NEW YORK — Since going public in May 1992, Lida Inc. has been struggling with weak sales, plummeting profits and underutilized capacity. But officials of the vertically integrated converter say they’ve seen the bottom of the trough.
In the fourth quarter ended Jan. 2, Lida reported a loss of $922,000 against a year-earlier loss of $583,000, while sales slipped 2.7 percent, to $20.5 million from $21.1 million.
For the year, Lida lost $3.2 million, against a profit of $2 million, or 27 cents a share, in 1992. Sales inched up 1.3 percent, to $88.6 million from $87.4 million.
In 1991, the last full year before becoming a public company, Lida had a net profit of $6.6 million on sales of $107.8 million.
In the wake of these results, Isaac Kier, Lida’s chairman and chief executive officer, along with his brother, Nelson, who is the company’s president, and their father, Ralph, vice chairman and founder, have taken voluntary cuts in compensation by one-third for all of 1994.
According to Lida’s last proxy statement, Isaac Kier was paid $362,785 in 1992, Nelson Kier got $332,243 and Ralph Kier received $252,888 plus a $200,000 bonus. The Kiers own two-thirds of the company.
“We’ve felt the scrape, and now we have to see what kind of bounce we’ll get off the bottom,” said Isaac Kier, in a recent interview at Lida’s sales and marketing offices here.
“I’m optimistic. We’ve done some things to put us in a position to have what I feel will be a pretty good 1994, including a capital investment of about $14 million over the past two years,” he said.
Among the items Kier said could propel Lida back into the black:
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- Amida by Lida, a collection of rayon and Lycra spandex blended fabrics, aimed at the sportswear and aerobicwear markets and currently making its debut at the company.
- A group of novelty jacquard velours in blends of rayon, nylon and Lycra, geared toward the sportswear and party dress businesses.
- Corona, a trademarked, proprietary printing process that allows a deeper penetration of dyestuffs on Lycra-containing fabrics, eliminating grin-through. Grin-through is the lessening of color intensity or design when a fabric is stretched, as the undyed fibers below the surface show through.
Analysts seem to agree with Kier’s assessment. While they aren’t predicting a profit bonanza for the company, they believe Lida is coming back.
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“The recent past hasn’t been very kind to Lida, but we see the worst of times being behind them,” said Jay Meltzer, textile analyst at Goldman Sachs.
Meltzer added, “While it’s too early to tell what kind of profit they’ll have, they should see some good results by the end of this year.”
“I think they have a reasonable chance of coming back and probably turning a small profit,” he said. “I think the environment looks a little better, and they seem to have put their house in order.
“They still face a number of challenges, such as a soft print-goods market and a softer Lycra market,” he continued. “But we think they can cope with that and come back from what was a very poor 1993.”
Lida’s troubles since going public began immediately. Hitting the stock market at a time of weak interest in initial public offerings, the shares, initially expected to be priced at $14 to $16 each, were set at $11.50. Lida’s stock, which is traded over the counter, closed at 2 1/8 Monday, down 5/8.
The company has been plagued since then by an oversupply of Lycra in the market, and startup problems at its Larjak printing facility in Gastonia, N.C.
Since the company is one of the industry’s top users of Lycra, the sudden glut of the fiber into the market hurt Lida’s competitive position, particularly in the circular-knit area, where the company does the bulk of its business.
“We’ve had significant increases in unit sales in circular knits, but we haven’t gotten the same margins as we did in 1991 and early 1992,” said Kier, who also serves as president of the Textile Distributors Association.
Larjak, which had startup costs exceeding several million dollars, is now “running well,” said Kier, and will be producing both the Amida by Lida and the novelty jacquard velours.
Despite the problems Lida has encountered over the past 22 months and the fading price of the market, Kier said the IPO was necessary if the company is to develop as a key fabric resource.
“You always think when things are good they’ll be good forever, and when things are bad you think you’ll never get out of the morass,” Kier said. “But we never expected the market to go against us to the magnitude it did.
“There are a lot of handicaps with being a public company, but if we hadn’t done the IPO, we wouldn’t have been able to invest the kind of money we did to enable us to make new products,” said Kier. “It’s definitely been a learning experience.”
Lida’s other facilities are all in the Charlotte, N.C., area: Danalex, a printing plant, where the Corona process has been implemented; Davidson, a knit plant, and a facility for warehousing, finishing and administrative offices. In addition to its New York sales and marketing office, Lida has an office in Los Angeles.