RUSSELL’S FIRST QUARTER RETURNS TO BLACK INK
Byline: Jennifer Weitzman / Rosemary Feitelberg
NEW YORK — Finishing the second year of a major strategic reorganization and armed with a growing stable of brands, Russell Corp. reported gains in income and sales in its first quarter.
The international branded apparel company specializing in activewear and sportswear said Thursday that its net income rose in the first quarter ended April 2 to $466,000, or 1 cent per diluted share, from a loss of $14.3 million, or 41 cents, a year earlier.
The income figures include non-recurring expenses, severance and write-down and sale of assets related to the company’s multiyear strategic plan initiated in 1998. Exclusive of these charges — $5.6 million in this year’s quarter versus $17.9 million in the 1999 quarter — net income was $6.1 million, or 19 cents a share, versus $3.6 million, or 10 cents. Wall Street had projected 17 cents per share. The results mark Russell’s third consecutive quarter of profitability.
Net sales for the Atlanta-based company climbed 8.1 percent to $251.9 million, from $233.1 million.
With a series of acquisitions completed and a number of its competitors, like Fruit of the Loom, reeling from financial difficulties, Russell is actively seeking opportunities to grow. In March, the company acquired Haas Outdoors. This month, it acquired the Discus athletic brands from bankrupt Tultex for $2.7 million. Russell said Thursday it expects to complete the acquisition of Mossy Oak apparel within the next week or so.
“Russell continues to be energized by our new strategic direction as we build a marketing-driven business with a portfolio of consumer brands,” said Jack Ward, chairman, president and chief executive officer of Russell, in a statement. “Our new marketing and advertising efforts are impacting our financial results with increased sales and market share in key categories.”
Ward said the company will continue to seek to expand and develop its portfolio of brands.
In July 1998, the company announced restructuring plans to offset falling sales and eroding margins in its screenprint lines. The plans included increased advertising and marketing funding, closing all but two of its retail stores and its licensed products business in order to focus on casualwear and athletic uniforms and reducing costs.
Michael May, director of communications with Sporting Goods Manufacturers Association in North Palm Beach, Fla., said that Russell is easily among the top 10 sportswear makers and that Russell’s numbers are extremely good in light of increased competition from traditional and nontraditional manufacturers like Fubu and Tommy Hilfiger and the decline in the number of sports teams across the country.
In addition to Russell and Discus, the company’s major brands include Jerzees and Cross Creek.
Sales of women’s apparel account for less than 5 percent of Russell’s overall business, double what it was one year ago, a Russell spokesman said, but the company has indicated it recognizes the need to move that number up further and is making substantial efforts to accomplish that.
“Women’s is a priority with all our brands. All our data show that is where we have the most potential,” a Russell spokeswoman said. “Like many other companies, we have dabbled in women’s products. But we have never given it the attention we are now. It’s a sheer business reason for all three of our brands.”
This fall, Russell Athletic’s women’s activewear will be tested in several department stores, and Jerzees women’s activewear will be rolled out in Kmart.
“We’ve had women’s products in the past, but not a lot. Now we’re looking at women’s as a whole line,” the spokeswoman said. “There will be core basics and fashion items that will change each season.”
Russell plans to market the Discus label internationally.
“While we are still in the early stages of development, Discus will certainly help enhance our portfolio of brands and offer access to new consumer segments,” Ward said in an earlier statement. “The acquisition of the Discus brands further illustrates our efforts to develop and penetrate markets that provide opportunities for additional business growth.”