WestPoint Home sheds sales, narrows loss

-- Home Textiles Today, 11/6/2008 2:40:00 PM

New York – As expected, sales volume kept shrinking – and losses narrowed – as WestPoint Home in its third fiscal quarter shed underperforming retail placements along with manufacturing and distribution infrastructure.

As the WestPoint facts and figures were stated during parent company Icahn Enterprises’ earnings call today, the trend was clear. WestPoint revenues tumbled 41.0% to $108.0 million in the quarter ended Sept. 30, as the big supplier continued its “exit of certain non-profitable bed and bath programs,” said Peter Shea, Icahn Enterprises president, who also pointed to macroeconomic issues during this morning’s quarterly conference call with analysts.

Year-to-date revenues for the first nine months of $317.8 million are down 40.2% from $531.1 million in the year-ago period.

Operating losses have been roughly halved. The Q3 operating loss of $18.4 million was exactly 50% of last year’s $36.8 million, while the 2008 nine-month operating loss of $66.5 million is 46.8% less than the $125.0 million recorded one year ago.

The operating loss embodies such costs as $4.5 million in restructuring ($8.4 million year-to-date) and $3.7 million in impairment charges ($5.3 million year-to-date).

Dominick Ragone, Icahn Enterprises cfo and cao, said of WestPoint that “restructuring efforts in this segment have begun to pay off in terms of significant cost reductions as evidenced by improved gross margins.” Indeed, gross margin dollars at WestPoint were $8.7 million for the quarter, up from $5.4 million – and reached $24.4 million year-to-date, up from $1.1 million.

Compared to 2007, the company has significantly reduced costs, said Shea, “by shifting manufacturing capacity to low-cost countries, reducing logistics costs, outsourcing certain support functions, and right-sizing head count throughout the company.” These efforts are ongoing.

Shea noted that WestPoint’s “liquidity remains strong, with the company ending the quarter with approximately $129 million in unrestricted cash and $62 million of unused borrowing availability.”

WestPoint is now an even smaller part of Icahn Enterprises, which spent more than $800 million in its July acquisition of a majority share of automotive industrial supplier Federal Mogul. WestPoint’s results are now reported as part of the “Metals, Real Estate & Home Fashion” division of Icahn.