DANSKIN CUTS LOSS IN 1ST QUARTER
Byline: Thomas J. Ryan
NEW YORK — Stringent expense controls helped Danskin Inc. trim its loss in the first quarter ended April 1 to $2.3 million from $3.1 million a year ago.
Sales slumped 12.9 percent to $21 million from $24.1 million. The firm said it planned for revenues to be lower to focus on improving delivery and inventory turns, but it continued to be hurt by liquidity and management issues from last year.
“Problems throughout 1999, including severe capital constraints and the need to replace much of senior management, adversely impacted our operating results for the entire year,” said Donald Schupak, chairman. “Although the company was successfully recapitalized in December last year, the effects of 1999 carried over to the first quarter of this year, impacting both revenues and margins.”
The lower loss stemmed from a slashing in selling, general and administrative expenses to 28.2 percent of sales from 35.2 percent as the firm initiated efforts to streamline processes and cut costs.
At the Danskin activewear division, the operating loss in the quarter shrank to $709,000 from $1.67 million. Sales dropped 7.8 percent to $15.3 million from $16.6 million due to lower volumes in the basic replenishment business and private label programs, as well as fewer company-operated stores. Same-store sales fell 5.4 percent, partly due to inventory imbalances and greater closeout sales. The Danskin division operates one full-priced store and 34 outlets.
At Pennaco hosiery, operating losses increased slightly to $523,000 from $511,000. Sales slumped 24.1 percent to $5.7 million from $7.5 million due to market weakness in sheer hosiery, decreased sales in Round the Clock Take 2 Value Pack Program, reduced continuity programs with chain stores and lower sales of Danskin socks.
In its 10-Q filing, the firm said it planned to expand activewear by hiking orders under basic replenishment programs with major chains, and adding specialty stores and new distribution channels.
Pennaco hosiery should benefit from the abandonment of the Ralph Lauren Hosiery license, to which the firm said it committed substantial product development and research resources last year. The line was to bow last fall.
Danskin said it expected new licenses for Evan-Picone and Ellen Tracy to generate revenue of about $20 million annually. Sales under these licenses commence in the second quarter. The company also plans to phase out unprofitable styles in existing lines and has increased prices on Round the Clock.
Carol Hochman, who became chief executive in June 1999, said, “In the operating plan for fiscal year 2000, which we view as a transitional year, we have taken steps to eliminate unprofitable businesses and products, and cut infrastructure to maximize financial results and minimized risks.”
Hochman, former president of Liz Claiborne accessories, succeeded Cathy Volker, who resigned.