WestPoint's 3Q good news/bad news
Big sales gain, loss widens
HTT Staff -- Home Textiles Today, 11/24/2010 3:22:11 PM
New York - Despite a double-digit sales gain, WestPoint International posted a $19 million operating loss in the third quarter as higher freight and raw material costs took a 25% bite out of gross margin.
Company parent Icahn Enterprises said in its presentation to analysts it had implemented price increases with customers to offset higher costs. The $19 million operating loss was flat compared to 2009's third quarter.
Net loss was $14 million compared to a loss of $10 million in the year-ago quarter. Gross margin accounted for 5% of sales.
"The price of cotton is hovering at historic highs, and down features and synthetic fibers are up significantly from last year," said Dominic Ragone, cfo and principal accounting officer..
Volumes, however, rose smartly during the quarter, up 23% to $116 million.
Year-to-date, sales are up 16% to $306 million. Net loss narrowed from $32 million to $29 million.
Rangone told analysts Icahn expects operating losses to continue through 2010.
"In spite of the difficult conditions, the home fashions segment continues to make progress in realigning its manufacturing operations to lower costs," said Rangone. "The company is focused on its sourcing strategy, new products and scouring its operation to maximize its operating leverage."