NEW YORK — Russell Corp. reported higher earnings and sales in the fourth quarter, helped by gains in the Brooks running division and tighter cost controls.
However, the Atlanta-based activewear giant said Thursday it was forecasting a loss in the first quarter because of restructuring charges to cover the costs of plant closings as it shifts more of its manufacturing overseas and consolidates back-office functions. After the announcement, the share price slipped 7.53 percent to close at $14.99 in New York Stock Exchange trading.
Profits in the three-month period ending Dec. 31 grew 14.7 percent to $11.8 million, or 36 cents a share, from $10.3 million, or 31 cents, in the same period a year ago. Earnings exceeded analysts’ expectations of 21 cents, although results were helped by a tax credit in the quarter that stemmed from the resolution of tax matters in previous years, Russell said.
Sales increased 6.2 percent to $354.6 million from $334 million.
“We feel positive about our many growth opportunities and out cost-reduction initiatives outlined in January,” Jack Ward, Russell’s chairman and chief executive officer, said in a statement.
Russell had a difficult year, facing a sales slowdown and operational challenges such as too much inventory. The firm said last month it would cut 2,300 jobs and shift more business overseas to cut costs as part of a major restructuring.
After several acquisitions in recent years, the company has a stable of brands, including Spalding, Brooks, Moving Comfort, Huffy and AAI, in addition to its core Russell Athletic and Jerzees brands. Russell has been adding performance fabrics to its offerings to compete with more nimble competitors like Under Armour, as well as activewear giants Nike and Adidas.
“The introduction of a full line of Dri-Power Performance products for women has had a very positive impact on Russell Athletic’s women’s business, particularly since more than a fourth of that business is now in the performance category,” Ward said on a conference call Thursday with Wall Street analysts.
Brooks, a leader in the running category, is expected to have double-digit revenue growth this year, Ward said.
In the full year, Russell’s earnings dropped 28.1 percent to $34.4 million, or $1.03, from $47.9 million, or $1.46, in 2004. Sales rose 10.5 percent to $1.44 billion, boosted by acquisitions. Sales in the company’s Mossy Oak and sporting goods segment were down for the year, Ward noted.
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For the first quarter of 2006, Russell said it projected a loss of 29 cents to 41 cents a share. Excluding those charges, earnings are forecast to range between a loss of 2 cents and a profit of 4 cents a share.