MONTREAL — Profits at Dominion Textiles Inc. slid 15.4 percent in the second quarter and 12.3 percent in the six months ended Dec. 31, dragged down by high denim inventories at retail and price weakness in yarns and apparel fabrics.
Charles H. Hantho, chairman, president, and chief executive officer, said the apparel industry in North America continues to be soft in certain apparel segments and oversupply throughout the apparel market, while in Europe there are “only modest signs” of recovery.
Based on current market conditions, he said the company’s third quarter “will be disappointing but our expectations are for improved market conditions.”
Dominion’s operating profits in the quarter sank to $24.1 million Canadian ($18.3 million U.S.) from $28.5 million.
Dominion reported net profit of $3.4 million ($2.6 million), or 5 cents (4 cents) a share, in the latest quarter after a restructuring charge of $10.5 million ($8 million), partially offset by an $8.75 million gain ($6.7 million) from the sale of hydroelectric rights to Hydro Quebec. Details of the restructuring will be released in the near future, Dominion said.
In the 1992 quarter, Dominion earned $6.4 million, or 14 cents a share.
Sales declined 4 percent to $322.8 million ($245.3 million) from $336.2 million.
Six-month operating earnings fell to $49.1 million ($37 million) from $56 million. Net earnings in the six months after the special items came to $7.8 million ($5.9 million), or 13 cents (10 cents) a share, against $10 million, or 21 cents, a year earlier.
Sales dipped 1.1 percent to $624 million ($474 million) from $630.9 million.
The company said that although retail sales of denim remained strong throughout the holiday, denim volume was off in the quarter as a result of overstocking by some retail customers at the beginning of the period.
Commodity yarn sales were down and prices continued to weaken in the U.S. as a result of poor market conditions in T-shirts, fleece and hosiery markets.
Klopman, its European apparel fabric and work wear operation, suffered flat volumes and margin pressure due to increased apparel imports, but benefited from the devaluation of the Italian Lira. Overall margins at Klopman improved as a result of cost reduction program.