Quaker looks for longer global reach

FALL RIVER, MA — Despite a weakened global economy, Quaker Fabric Corp.'s foreign fabric sales picked up during 2002, and the company is looking forward to expanding the business as the U.S. government concludes additional foreign trade agreements, executives said last week.

"Expanding international markets will remain a key piece of our strategy, and we will continue to aggressively pursue opportunities around the globe," president and ceo Larry Liebenow told investors during a conference call to review fourth quarter and fiscal year results. [See page 24 for financial report.]

NAFTA continued to represent Quaker's largest foreign market last year, generating sales for the company of $30.3 million, up 12 percent from 2001, according to cfo Paul Kelly. Sales to the Middle East catapulted by 122 percent, to $7.3 million, although sales elsewhere around the world declined. South American sales of $2.9 million represented a 12 percent drop from the previous year, European sales slipped slightly, by 1 percent, to $4.8 million, and all other foreign fabric sales fell 6 percent, to $3.5 million.

"For the 12 months, foreign fabric sales represented 13.7 percent of overall fabric revenue versus 13.5 percent in 2001," Kelly said.

While Liebenow cautioned that Quaker expects to face a challenging economic climate in the near term, "we're looking forward to various free trade agreements, particularly the ones that have almost wrapped up with Singapore and Chile, and the one currently being negotiated with Australia," he said.

Although Quaker's overall sales slowed over the course of the year, the company finished with a 10.4 percent boost to revenues, reaching $365.4 million, a record high.

"As far as we can tell, it is fundamentally reflecting an improved market share position," Liebenow said. "I don't believe the [size of] the business has improved from last year to this year, if it has improved at all."

Last year's cooling economy was reflected in a slight alternation in the ratio of promotional/category fabrics that Quaker sold compared to middle-priced to better fabrics. Promotional fabrics accounted for 25.6 percent of fabric sales vs. 21.1 percent in 2001, Kelly said, while better fabrics shrank to 74.4 percent of the business from 78.9 percent the previous year.

Liebenow characterized the shift as "normal variations," and said such fluctuations have little impact on overall financial performance.

"Margins are somewhat better in the middle to better end, but not so dramatically that the minor shifts that we are seeing back and forth as we go through the year are going to have any significant increase on the margins."

In fact, the average price point ticked up on both types of goods last year, Kelly said. The average price of promotional fabrics rose 1.3 percent to $4.00, while the average price on better fabrics gained 4.6 percent, to $6.43, he said. Overall, the company's average fabric price for the year rose 1.8 percent, to $5.57, he said.