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FORT MILL, S.C.-Home furnishings struggled at Springs Industries, mirroring the mill's overall lackluster performance in the third quarter.

Although it did not disclose totals, Springs reported that profits for the home furnishings segment were down $16 million from a year ago. Sales for the segment totaled $501.5 million in the third quarter, up 1 percent from the year-ago quarter, which it did not previously report.

The company blamed the decline on promotional pricing and production curtailments associated with its efforts to reduce excess inventories. Profits in the segment were also hit by a writedown of expenses connected with the closing of a terry towel manufacturing facility in Griffin, Ga. as well as disappointing sales of some licensed bed fashion products.

In September Springs said it would invest $26 million to modernize its other towel manufacturing and yarn operation in Griffin.

Overall, sales for the third quarter were $578.3 million, down 0.2 percent from $579.2 million in 1997. Income before unusual items was $14.7 million, or 80 cents per diluted share, compared to $25.2 million, or $1.21 per share a year ago. The current third quarter results include pretax charges totaling $5.4 million for employment severance expenses related to the Griffin consolidation and other cost-cutting. These charges reduced income before unusual items by 18 cents per share.

Springs sold its Ultrasuede (now UltraSuede) fabric business to Toray Industries of Japan in September, during which it also sold its closed Rock Hill printing plant to York Printing & Finishing.

Net income for the quarter was $21.8 million, or $1.19 per diluted share, accounting for realignment expenses and gains from the Rock Hill and Ultrasuede sales; income from reversals of previously accrued Rock Hill restructuring costs; Year 2000 expenses, and the Griffin closing. This compared to net income of $27.4 million or $1.32 per share in 1997, which also included costs for Year 2000 and fabric operations restructuring.

"While our earnings are clearly not where we would like them to be, we did make progress in the quarter and remain confident of our long term plans for improvement," said Crandall Bowles, chairman and chief executive for Springs, in a statement. "For example, our efforts to reduce inventories have penalized operating margins but we have succeeded in reducing inventories by $46 million since June. We also sold our Rock Hill plant, averting significant costs which previously had been reserved."

Bowles expect future growth to come from programs Springs recently launched to license its Springmaid and Wamsutta brands, which have added blankets, flannel and knitted bedding, and kitchen products to its branded home furnishings assortment.
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Author:Chirls, Stuart
Publication:HFN The Weekly Newspaper for the Home Furnishing Network
Geographic Code:1USA
Date:Oct 26, 1998
Previous Article:IN WITH THE BLUE.

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