Cone Mills posts 2Q net profit; decorative fabric sales drop 4.4%
By Susan M. Andrews -- Furniture Today, August 5, 2002
GREENSBORO, N.C. — GREENSBORO, N.C. — Cone Mills, parent of furniture industry supplier Cone Jacquards, said its second-quarter earnings were its best in six years as sales rose 3.4%.
Sales of $125.8 million were up from $121.7 million for the same period in 2001. It posted a net profit of $2 million, compared with a $27.5 million loss a year earlier.
Earnings per share came to 8 cents, compared with a loss of $1.08 last year. Excluding charges stemming from what it calls its Reinvention Plan and discontinued operations, the second-quarter 2001 loss was 10 cents per share.
Cone attributed the improved results to the ongoing Reinvention Plan and a 4.4% rise in denim sales to $101.7 million for the quarter. Denim is its core product.
The soft market for home furnishings affected performance of its decorative fabric segment, where sales were down 4.4%.
Operating income was up 155.4% in the denim segment, up 21.2% in commission finishing and flat in decorative fabrics.
John Bakane, president and chief executive officer, expressed confidence in the Cone Jacquards team despite the segment's sales decline.
He shouldered some of the blame, citing mistakes he made following the sale of the John Wolf converting business last year.
"I could have managed that more smoothly," Bakane said.
However, he said, after beefing up styling and development, "our customers say the new lines are right on target.... Our Reinvention Plan is working, as evidenced by the turnaround in our operating performance and the improved efficiency of our balance sheet."
Cone said it has reduced debt by $32 million and inventories by 40% in the past 12 months.
"We expect third-quarter results to exceed the improved results we posted for the second quarter," Bakane said.
| 13 weeks ended 6/30 | 2002 | 2001 | Change |
|---|---|---|---|
| Sales | $125,837,000 | $121,728,000 | 3.4% |
| Operating income | 7,801,000 | (4,343,000) | — |
| Net income | (a)2,015,000 | (b)(27,532,000) | — |
| Earnings per share | 0.08 | (1.08) | — |
| 26 weeks ended 6/30 | 2002 | 2001 | Change |
| Sales | $231,657,000 | $254,389,000 | (8.9%) |
| Operating income | 14,477,000 | (1,193,000) | — |
| Net income | (a)2,423,000 | (b)(31,414,000) | — |
| Earnings per share | 0.09 | (1.23) | — |
| (a) After preferred dividends; includes equity in earnings of unconsolidated affiliates of $729,000 in the 2002 13 weeks and $682,000 in the 2002 26 weeks. (b) After preferred dividends; includes pretax restructuring and asset impairment charges of $19.7 million in both 2001 periods, income tax benefits of $8.4 million in the 2001 13 weeks and $9.1 million in the 2001 26 weeks, equity in earnings of unconsolidated affiliates of $223,000 in the 2001 13 weeks and $572,000 in the 2001 26 weeks and net losses from discontinued operations of $5.5 million in the 2001 13 weeks and $7.5 million in the 2001 26 weeks. | |||
