Kellwood Co. reported reduced earnings during the fourth quarter after a onetime restructuring charge, but the firm reached positive year-end results.
In the quarter ended Feb. 3, net income fell 44.3 percent to $7 million, or 27 cents a diluted share, from $12.5 million, or 49 cents, in the year-ago period.
Buoyed by organic sales growth across categories and the acquisitions of Vince and Hollywould, sales of the St. Louis-based company increased 10.2 percent to $491.9 million from $446.5 million in the same quarter last year.
For the year, earnings swung into the black to reach $31.4 million, or $1.21 a diluted share, from a loss of $38.4 million, or $1.42, last year.
Sales for the year increased a fraction of a percent to $1.96 billion. Fiscal year 2006 included 53 weeks, while fiscal year 2005 was 52 weeks.
“Kellwood made solid progress in the fourth quarter of 2006,” Robert C. Skinner Jr., president, chairman and chief executive officer, said in a conference call Friday.
“This past fall and during the holiday season, we began to experience the benefits from our efforts to revitalize our Sag Harbor and Calvin Klein women’s better sportswear offerings,” he added.
The onetime charge of $7.7 million was included for the quarter as part of the company’s restructuring efforts, which Kellwood said are now complete.
Women’s sportswear sales gained 9 percent in the quarter over the same period last year. The company identified Sag Harbor and Calvin Klein women’s better sportswear as lines that had particularly seen improved results, while the company was disappointed with the Halmode dress and suit business performance.
Its acquisition of Vince and Hollywould during the fourth quarter, plus the 2007 relaunches of O Oscar, Democracy and David Dart, bolstered the company’s expectations going forward.
For 2006, about 30 percent of Kellwood’s business came from better and above price points. The company expects that number to climb to 35 percent this year, moving toward the five-year goal of at least 50 percent, which the company predicted it will beat in the call Friday.
“While pleased with our progress, we are certainly not satisfied, as we know we can perform still better,” Skinner said. “Our recent results demonstrate that the actions we are taking are working. We expect to build upon our revitalized business platforms and see continued improvement in profitability in future quarters.”
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The company provided positive guidance, projecting $490 million to $500 million in sales from ongoing operations for the first quarter next year, compared with $493.8 million this year. Kellwood expects earnings from continued operations to be $5 million to $5.5 million, or 19 cents to 21 cents a diluted share, up from $3.9 million, or 25 cents, this year.
For fiscal year 2007, the vendor expects net sales from ongoing operations to range from $2 billion to $2.03 billion, compared with $1.96 billion last year. It projects earnings from ongoing operations will reach $47 million to $49 million, or $1.80 to $1.89 a diluted share, up from $42.5 million, or $1.64, in 2006.
In a separate development, Kellwood filed a copyright infringement lawsuit Thursday against Caché Inc. and Adrienne Victoria Design Inc. in Manhattan federal court.
Kellwood alleged in legal papers that Caché sold apparel that infringed on its David Meister Ivory Garden design, a textile design based on an original work of art by Creations Robert Vernet. The lawsuit alleges that Caché sold infringing dresses. Kellwood is seeking a permanent injunction and unspecified damages. Caché declined to comment.