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GITANO GROUP REPORTS LOSS FROM OPERATIONS AND RESTRUCTURING IN 1991; TO ACCELERATE RESTRUCTURING; WILL RETURN TO PROFITABILITY

 GITANO GROUP REPORTS LOSS FROM OPERATIONS AND RESTRUCTURING IN 1991;
 TO ACCELERATE RESTRUCTURING; WILL RETURN TO PROFITABILITY
 NEW YORK, March 16 /PRNewswire/ -- The Gitano Group, Inc. (NYSE: GIT) reported today a pre-tax loss in 1991 of $71.4 million and said it reflects the decision to accelerate its restructuring program and take other charges related to its effort to streamline the company and downsize its retail business and exit certain aspects of its manufacturing and other non-core activities. For the year, the company reported a net loss of $62.5 million or $3.90 per share.
 Of the pre-tax operating loss, the company said that approximately $49.2 million is from its non-core businesses. All of these non-core businesses also generated losses in 1990. The pre-tax loss includes a one-time charge of $12.2 million related to the divestiture and restructuring of certain of Gitano's domestic manufacturing facilities, as well as charges associated with the downsizing of its retail operations, which involves closing 15 stores, including all of its non- outlet retail stores. Gitano said its sales were $780.4 million for the year.
 Gitano reported net income of $8.0 million or $0.54 per share on sales of $807 million for 1990.
 The fourth quarter net loss totalling $66.7 million, which includes the $12.2 million restructuring charge, was further impacted by unanticipated year end adjustments of approximately $35 million. These adjustments reflect the impact of inventory markdowns and excessive shrink in retail and manufacturing inventories caused by cost variances related primarily to procurement of domestic sourced production.
 Haim Dabah, president and chief operating officer of the Gitano Group, Inc., said, "We have elected to accelerate our restructuring program and be aggressive in writing down certain assets and exiting those non-core businesses which were not profitable or not generating the returns we demand. For us, 1991 was a difficult year but we are on track in streamlining the company and strengthening account relationships with our key mass merchant retailers. We believe these tough decisions will increase our earnings potential in the future. As a result, we see 1992 as a year of profitable rebound for us.
 "We fully expect to return to profitability in the current quarter, with sales in the first quarter to be ahead of the $194 million we reported in the first quarter of last year, and earnings in the quarter ending March 31, 1992 to be ahead of the $0.16 per share we earned in the first quarter last year. Our core business is also operating with our largest order backlog, which we believe reflects the success of our transition to our pre-sell mode and key account business strategy. At the end of February 1992, Gitano's order backlog was $368 million compared to $249 million in the comparable time frame last year," he said.
 "Looking further ahead, we expect our earnings for the first half of 1992 to be ahead of 1991. We believe that the second half of 1992 will be stronger than the first half," Dabah concluded.
 In December, Gitano announced that it intended to take a restructuring charge of about $6.5 million. However, with the acceleration of its restructuring, the company decided to exit from unprofitable activities and focus its efforts on its core business as a key supplier of a high quality brand name affordable apparel, sold primarily through mass merchandisers and discounters.
 The streamlining also reflects charges associated with its manufacturing and distribution infrastructure. The company accelerated its move from owning and operating manufacturing facilities to a dedicated contractor manufacturing base. Combined with its global sourcing network, the re-engineered dedicated contractor manufacturing structure and process should enhance Gitano's abilities to meet the Quick Response demands of its customers on a more cost-efficient basis.
 The company said it is currently not in compliance with certain financial and other covenants. Gitano said, however, that it has reviewed its 1991 financial and operating results and future plans with its lenders, who have been supportive. The company has not received waivers to date, but is presently working with its lenders to amend covenants in the Company's credit agreements. Although no assurance can be given, the company believes that it will obtain revised agreements in principle shortly.
 The Gitano Group, Inc.'s primary business is supplying branded, high quality, affordable apparel to mass merchants and discounters. Gitano's products include fashion basic clothing for women, men and children, as well as intimate apparel and accessories. The average retail price of the company's apparel is under $20.
 Gitano licenses its brands for certain products such as socks, watches and athletic footwear. The company's other brands include Gloria Vanderbilt and Regatta Sport.
 -0- 3/16/92
 /CONTACT: Haim Dabah, president; Stanley Greenstein, CFO; or Gustave Birnberg, senior vice president, all of Gitano 212-819-0707/
 (GIT) CO: Gitano Group, Inc. ST: New York IN: TEX SU: ERN


AH -- NY075 -- 8521 03/16/92 17:47 EST
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Date:Mar 16, 1992
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