Burlington doubles 1Q losses
By Don Hogsett -- Home Textiles Today, 1/29/2001
GREENSBORO, NC -Weakened by stalled-out sales and thinning margins, troubled textiles titan Burlington Industries Inc. more than doubled its first-quarter losses, to $11.5 million from $5.3 million the previous year.
Sales in the opening quarter of the new fiscal year slipped by 1.8 percent, to $364.3 million from $371.0 million last year, hampered by continuing weakness in interior furnishings and the company's big apparel businesses.
Taking a bite out of the top line, interior furnishings sales, including home fashions, upholstery fabric and mattress ticking, dropped off at a daunting double-digit pace, falling by 12.3 percent, to $108.1 million from $123.3 million a year ago, a $15 million shortfall.
Putting earnings under pressure, average gross margin eroded by 390 basis points, to 7.9 percent from 11.8 percent a year ago. Providing some relief, though, the company aggressively whittled down its costs by 10 basis points, to 8.7 percent from 8.8 percent last year. Measured in absolute dollars, costs were cut by 3.5 percent, to $31.6 million from $32.7 million, a cash savings of $1.2 million.
Putting another big dent in the bottom line were customers who couldn't pay their bills, and the company's provision for doubtful accounts increased more than six-fold, by 534.6 percent, to $1.7 million from $269,000 a year ago. Adding an extra layer of pressure, interest expense shot up by 14.4 percent, to $17.9 million from $15.6 million, a jump of $2.2 million.
George Henderson III, chairman and ceo, said: "We entered fiscal year 2001 with aggressive action plans and a resolve to improve the financial performance of the company. We are pleased with our progress, having achieved lower than expected losses and significant working capital improvements, while reducing debt by approximately $22 million during the quarter."
Douglas McGregor, president and coo, said, "Our restructuring plans are on target, and our capacity reductions will be complete by the end of the March quarter."
QTR. 12/30 (x000) | 2000 | 1999 | %CHG |
|---|---|---|---|
Sales | $364,314 | $371,048 | -1.8 |
Oper. Income (EBIT) | (2,776) | 6,554 | - |
Net income | (11,523)a | (5,320)a | - |
Per share (diluted) | (0.22) | (0.10) | - |
Average gross margin | 7.9% | 11.8% | - |
SG & A expenses | 8.7% | 8.8% | - |
( ): Denotes loss
a-First-quarter earnings include a $1.7 million provision for doubtful accounts, up 534.6 percent from $269,000 the prior year; a $2.5 million loss on its share of a joint venture, up 39.0 percent from a $1.8 million prior-year loss; and an offsetting income-tax benefit of $5.8 million, compared with a year-before income-tax payment of $4.5 million.
