Dark clouds in Sunbeam 3Q

By Don Hogsett -- Home Textiles Today, 11/20/2000 12:00:00 AM

BOCA RATON, FL -Aborting an earlier start at a turnaround and flaming out in the third quarter, Sunbeam Corp. posted sharply worsening sales and earnings. Sales fell off by more than 22 percent, and losses widened severely, to $84.8 million from $38.8 million last year.

Sales slumped by more than $135 million during the third quarter, with $32 million of the shortfall accounted for by the shutdown of two business units, and another $72 million stemming from lower sales of Y2K-related products like generators, cooking and lighting products. But even excluding those two big items from the equation, comps fell off by $28 million at the nation's largest producer of automatic blankets and throws, battered by sluggish consumer spending and a weakening retail environment.

Acting as a further drag, average gross margin contracted by 460 basis points, to 22.5 percent from 27.1 percent the year before. Gross margin dollars declined by 35.4 percent, to $105.1 million from $162.8. With sales heading south, costs climbed sharply higher, rising by 320 basis points, to 29.5 percent of sales from 26.3 percent a year ago. Caught between falling margins and rising costs, the company posted an operating loss of $32.3 million, compared with a prior-year profit of $4.3 million.

Hanging a dark cloud over the short-term outlook, Jerry Levin, chairman and ceo, said, "Given some of the negative economic trends we have seen in September and October, we are cautiously approaching the next several months as we expect that retailer and consumer uncertainty relative to the economy will create an overall unfavorable retail environment in the fourth quarter."

SUNBEAM CORP.

( ): Denotes loss

a-Earnings in the quarter include an income-tax benefit of $1.0 million vs. a year-ago payment of $3.7 million. 12-month results include an income-tax provision of $6.9 million, compared with $12.7 million the year before.