Byline: Thomas Cunningham

NEW YORK — Leslie Fay said Tuesday its fourth-quarter losses widened to $75,000 from $58,000, as financing costs related to a recent merger sapped its results.
Last fall, Leslie Fay, which makes dresses and sportswear, merged with an affiliate of Three Cities Research, a New York-based investment firm. The results for both quarters also include a $1.1 million positive noncash accounting offset related to Leslie Fay’s bankruptcy reorganization, completed June 1997.
Boosted by the October 1998 acquisition of the Warren Group, Leslie Fay’s sales for the quarter ended Jan. 1 climbed 30.1 percent to $39.2 million from $30.1 million. Excluding Warren, Leslie Fay’s sales rose 5.2 percent to $28.3 million from $26.9 million.
“As expected, the Warren Group continued to show strong sales results and it was largely responsible for the company’s sales growth,” John J. Pomerantz, Leslie Fay chairman and chief executive, said in a statement. Warren’s brands include David Warren, Rimini and Reggio.
He added that Leslie Fay dresses showed a slight gain in sales volume from last year’s fourth quarter, “but missed our plan for the year due to higher discounting. Leslie Fay sportswear continued to be affected by inventory clearance markdowns. However, it ended the year in a good inventory position.”
Excluding the positive effect of Warren, Leslie Fay’s gross margin fell to 15.2 percent of sales in the quarter from 17.9 percent a year ago. Including Warren, Leslie Fay’s gross margin was 19 percent against 18.9 percent a year ago.
The Warren group should report superior top- and bottom-line growth in 2000, according to Pomerantz, who said the company’s licensing agreement to produce dresses under the Liz Claiborne name will help push this year’s sales ahead of an earlier-announced target of $215 million. The company has combined the sportswear labels Leslie Fay Sportswear and Haberdashery by Leslie Fay.
During the fourth quarter, net interest expense and financing costs grew to $597,000 from $270,000 a year earlier. As part of the merger with Three Cities, last year Leslie Fay borrowed over $5 million to help finance a one-million-share buyback.
For the full year, Leslie Fay’s profits fell 6.1 percent to $8.3 million from $8.9 million. Reflecting the share buybacks, Leslie Fay’s per-share results were flat at 63 cents. Results for both periods also include a $4.6 million positive accounting offset related to the bankruptcy reorganization.
Leslie Fay’s sales in the year climbed 29.2 percent to $197.4 million from $152.8 million. Excluding the Warren Group, sales climbed 1.5 percent to $151.9 million from $149.6 million.
Leslie Fay shares fell 1/8 to close at 5 13/16 in over-the-counter trading Tuesday.

load comments
blog comments powered by Disqus