Home fashion sales up

Staff -- Home Textiles Today, 2/19/2001 12:00:00 AM

THOMASTON, GA -Defying the widespread industry slowdown in sales, Thomaston Mills Inc. pushed home fashion sales up by more than 15 percent during the second fiscal quarter, capitalizing on improved deliveries and a broadened product to rebuild its core home business after a sweeping restructuring that earlier shuttered the company's big denim business.

But hampered by weakness in its apparel fabrics business, overall Thomaston sales were flat at $37.2 million.

And with margins under crushing pressure from slowdowns in its plants, rising raw material costs and rocketing energy prices; and hobbled by continued weakness in its apparel fabrics business, Thomaston was rocked by a $5.9 million loss during the period, compared with a small year-ago profit of $106,000.

Wreaking havoc on the bottom line, the company posted a negative gross margin of 0.8 percent-selling its goods for slightly less than it cost to make them-obliterating the gains made by cutting costs, lowering its interest expense and paring long-term debt.

Offering a wry, succinct summation, Neil Hightower, president and ceo, observed, "Our margins were the pits. A lot of good things were accomplished in the quarter, but the margins really wiped it out." Because of extended plant shutdowns over the Thanksgiving and Christmas holidays, and hard hit by rising costs, the company generated a negative gross margin of 0.8 percent, down steeply from 10.8 percent in the year-ago quarter.

The strain on margins more than offset gains from continued cost cuts, generating a modest operating loss of $317,000, compared with a prior-year operating profit of $3.8 million. Steadily reducing its overhead, Thomaston cut its operating costs by 100 basis points, to 9.1 percent of sales from 10.1 percent a year ago. And in absolute dollars, Thomaston reduced expenses by 9.7 percent, to $3.4 million from $3.7 million.

At the same time, Hightower said, the company managed to reduce its long-term debt by 10.4 percent, or $3.1 million, to $26.8 million from $29.9 million last year. Interest expense was whittled down by 10.7 percent, or $239,000, to $2.0 million from $2.2 million.

"Given what's happening out there, we were pretty pleased with what we accomplished in our consumer products business during the quarter," said Hightower. "Our sales there were up by 15.5 percent." Helping to generate the double-digit sales gain, "We performed well on the supply side-we've really improved our deliveries and it's paying off."

Going forward, Hightower added, "capacity utilization is improving, and progress is being made in cost reduction and new product innovation. We are working hard to position the company to rebound when economic conditions improve."

Thomaston Mills Inc.

( ): Denotes loss

a-Results of the second fiscal quarter include miscellaneous income of $49,000, compared with $389,000 the prior year; a charge of $164,000 for the amortization of credit agreement fees, compared with $100,000 the previous year; and a $55,000 loss from discontinued operations vs. $238,000.

b-Six-month results include miscellaneous income of $84,000 vs. $405,000; a charge for the amortization of credit agreement fees of $315,000 vs. $174,000; and a $366,000 profit from a discontinued operation, compared with a year-ago loss of $244,000.