Genesco, Inc., president John L. Hanigan today announced he will recommend that the apparel conglomerate dispose of all of its operations manufacturing women's and children's clothing because they are "bleeding" the company of profits.
Hanigan told shareholders in a letter he will recommend the action to the board of directors at a meeting Aug. 31.
The Ganesco executive said the corporation should liquidate or sell 16 companies because the firm has had "little success in this area as a whole," even though the companies grossed more than $200 million in the fiscal year ended July 31.
Ganesco lost $15.9 million in fiscal 1976 on sales of $1.1 billion. Losses for the nine months ended last April 30 amounted to $12.3 million.
Hanigan said the corporation's bankers gave the firm a vote of confidence by guaranteeing $130 million in the form of a revolving credit agreement for one year. The new credit line, involving more than a dozen banks, replaces a $240 million credit agreement. Hanigan said that "nowhere near" the $240 million was ever used.
If it is not posssible to sell the women and children's clothing operations at "a reasonable price immediately, we should shut down the ones losing money and continue the profitable operaations until such time as they can be sold." Hanigan wrote, "It is not possible at this time to determine exactly what additional adjustments to our net worth would be necessary in discontinuing these operations."
He said he also planned to recommend to company directors that some $35 million in future tax benefits be removed from company balance sheets "because it is not now certain that all of these will be utilized in the future before they expire."
These benefits would still be available to Genesco struck form the sheets, he said. The company's cash position would remain the same.
Hanigan, former chief executive officer of Brunswick corp., year took over Genesco's top position earlier this year replacing interim chief executive officer William M. Blackie. Blackie was named by the board of directors to replace Franklin M. Jarman, who was outsted by the board at the beginning of this year.