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Pillowtex Corp., parent company of Kannapolis-based Fieldcrest Cannon, continues to bleed money.
Late Thursday, the company reported a net loss of $8.1 million, or 57 cents per share of Pillowtex stock, for the second quarter of the fiscal year.
That brings the company’s net loss for the first six months of the year to $19.8 million — $1.39 per share loss — versus an $11 million profit for the first six months of 1999. Sales decreased by $43.9 million for that period.
While Pillowtex CEO Chuck Hansen said sales to “key customers” increased, sales to institutional customers suffered because of increased competition from imports.
And some regional department store chains didn’t buy as much of the company’s towels, sheets and other home products as expected because their inventories are high, he said.
Even so, Pillowtex rival Springs Industries of Fort Mill, S.C. posted a surprise $19.4 million profit for the second quarter, up 46 percent from the same period last year.
Springs CEO Crandall C. Bowles attributed that in part to the introduction of a new brand, Springmaid, at Wal-Mart stores. Crandall warned that while sales should continue to increase in the second half of the year, profits likely will flatten.
Analysts predict that Springs could still have to curtail its production to bring inventory in line with where it should be, Home Textiles Today reported.
Pillowtex is taking steps to reduce its own inventory, idling manufacturing plants across the company, including local Fieldcrest Cannon plants, for two weeks this month.
At the end of the second quarter, Pillowtex had reduced inventory by $47.4 million, while improving sales collection processes and reducing the time it takes to collect outstanding bills, Hansen said.
In the second half of the year, Hansen said he expects a continued focus on reducing inventory and “stringent cost controls” to put the company in a better financial position.
One of those cost controls in the first half of the year was to eliminate some jobs. Hansen fired about 100 salaried employees over the past couple of months, including about 50 locally this month.
Pillowtex stock is at a 52-week low, closing at $2.25 on Thursday, and the company has a billion-dollar debt to pay.
Still, Hansen said he’s confident the changes he’s making will turn around Pillowtex’s fortunes.
“We continue to make progress in restoring the financial health of the company,”Hansen said in a prepared statement.
Last year, Pillowtex blamed losses on problems with new computer systems, inventory markdowns, idled operations and lower margins on inventory liquidations.
Although sales increased in 1999 to a record $1.55 billion, Pillowtex reported an overall loss of $31.8 million for the year. In 1998, the company reported a net profit of $40.8 million.
Pillowtex employs 14,000 people at manufacturing and distribution centers in the U.S. and Canada, including 5,000 at Fieldcrest Cannon plants in Cabarrus and Rowan counties.
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