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Byline: JENNIFER L. BRADY
NEW YORK -- The yearend financial report from Danskin Inc. last week was another dose of bad news from the hosiery industry.
As reported, the firm posted an operating loss of $1.15 million in its fourth quarter ended March 26, and after various charges -- primarily a reserve to protect the investment interests of its parent company, majority-owned by two top Danskin officers -- the net loss came to $8 million. A year ago, the firm had a fourth-quarter net profit of $1.4 million, or 23 cents a share.
Sales in the quarter fell 15 percent to $31.3 million from $36.7 million.
In additional details, the firm reported sales at its Pennaco hosiery division dropped 23 percent to $13.3 million from $17.3 million. Sales at the Danskin division, which includes exercise clothing and dance wear, slid 7.3 percent to $18 million.
Danskin said the operating loss in the fourth quarter, traditionally its strongest period, was also attributable to severe weather in January and February that forced closings of the company's manufacturing plant in York, Pa., and a distribution center in Memphis.
The special charges reflect in part a $5.2 million reserve related to money owed to parent Esmark, which holds a 50.7 percent stake in Danskin, for the decline in the stock price of Danskin, one of Esmark's principle assets. Esmark's principal shareholders are Byron A. Hero Jr., Danskin's chairman and chief executive officer, and Edwin W. Dean, Danskin's vice chairman and general counsel, who together own 74.3 percent of Esmark.
The net loss also includes a $1.2 million charge for acquisition and development of certain hosiery programs.
For the year, Danskin saw operating profits slide 59.4 percent to $1.65 million from $4.06 million the previous year.
The net loss for the 12 months totaled $7.1 million compared to a profit of $1.5 million, or 26 cents, in the prior year. Sales slid 2.2 percent to $131.5 million from $134.5 million.
Sales at Pennaco declined 9.8 percent in the year to $59.7 million while sales at Danskin rose 5 percent to $71.8 million.
In a telephone interview, ceo Hero attributed the weak sales in its Pennaco division to tough competition in the hosiery business and said the industry "is still suffering from tremendous overcapacity, thanks to Hanes."
Hanes Hosiery is part of Sara Lee Corp., the largest hosiery producer in the country, which, as noted, last month announced a massive restructuring of its personal products business. The move, which will cut about 6 percent of Sara Lee's total work force and result in a $495 million charge after taxes, is aimed primarily at cutting back production in its ailing U.S. and European hosiery and fleecewear businesses.
Hero said he expects the April acquisition of the licensed Christian Dior hosiery business and the development of the company's private label programs to boost sales in its Pennaco division and bolster profitablity.
In other matters, Danskin said its increased its credit facility with the First National Bank of North Carolina to $35 million from $30 million and extended the due date to August 1996 from August 1995.
-- Fairchild News Service