Glenoit profits fueled by shift in sales, operations

Home fashions sales, reduced costs bring profit

By Don Hogsett -- Home Textiles Today, 12/4/2000 12:00:00 AM

NEW YORK -With sales racing ahead in its core home fashions business, and at the same time cutting costs and hacking away at interest expense, Glenoit Corp. reported that third-quarter profits shot up by 24.8 percent, to $2.3 million from $1.8 million a year ago.

Steadily improving its operations as it works its way through a pre-packaged bankruptcy, the diversified textiles producer said sales climbed higher at a double-digit pace, boosted by a pair of home fashions acquisitions, rising by 15.1 percent, to $99.0 million from $86.0. Home fashions sales soared by 22.7 percent, to $78.3 million from $63.8 million last year, boosted by the buyout of Ex-Cell Home Fashions and American Pacific.

Operating profits in the rapidly expanding home business climbed by 10.7 percent, to $8.1 million from $7.3 million.

And in more good news, Glenoit's battered apparel fabrics business, swamped by a wave of low-cost foreign imports, showed signs of stabilizing. Apparel sales declined by just 6.1 percent, to $21.4 million, a big improvement over a 21.8 percent decline recorded during the second quarter, and a 12.8 percent drop during the first quarter of the year. Operating fabrics from apparel operations were off a slender 2.5 percent, to $5.1 million, following a steep 49.1 percent drop recorded in the second quarter.

Driving the earnings improvement, in addition to the stronger sales, Glenoit pared down both overhead and interest expense. Operating costs improved by 30 basis points during the third quarter, to 17.8 percent of sales from 18.1 percent a year ago. And interest expense was shaved by 13.6 percent, to $5.7 million from $6.6 million last year, a cash savings of $901,456.

For the nine months year to date, Glenoit recorded a substantially narrowed loss of $3.9 million, compared to $9.3 million last year.

Glenoit Home Fashions Results

3 mos.	'00	'99	%CHG
Sales	$78,252	$63,801	22.7
Op. income	8,129	7,340	10.7

9 mos.	'00	'99	%CHG
Sales	208,556	160,521	29.9
Op. income	17,309	14,717	17.6

Source: Glenoit Corp.

GLENOIT CORP.

Qtr. 9/30 (x000)	2000	1999	%CHG
Sales	$98,979	$85,978	15.1
Oper. income (EBIT)	10,187	10,326	-1.3
Net income	2,253a	1.805a	24.8
Average gross margin	28.1%	30.1%	-
SG & A expense	17.8%	18.1%	-
NINE MONTHS	2000	1999	%CHG
Sales	260,274	222,135	17.2
Oper. income (EBIT)	17,104	17,743	-3.6
Net income	(3,929)b	(9,263)b	-
Average gross margin	26.0%	29.3%	-
SG & A expenses	19.4%	21.3%	-

( ): Denotes loss

a-Third-quarter results include amortization of deferred financing costs of $468,414, compared with $850.393 the prior year. The year-ago three month included restructuring and reorganization charges of $607,000.

b-Nine-month results include amortization of deferred financing costs of $1.2 million vs. $1.9 million last year; reorganization and restructuring charges of $13.1 million, compared with $2.0 million the preceding year; and an income-tax benefit of $5.1 million, compared with $1.6 million last year.