CONE MILLS CUTS LOSSES IN QUARTER, BEATS CONSENSUS OF WALL ST. ANALYSTS
NEW YORK — Cone Mills Corp.’s restructuring initiatives helped the firm substantially narrow its first-quarter losses and beat analysts’ estimates, but denim and khaki sales revenues were down 7.4 percent due to industry supply and demand imbalances.
Cone’s loss for the quarter ended April 2 was $277,000, or 4 cents a share, compared with a loss of $9.5 million, or 40 cents, in the comparable period last year. The loss was one half analysts’ consensus estimate for the quarter.
The Greensboro, N.C.-based mill’s sales were down 9.9 percent to $141.7 million from last year’s $157.3 million.
The company said lower denim prices and the exit from yarn-dyed products last year were the primary causes for the sales decline. The 7.4 percent drop put denim and khaki revenues for the quarter at $104.3 million from $112.6 million in the comparable 1999 period. Cone said the sales volume was higher in the most recent quarter, but that dollar revenues were adversely affected by lower denim prices, industry supply-demand imbalances and declining cotton costs, savings from which were passed on to customers because of market conditions.
Operating income for the denim and khaki segment was $5.3 million, or 5.1 percent of sales, compared with $9.3 million, or 8.3 percent of sales for the first quarter of 1999.
John L. Bakane, chief executive officer, said in a statement, “While results were better than analysts’ expectations, our first-quarter numbers were negatively affected by weak shipments across the board in January, curtailed operating schedules and higher financing costs. We expect to be profitable in the second quarter.”
He noted that shipments have improved sharply and the company is now operating at full schedules.
In other quarterly results, the company said that sales of the commission finishing division were $17.6 million for the quarter, down 12.4 percent from last year. Sales of the decorative fabrics segment rose by 17.9 percent to $19.5 million because of continued growth in jacquards.
As part of the company’s 1999 restructuring program, it ceased manufacturing yarn-dyed products last year.
“We are encouraged by improving results, strengthening markets and improving operating schedules,” Bakane said. “We are committed to being profitable in the second quarter, achieving our $50 million EBITDA goal for 2000 set at the beginning of the year, and putting into place a balance sheet which will fund our strategic growth initiatives.”