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Wednesday July 22, 6:03 pm Eastern Time
Russell to embark on major restructuring, cut 4,000 jobs
ALEXANDER CITY, Ala., July 22 (Reuters) - Athletic uniforms maker Russell Corp. (RML - news) said on Wednesday it is considering cutting 4,000 jobs, disposing of its shopping center real estate and closing 25 plants as part of a $100 million to $125 million restructuring plan during the next three years.
The company said it would take a substantial charge in the third quarter of 1998 for the restructuring. The restructuring plan should begin lowering operating costs in 1999 and should generate increased savings in subsequent years, it said in a statement.
Analysts had expected third quarter earnings of $0.70 per share before the announcement.
The multi-year strategic plan that is being considered include closing about 25 of its 90 facilities over the next three years, including selected manufacturing plants, distribution centers and offices. It also includes expanding production outside the United States, consolidating the licensed products business, disposing of owned shopping center real estate; reorganizing the corporate structure and establishing a dual headquarters in Atlanta.
Savings from the planned restructuring will improve earnings and fund initiatives to increase business growth, the company said. All of the company's efforts going forward will focus on positioning Russell in the athletic, sportswear and casual wear apparel categories. Details of the plan will be released over the coming months, after implementation steps have been developed, the company said.
Earlier, it posted second quarter earnings of $6.56 million, or $0.18 per share, down from the year-ago's $8.11 million, or $0.22 per share. It beat analysts' expectations of $0.15 per share. Sales rose slightly to $271.8 million versus $270.2 million in the year-ago period. The company's shares ended Wednesday at 29-5/8, down 7/16 on the day.
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