Russell Corporation turned the corner on organic growth in the fourth quarter, posting a 3% increase in revenues for the period when excluding the impact of acquisitions on quarterly sales figures. Including the acquisitions over the past year, fourth quarter sales increased 10.5% to $334.0 million, compared to $302.4 million in the year-ago period.
Based on calculations SEW made with percentages provided by Russell Corp., total Domestic sales appeared to have increased 9.7% for the quarter to $306 million, or a 2.0% gain when excluding acquisitions. Domestic Athletic sales increased 18.0% with acquisitions to $149 million, but rose just 1.0% sans the acquisition effect. Domestic Activewear sales rose 3.0% to $157 million. International sales increased 21.7% for the quarter to $28 million, but was up about 14% excluding currency effects.
Gross margin was down 110 basis points to 29.1% of sales versus 30.2% in Q4 last year. Management said some of the benefits seen from cost-cutting programs were more than offset by higher fiber, transportation, and energy costs, as well as the lower margins inherent in the Huffy Sports product line and price reductions in Artwear, which were taken in early 2004.
Earnings for the period were down roughly 29% to $10.3 million, or 31 cents per diluted share, compared to $14.5 million, or 44 cents per diluted share, in the year-ago period. Dilution from the Huffy Sports deal, employee down-sizing, and Sarbanes-Oxley related expenses cost about six cents per share in the quarter.
Management said they cut about 25 management and staff jobs, but had to have 15 accountants, employees, and consultants working on projects related to Sarbanes-Oxley compliance.
For 2005, RML sees EPS in the range of $1.55 to $1.65 per diluted share on sales of approximately $1.50 billion to $1.52 billion, or an increase between 15% and 17% for the year versus 2004. The Brooks acquisition is expected to be accretive by at least five cents to seven cents per share for the year and Huffy Sports is seen as breakeven or “slightly accretive” for 2005. First quarter sales are expected to increase in the 20% range and EPS in the 5 cents to 8 cents earnings per share range.
