Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, March 28, 1995 TAG: 9503280059
SECTION: BUSINESS PAGE: B6 EDITION: METRO
SOURCE: JEFF STURGEON STAFF WRITER
DATELINE: LENGTH: Medium
One day after the contract was approved, company executives said they welcomed the chance to focus again on making and selling active wear and licensed sports apparel. Their time has been divided by a union-organizing drive and election and contract negotiations for seven months.
Members of Local 1994 of the Amalgamated Clothing and Textile Workers approved their first three-year contract with Tultex on Sunday by unanimous vote, the union said.
Tultex said it can cope with the cost of the agreement despite pressures on the textile industry, a sentiment echoed by one analyst.
Tultex also corrected a report by the union that its employees have not had a raise in five years. The company last raised wages Jan. 1, 1993, a spokesman said. The new contract provides for a 5 percent raise to most employees this year and 4 percent per year for two more years. The average hourly wage is $8.
``The cost of this contract is made up by increased sales due to the demand we're having in the active wear business,'' said Randy Rollins, Tultex's executive vice president and general counsel.
Tultex's active wear sales rose 7.6 percent last year, while sales of some higher-priced items jumped nearly 50 percent, Rollins said.
Moreover, Rollins said, Tultex has put its internal affairs in better order. The contract locked in labor costs and the reworking of debt painted a clear picture of the company's resources, he said.
He added that a new employee-management committee established by the contract will focus on productivity issues.
Lorraine Miller, a textile and apparel analyst at Robinson-Humphrey Co. in Atlanta, said the company's outlook for financing the higher labor costs with increased sales is reasonable.
Raises amounting to 13 percent over three years and other contract terms will erode profits by no more than 5 cents per share this year, she said.
The company posted profits of $8.9 million, or 26 cents per share, in 1994. Robinson-Humphrey has forecast a like gain for the company this year, excluding the effect of one-time accounting and debt-refinancing charges.
``Looking at what the earning power of this company is, the [pay] increase is really not significant,'' Miller said.
By no means, however, is the company completely out of the woods, Miller said.
Economists have toned down projections for this year's economic growth. The baseball strike continues to depress sales of Tultex-made hats, jerseys and the like. And textile and apparel companies must pay more for raw materials.
These pressures have led to disappointing earnings reports by some Tultex competitors and depressed textile stocks, Miller said.
Tultex common stock closed Monday on the New York Stock Exchange at $4.20 a share, up 12 1/2 cents from Friday. The stock was trading near its 52-week low price, probably as a consequence of the seasonal nature of sales of the sweat shirts and sweat pants that make up a large part of Tultex's product line, Miller said.
by CNB