MCNAUGHTON BOUNCES BACK WITH SALES JUMP OF 78 PERCENT
NEW YORK — Sparked by its recently acquired Miss Erika line, Norton McNaughton Inc. reported earnings of $1.3 million, or 18 cents a share diluted, in the second quarter ended May 2, rebounding from a loss of $3.6 million a year ago.
Results were in line with a forecast given on May 28.
Sales surged 78 percent to $94.1 million from $52.9 million, primarily reflecting $41.2 million in added sales from Miss Erika, a casual separates line acquired in September 1997.
Sales increased $2.7 million in the Norton Studio line and $1.8 million at DPS, a denim-based sportswear line. These increases offset a $7.7 million decrease in net sales of Modiano, Lauren Alexandra and Pant-her product lines, which were discontinued last year.
The year-ago quarter was pushed down by pretax charges of $5.7 million for severance payments resulting from management changes, the termination of certain lease obligations and the establishment of reserves for certain contingencies, including the closing of its outlet stores.
Gross margins improved to 19.2 percent of sales from 16.9 percent, primarily due to Miss Erika, which carries higher margins than McNaughton’s lines.
Peter Boneparth, Norton McNaughton’s president and chief operating office, said in a statement that results also benefited from expense initiatives implemented during 1997.
In the six months, the firm posted earnings of $471,000, or 6 cents a share, against a loss of $3.5 million a year ago. Sales rose 56.3 percent to $147.6 million from $94.5 million.
“Miss Erika,” Boneparth added, “has experienced solid sales growth in fiscal 1998, with sales for the first six months running about 30 percent ahead of the comparable prior-year period.”
McNaughton last week completed the acquisition of Jeri-Jo Knitwear Inc. and Jamie Scott Inc., two privately held importers of moderate-price junior and misses’ sportswear, for $55 million in cash, with additional consideration payable in cash and McNaughton’s stock based on future performance.
Jeri-Jo/Jamie Scott will become a separate subsidiary under the direction of current management.