Kellwood Company, parent company to Kelty, Sierra Designs, and Slumberjack, reported relatively flat top-line sales during the second quarter, but the bottom line slipped into the red due to extensive restructuring charges. The restructuring did not have any significant effect on Kellwood’s outdoor brands, but many of its other price-point lifestyle apparel brands will be restructured in the near future.

Total Kellwood sales increased 0.4% to $562 million, as compared to $560 million last year. Gross margins dropped 13.5 full percentage points to 7.7% due to the clearance of inventory of the company’s lower price-point brands.

Kellwood SG&A expenses dropped 80 basis points to 16.9% of sales compared to 17.7% last year. The company’s net loss for the second quarter was $79.4 million, or $2.86 per diluted share, as compared to net earnings of $10.2 million, or 36 cents per diluted share last year.

American Recreation Products, Kellwood’s outdoor division, increased sales by 15% which the company attributed to strong results from Kelty, Sierra Designs, Eddie Bauer, and Wenger Swiss Army brands, as well as stabilization in the camping products industry following a period of consolidation and price deflation.

Looking forward, Kellwood expects third quarter sales of $630-640 million, as compared to actual sales of $717 million in the third quarter last year. Net earnings in the third quarter are expected to be roughly $16.0 million, or 55 cents – 58 cents per diluted share, which is prior to impairment, restructuring, and related non-recurring charges.

For the fiscal 2005 year, the company expects sales in the range of $2.4 billion. This compares to actual fiscal 2004 sales of $2.56 billion. The company's current sales guidance for the year includes sales from divisions and brands that will be exited or restructured. Sales for Kellwood's ongoing operations are forecasted to be approximately $2.1 billion versus $2.2 billion last year. Net earnings for the fiscal 2005 year continue to be estimated in the range of $37 million to $38 million, or approximately $1.35 per diluted share, before restructuring charges.