TAMPA - Shares of Tropical Sportswear Int'l Corp. rose sharply on Tuesday after the struggling apparel company reported its first improved quarterly earnings in more than a year.
Shares of Tropical, which flirted with bankruptcy months ago, closed Tuesday at $1.99, up 73 cents.
The company reported second-quarter net income of $4-million, or 36 cents a share, up from $638,000, or 6 cents a share, in the same quarter a year ago. But company officials, who credited the improved performance largely to cost cutting, cautioned that Tropical's path remains rocky. Sales plummeted to $93.8-million, down from $112.7-million, as the men's pants maker continued deep discounting to move a huge backup of unsold inventory.
"The steps we have taken are the building blocks to executing a turnaround strategy," said Michael Kagan, chairman and chief executive.
Among those steps so far are shifting the last of Tropical's fabric-cutting operations offshore and selling an administration building at its Tampa headquarters that was never occupied. The $9.2-million sale of the property provided Tropical with cash to pay down debt during the quarter.
Tropical is trying to come back from the botched restructuring of its Savane division last year, which led to missed delivery dates and a flurry of canceled orders by retailers that left the company stuck with more than $100-million worth of unsold inventory. The inventory backlog was whittled down to $58-million at the end of the second quarter, but it will be June before Tropical expects its profit margins to recover to more normal levels.