GUILFORD’S PROFITS, SALES OFF IN QUARTER

Byline: Arnold J. Karr

NEW YORK — With its business in apparel fabrics dropping at a double-digit rate, Guilford Mills reported declines in profits and sales for the second quarter and six months ended April 2.
The Greensboro, N.C., manufacturer of knit fabrics reported net income for the quarter ended April 2 was down 41.7 percent to $2.8 million, or 15 cents per diluted share, from $4.8 million, or 21 cents, in the year-ago period. Sales declined 3.3 percent to $211.1 million from $218.3 million in the same interval.
Apparel sales declined 15.4 percent to $71.9 million from $85 million in the second quarter of 1999. The 15.4 percent drop was identical to the increase in sales of fabrics for the automotive segment of Guilford’s business, which advanced to $103.5 million from $89.7 million a year ago.
Home fashion fabrics had an even steeper decline than did apparel, falling 27.2 percent to $23.3 million from $32 million in the 1999 quarter. Industrial and specialty fabric revenues advanced 7.4 percent to $12.4 million from $11.5 million.
“Sales for the second quarter reflected the continued product mix changes in our business and the continuing influx of apparel imports,” said John Emrich, president and chief executive of Guilford, in a statement.
Results for the current quarter included a $2.5 million pretax gain from a demutualization distribution by two of the company’s insurance carriers and a $227,000 gain from a hedging strategy to compensate for the strength of the British pound against the euro, which had pressured Guilford’s operating results in the U.K.
Jack Pickler of Prudential Securities noted that Guilford’s sales and margins came in a bit lower than he’d expected. “Denim seems to be improving,” he said, alluding to Galey & Lord’s return to profitability last week. “But Guilford’s business is more dependent on the ready-to-wear side of apparel, and that’s been more hard-hit by imports than have jeans and khakis, which are largely sourced here. Companies that manufacture synthetic fabrics for tops and specialty areas, such as linings, have had a lot more competition.”
For the six months, net income declined 18.5 percent to $5.8 million from $7.1 million. Because of a comparable decline in outstanding shares, earnings per share were 31 cents for both periods. Sales declined 3.6 percent overall to $417.6 million from $433.2 million, and were down 11.8 percent in the apparel segment, to $146.6 million from $166.2 million. In the half, apparel fabrics accounted for 35 percent of total revenues versus 38 percent in the 1999 half.