WestPoint Narrows Loss in 2Q, Posts $1Million in Operating Income
NEW YORK-WestPoint Home slimmed down its net loss in its fiscal second quarter and, in the process, reported positive operating income for the first time since Icahn Enterprises, its parent, purchased the company in 2005.
The second-quarter net loss totaled $2 million, compared to a net loss of $5 million in its second quarter of last year, according to Icahn's quarterly filing with the U.S. Securities and Exchange Commission. Operating income (earnings before interest, taxes, depreciation and amortization) was $1 million, as compared to an operating loss of $6 million last year.
Speaking on a conference call with HFN, Dan Ninivaggi, Icahn's president, attributed the upbeat result to WestPoint's efforts in restructuring its business. "First, we've cleaned up the cost structure," Ninivaggi said. Second, Norm (Savaria, WestPoint's president and CEO) has put in a new structure with teams focused on each customer. Third, we're rebuilding our backlog with core customer programs that are profitable and that add value to our customers."
On the call, Savaria said the new structure "aligned our costs with the values that the market allows for us to get out of our products. We're serving our customers' needs better and executing better with them."
The SEC filing provided the details on these results. Selling, general and administrative expenses fell 40 percent in dollars and 401 basis points as a percentage of sales, to 13.9 percent.
Net sales in the quarter, which ended on June 30, were $65 million, down 22.6 percent from last year's second quarter. The SEC filing said WestPoint's sales were affected by its decision to exit certain unprofitable businesses. That move also reduced WestPoint's cost of goods sold, resulting in a gross margin gain of 467 basis points to 15.4 percent.
Going forward, Ninivaggi said WestPoint will "come out of the gate profitable" next year. "We will be operating at full capacity next year, adding capacity in our existing plants. We've always been committed to the business, and we have always wanted to make sure that WestPoint gets on the right platform, that it has the opportunity to be successful."