Galey & Lord, Inc announced today net sales for the third quarter of fiscal 2001 of $220.2m, a decrease of 16 per cent from the $262.2m of net sales for the third quarter of fiscal 2000 (June quarter 2000).

The Company's net income for the June quarter 2001 would have been $1.7m or $.14 per common share, excluding run-out costs associated with the company's strategic initiatives announced on September 20, 2000, compared to net income for the June quarter 2000 of $2.5m or $.21 per common share. Including the run-out charges related to the strategic initiatives, the company reported net income for the June quarter 2001 of $0.8m or $.07 per share.

The company reported that for the first nine months of fiscal 2001, net sales were $673.6m, a decrease of six per cent from the $714.4m of net sales for the first nine months of fiscal 2000.

The company's net income for the first nine months of fiscal 2001 would have been $4.6m or $.39 per common share, excluding run-out costs associated with the company's strategic initiatives announced on September 20, 2000, compared to net income for the first nine months of fiscal 2000 of $1.8m or $.15 per common share. Including the run-out charges related to the strategic initiatives, the company reported net income for the first nine months of fiscal 2001 of $1.1m or $.09 per common share.

At June 30, 2001, the company was in compliance with all of its lenders' covenants.

Arthur C. Wiener, chairman and CEO, said: "It continues to be a most difficult environment for textiles. The relative strength of the dollar, along with a difficult domestic retail environment has continued to put price and volume pressure upon our products."

"Our denim division performed well in this environment. The closure of our Erwin facility last December caused a 21 per cent decline in denim sales in the June quarter. However, operating income excluding strategic initiatives improved 39 per cent. Galey & Lord Apparel, however, had a decline both in net sales (16.8 per cent) and operating income excluding strategic initiatives (62.6 per cent). The company expects further deterioration of both volume and margins for this unit in the current (September 2001) quarter."

"Both European divisions (Swift Europe and Klopman International) performed well. The company's Home Fashion Fabrics division performed poorly primarily because of lower priced greige fabric."

"As a result of the continued erosion of our Galey & Lord khaki business, the company expects to report a net loss in the current (September 2001) period."

"The company has taken and will continue to take the appropriate long-term actions to adjust to what it believes is a permanent change in the marketplace. Management continues to evaluate alternatives, including if necessary the potential rationalization and sale of assets, that it believes will position the company to be profitable in fiscal year 2002 and it expects to conclude such evaluation shortly."