Guilford Mills, Inc's (NYSE: GFD) apparel sales plummeted by 14.1 per cent in the last financial period, resulting in a pre-tax operating loss of almost $7m for the financial year to date, the troubled company announced today. The poor results have persuaded Guilford's board to suspend the quarterly dividend.

It had also incurred a net loss of $2.6m as compared with the third quarter of last year. Business was further depressed by competition from low-cost imports.The decline in the apparel segment more than offset continued growth in the automotive and home fashions segments.

John Emrich, president and chief executive officer, said: "We are continuing to see pressure on our margins in the apparel segment.

"Results have been negatively impacted by low-cost imports and changes in product mix. Furthermore, we have reduced production levels at some of our operations that were built for large runs resulting in higher unit costs.

"This combination resulted in a pre-tax operating loss of $3.5m for the apparel segment for the quarter, and a $6.9m apparel pre-tax operating loss for the nine months year-to-date.

"Our automotive segment is strong and growing. The segment's decline in profitability for the quarter was a result of especially strong product demand at the time we were still integrating operations and expanding capacity. We are returning to more normalized operations and our profitability should reflect these improvements by the end of our fiscal year."

Guilford Mills is an integrated designer and producer of value-added fabrics using a broad range of technologies. The company is the largest warp knitter in the world and is a leader in technological advances in textiles, including microdenier warp knits and wide width circular knits of cotton blended with LYCRA(R).

Guilford Mills serves a diversified customer base in the home furnishings, apparel, automotive and industrial markets. Through its Guilford Home Fashions subsidiary, the company produces bedding products, window treatments and shower curtains for the retail market.