Sales were negatively affected during 2000 by a weaker retail market, a more competitive activewear market and the elimination of the noncore Gitano jeanswear business, the company said.
Dennis Bookshester, chief executive officer, said in a statement, “The company continues to focus on a strategy of becoming the low-cost producer and marketer of high-volume basic apparel. We have improved product quality, dramatically reduced manufacturing costs and increased customer satisfaction.” He noted that while the company has made significant progress in improving its operations, the increasingly competitive environment of the markets will require Fruit of the Loom to maintain the strategy that it has been following, as well as continue to focus on reducing selling, general and administrative expenses.
The company has a borrowing availability under its debtor-in-possession financing facility exceeding $255 million. In December, Fruit of the Loom paid $40 million to reduce the DIP term loan balance to $100 million. As of Feb. 28, there was no usage of the revolver component of the facility, the company said. Fruit of the Loom added that the size of the DIP and available cash provides the company with adequate financial flexibility and liquidity to pay its suppliers and meet customer expectations.
Fruit of the Loom filed for Chapter 11 bankruptcy court protection on Dec. 29, 1999. The company manufactures underwear for men, women and children, and printable T-shirts and fleece for the activewear, casualwear and children’s wear markets.