WestPoint Posts $10 Million Loss in Q1; Sales Fall 43 Percent
NEW YORK-In the midst of a steep drop in sales, WestPoint Home reported a first-quarter net loss of $10 million, the same as it tallied in the first quarter of last year, according to a 10-Q filing by the company's parent, Icahn Enterprises.
Net sales in the quarter, which ended on March 31, fell 43 percent to $56 million, the result of WestPoint's efforts to streamline sales and exit certain unprofitable programs and customers. Also, gross margin fell 400 basis points to 4 percent, despite a 40 percent drop in cost of goods sold.
Selling, general and administrative expenses dropped 38 percent in dollars but rose 153 basis points as a percentage of sales to 17.9 percent. During the quarter, WestPoint initiated a restructuring which included the elimination of executive positions in sales, marketing and merchandising--a move that would save the company about $12 million in SG&A a year, according to Norm Savaria, WestPoint's president and CEO.
The 10-Q filing said WestPoint "will continue to explore ways to lower its SG&A expenditures by ongoing review and investigation of the potential for further consolidation of its locations, reduction of headcount, and where appropriate by applying, as necessary, more stringent oversight of expense areas where potential savings have been identified."
The filing also said, "Given the uncertainty and volatility in the macroeconomic conditions, we cannot predict when, or if, (WestPoint's) financial performance will improve."