Hartmarx Corporation today reported operating results for its second quarter ended May 31, 2002. Revenues were $130.6 million in 2002 compared to $146.1 million in 2001. Earnings before interest and taxes ("EBIT") improved to $3.6 million compared to a loss of $3.5 million in 2001. After consideration of interest expense and income taxes, the net loss was $.5 million or $.01 per share in 2002 compared to a loss of $4.2 million or $.14 per share in 2001. Working capital requirements were reduced significantly from the year earlier levels with May 31 inventories $57.5 million or 32.4% lower, and total debt declining $21.4 million or 14.7%.
Homi B. Patel, president and chief executive officer of Hartmarx, commented, "As anticipated and previously communicated, second quarter revenues reflected the lower Spring '02 advance orders placed by retailers last year. EBIT has been favorably impacted this year from our lower cost structure and proceeds received from the previously announced settlement of litigation."
"We continue to anticipate that Hartmarx will be profitable for its second half and full year ending November 30, 2002. Despite the generally lackluster retail environment, in-stock reorder activity for our products has been higher throughout the first half, and Fall '02 advance orders are ahead in the better and luxury price point tailored clothing categories. Early indications are that this favorable trend will continue into the Spring '03 selling season. We are pleased with the significant progress made in reducing working capital and debt and remain on track to achieve or exceed our publicly stated year-end objectives of $25 million reductions," Mr. Patel concluded.
The $7.1 million improvement in second quarter EBIT to $3.6 million in 2002 from last year's loss of $3.5 million on 11% lower sales, reflected the $4.5 million litigation settlement proceeds received this year; the current period also included $.9 million of restructuring charges principally related to the closing of a manufacturing facility and other staff reductions, while last year's second quarter included restructuring charges of $2.0 million.
For the six months, revenues were $270.2 million compared to $287.2 million in 2001. EBIT was $6.8 million this year compared to a loss of $1.7 million in 2001. Restructuring charges included in year-to-date EBIT were $.9 million in 2002 compared to $2.6 million in 2001. After consideration of interest expense and taxes, the net loss was $1.0 million or $.03 per share in 2002 compared to a loss of $5.1 million or $.17 per share in 2001. The prior year also included a nominal second quarter loss related to repurchases of the Company's then outstanding senior subordinated notes.
Total debt at May 31 of $124.7 million declined $21.4 million from the year earlier level, after beginning the fiscal year $46 million higher. Interest expense of $8.6 million for the six months this year compared to $6.6 million for the first half of 2001 reflected $1.9 million of non-cash interest expense this year compared to $.2 million in 2001.
Hartmarx produces and markets business, casual and golf apparel under its own brands including Hart Schaffner & Marx, Hickey-Freeman, Palm Beach, Coppley, Cambridge, Keithmoor, Racquet Club, Pusser's of the West Indies, Royal, Brannoch, Riserva, Sansabelt, Barrie Pace and Hawksley & Wight. In addition, the Company has certain exclusive rights under licensing agreements to market selected products under a number of premier brands such as Austin Reed, Tommy Hilfiger, Kenneth Cole, Burberrys men's tailored clothing, Bobby Jones, Jack Nicklaus, Claiborne, Evan-Picone, Pierre Cardin, Perry Ellis, KM by Krizia, and Daniel Hechter. The Company's broad range of distribution channels includes fine specialty and leading department stores, value-oriented retailers and direct mail catalogs.
The comments set forth above contain forward-looking statements made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The statements could be significantly impacted by such factors as the level of consumer spending for men's and women's apparel, the prevailing retail environment, the Company's relationships with its suppliers, customers, licensors and licensees, actions of competitors that may impact the Company's business and the impact of unforeseen economic changes, such as interest rates, or in other external economic and political factors over which the Company has no control. The reader is also directed to the Company's periodic filings with the Securities and Exchange Commission for additional factors that may impact the Company's results of operations and financial condition. Forward-looking statements are not guarantees as actual results could differ materially from those expressed or implied in forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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