GUILFORD POSTS QUARTER LOSS
Byline: Vicki M. Young
NEW YORK — Guilford Mills on Friday reported a $7.6 million first-quarter loss, citing the worse-than-expected retail environment and continued fierce foreign competition.
The loss for the quarter ended Dec. 31, was against a gain of $3 million, or 16 cents a share, in the comparable 1999 quarter. Sales dropped 16 percent, to $173.5 million.
John Emrich, president and chief executive officer, said in a statement: “We are extremely disappointed by the worse-than-expected retail and automobile markets in our first quarter and the latest projections for the domestic economy in the short term. While Guilford’s performance was consequently worse than anticipated, the company had sufficient liquidity and remained in compliance with its debt covenants by managing working capital and control capital spending.”
Fabrics for auto interiors represent 50 percent of Guilford’s total sales.
Emrich noted that the company has reduced inventories by $25 million since December 1999. He added that because of the economic downturn, Guilford will continue to evaluate all of its options during the second quarter, though he offered no details on what those options were.
The 16 percent drop in total sales reflected a decline in all segments. Sales in the apparel business decreased by 18.9 percent, with all apparel product lines suffering double-digit decreases.
The company’s apparel segment posted a $2.7 million loss versus a $2.2 million loss a year ago.
Company executives said during a conference call with Wall Street analysts that the intimate apparel sector was down 19.4 percent in the quarter compared with the same 1999 period. Lingerie fabric sales were hurt by low-priced imports.
Also on the call, Kim Thomson, vice president and chief financial officer, said the company does not expect to fall behind on its debt payments because Guilford is significantly under the levels allowed by its banks on both the revolver and the factored lines.
The company said the quarter’s results also were affected by restructuring costs associated with previously disclosed plant closings, as well as start-up costs for the company’s new Mexican facility in Altamira, Mexico. The company will begin production at its Altamira plant in the second quarter.