Russell Corporation affirmed its earnings guidance for the fourth quarter and current fiscal year, but said Thursday at its analyst conference in Atlanta that Q4 sales would come in “at the lower end” of their previous guidance of $325 million to $345 million.
As reported throughout this issue, retail sales were hit hard at retail in October due to unseasonably warm weather and it appears Russell has taken a bit of an up pipeline hit from slower-than-expected fleece sales. The only retailer that has reported strong fleece sales to-date has been Pacific Sunwear, but theyre busy selling hoodies from surf and skate brands.
RML did up guidance for next year, due to a recent change in cotton prices and projected cost savings. Cotton prices, which averaged about 50 cents a pound this year, have “backed off” about 8 cents a pound since the company reported Q3 numbers late last month. The company, which said it uses about 100 million pounds of cotton a year, said it buys the raw goods about six months ahead.
The company also said that t-shirt prices had seen some “upward movement” from previous cotton price increases and the company should see some impact of the increase starting in January.
Matt Mirchin, president of Russell Athletic, also said he saw a growing business at the new TSA. He said business at the old TSA was more developed than at Gart, but sees the 2004 business growing and indicated that bookings there were “up substantially” for spring.
In a real demonstration of the shift the company has made since chairman and CEO Jack Ward joined the company in 1998, CFO Bob Martin indicated in a presentation the previous week that the company will have “well over” 30% of its product sourced in 2003, versus just 5% in 1998. Since Ward arrived, the total company workforce has declined 20% while the U.S. workforce has been reduced by 67%, indicating a large portion of manufacturing jobs moving to its offshore facilities.
