Cone Mills to close Raytex facility
By Don Hogsett -- Home Textiles Today, 12/18/2000 12:00:00 AM
GREENSBORO, NC -Moving to staunch the flow of red ink and focus its troubled home fashions operations, Cone Mills said it will shutter its Raytex top-of-the-bed fabrics printing plant in Marion, SC, a move that will eliminate about 200 jobs.
In a separate move designed to boost profitability, Cone, one of the world's largest denim suppliers, will boost denim production at its low-cost Mexican joint venture by about 35 percent, or 11 million yards.
"The shutdown of the Raytex operation, a commission printer of top-of-the-bed fabrics, will reduce fourth-quarter after-tax profits by about $27 million, mostly in non-cash costs associated with the write-off of good will and write-down of fixed assets," said Gary Smith, cfo.
Excluding ongoing losses at Raytex, and the cost of winding down the business, Smith said Cone will report "substantially improved operating results" for the fourth quarter and will be profitable before the payment of a preferred stock dividend drives the company into a small loss.
John Bakane, Cone ceo, said, "Raytex did not fit our vision for the future of Cone Mills because it did not have a leadership position in a market dominated by large vertical bedding manufacturers."
Additionally, said Bakane, the Raytex closing will eliminate significant operating losses, which totaled about $4.3 million for the first nine months of the year, on sales of just $14.1 million.
Put another way, the Raytex business was losing about 30 cents for every dollar of sales.
Bakane said Cone "will consider offers from other companies to purchase the Raytex facility and has targeted a closure date of approximately 60 days."
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