Fieldcrest-Cannon mostly rode out troubles in the textile industry last year, but the bad times have finally caught up with the Eden-based textile company.
Earnings for the first quarter of 1990 fell 88 percent from $3 million for the same quarter last year to only $338,000 this year.Despite the lower earnings, Fieldcrest-Cannon executives exuded optimism at the company's annual meeting here Tuesday.
``The new lines are doing well,' President Charles Horn said. ``There is optimism among retailers for the second half of the year so we're hoping for a good second half of '90.'
Sales for the first quarter were $274.4 million, down 7 percent from sales of $296.3 million in the first quarter of 1989.
K. William Fraser Jr., senior vice president for finance, said consumer demand for household products, particularly towels, has been weak.
``The trends in low sales didn't hit us last year they way they've hit related industries like home furnishings and apparel,' Fraser said. ``Now it's hit us suddenly and rather unexpectedly.'
Horn blamed retailing woes for the drop in sales. He said the bankruptcy of major department store operator Campeau Corp. continues to hurt the company.
``Things are getting better' he said. ``They are now operating again. We're shipping to them and they're paying their bills but their orders aren't what they used to be.'
Executives said Fieldcrest was spared more extensive financial losses by its decision last year to shift more emphasis to serving mass merchandisers such as K mart and Wal-Mart. Turmoil in the retail industry, including the troubled Zayre-Ames merger, were blamed for a 11 percent decline in bed and bath division sales.
Carpet and rug division sales for the first quarter of 1990 increased 3 percent over the same quarter last year. John Riley, head of the Greensboro-based division, said the division continues to lose money, but not as much as a year ago during the same quarter.
Fieldcrest-Cannon chairman Joseph Ely II said the company will continue its modernization plan that totals $250 million over several years. The company spent $44.8 million on capital expenditures in the first quarter of 1990 compared to $7.8 million in the same period last year, putting an additional dent into the quarter's earnings.
Ely stressed that modernization was the key to profitability down the road.
``Our direction is one of modernization,' he told about 25 people gathered for the meeting. ``We're committed to quality in terms of people and product.'