ROANOKE TIMES Copyright (c) 1996, Roanoke Times DATE: Thursday, January 11, 1996 TAG: 9601110108 SECTION: BUSINESS PAGE: B-6 EDITION: METRO DATELINE: ROCHESTER, N.Y. SOURCE: Bloomberg Business News
Bausch & Lomb Inc. will close one of its five plants that make sunglasses and cut 835 jobs in the division, resulting in a fourth-quarter pretax charge of $27 million.
The moves to revamp the division, which makes Ray-Ban sunglasses, come after a year of declining earnings, increased competition and a Securities and Exchange Commission investigation at the Rochester, N.Y.-based company.
This is a first step toward reviving the company's earnings, which have been hurt by slower-than-expected sales of its contact lenses in the face of stiff competition from Johnson & Johnson, analysts said. Bausch & Lomb next will turn its attention to cutting staff and improving productivity in that division, they predicted.
``There's a lot of fat at Bausch & Lomb,'' said Skip Klein at T. Rowe Price Associates Inc., which owned 440,580 shares as of Sept. 30. ``I think it's probably a good sign.''
Bausch & Lomb said the charge will shave 30 cents off per-share earnings in the quarter. That will reduce earnings from the estimate of 40 cents to 50 cents that Bausch & Lomb gave Dec. 5, surprising analysts who had expected about 77 cents. It earned 21 cents before a charge in the year-ago period.
Although cost-cutting plans for the sunglasses division aren't complete, the company said it expects the moves to trim costs by $20 million to $25 million. Last month, Bausch & Lomb said it planned to cut expenses by $50 million over three years to offset weak sales in the U.S. and overseas.
The job cuts will reduce the company's total work force by 5.8 percent.
Bausch & Lomb shares fell 1/4 to 38 in trading of 308,600.
While Ray-Ban has the largest share of the sunglasses market, Irvine, Calif.-based Oakley Inc. has been increasing its share through sales of its designer and sport sunglasses, analysts said.
The changes will consolidate Ray-Ban's sunglasses operation at three plants, in North America, Europe and Asia. Now, sunglasses frames are made at three plants, lenses are made at another, and the finished products are assembled at yet another.
The goal is to cut the time it takes to develop new styles of sunglasses and lower costs, said Bausch & Lomb spokeswoman Holly Echols.
William Waltrip, the new chairman and chief executive officer, said he would not speculate on where further cuts might be made.
``Obviously, there are more actions to come,'' he said.
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