North Face reports $5.8 million loss in second quarter |

North Face reports $5.8 million loss in second quarter

While sales figures continued to grow in the second quarter of 1999, Carbondale-based The North Face continued to experience increasing losses.

For the second quarter, ending in June, the outdoor equipment manufacturer’s net sales increased 26.5 percent to $54.6 million, compared to $43.2 million for the second quarter of 1998. Net loss for the quarter was $5.8 million or $0.46 per share compared to a loss of $1.7 million or $0.14 per share for the second quarter of 1998.

Though the second quarter increase brought net sales to $105.8 million for the six-month period ending June 30, the company showed operating losses of $10.6 million for the quarter and $16.6 million for the half.

This appears to result largely from growth of operating expenses to $31.7 million for the quarter, $10.5 million greater than operating losses for the second quarter of 1998.

In a press release, The North Face President and Chief Executive Officer James Fifield explained that the losses continued because the company increased its expenditures for advertising, product development, and facilities during the quarter. Spending in these areas, Fifield said, is critical to future growth, but he said the company will attempt to control costs for the rest of the year, to improve the bottom line.

According to the press release, the company has also spent considerable money on contracting out the distribution of its products and on improvements to its office equipment in the first and second quarters. Those expenses are expected to continue into the second half of the year.

For the second quarter of 1999, one-time expenses before taxes included $2.8 million for closing the company’s Vacaville, Calif., distribution center and starting up a new distribution operation in Lenexa, Kan. Other major one-time expenses during the second quarter were the relocation of a portion of the company’s headquarters to Carbondale from San Leandro, Calif., professional fees related to the “restatement” of the company’s 1997 and 1998 financial statements and $100,000 in costs related to the offer by Leonard Green to acquire the company.

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