Quaker rebound continues in 2Q

Staff -- Home Textiles Today, 7/22/2002 12:00:00 AM

FALL RIVER, MA —

Rapidly building margins, sales and market share, Quaker Fabric Corp. drove second-quarter profits up by 45.5 percent, to $4.5 million from $3.1 million last year as it continues to build on a rebound begun more than a year ago in the midst of a widespread slump in the decorative fabrics business.

Sales at the fabric producer jumped up by 20.4 percent, to $101.9 million from $84.6 million the preceding year, helped by a strong double-digit gain in export sales through the first half of the year.

But you wouldn't know how impressive a performance Quaker turned in judging solely from Wall Street's response. With investors still stuck on the sidelines, made anxious by corporate scandals, a prolonged slide in the stock market and lately a weakening dollar, Wall Street pushed Quaker stock down by more than a fourth in the hours after the good news hit the wire.

Swept along by continued erosion in the Dow Jones Industrial Average, Quaker stock tumbled by 28.3 percent, or $3.93 a share, on the morning of July 16, plunging to $9.95 from $13.88 the day before.

Helping to fuel strong earnings growth, Quaker expanded its average gross margin by 170 basis points, or 1.7 percentage points, to 22.7 percent from 21.0 percent the prior year. Gross margin dollars increased by 30.0 percent, to $23.1 million from $17.8 million.

Somewhat offsetting the gross margin improvement, operating costs climbed higher as well, rising by 50 basis points to 14.6 percent from 14.1 percent a year ago. Measured in absolute dollars, costs rose faster and higher than sales, moving up by 24.9 percent, compared with the 20 percent increase in sales.

In another bottom-line boost, inventories remained under control, rising slower than the rate of sales, by 15.2 percent.

Quaker Fabric Corp.