Wickes Chairman Sanford C. Sigoloff--under fire from Wall Street after his management group scuttled a buyout for the Santa Monica firm amid earnings troubles--on Monday blamed himself and other executives for the company’s sub-par performance.
But the 58-year-old executive, whose reputation was built on resuscitating seemingly down-and-out corporations, expressed confidence that Wickes would rebound and dismissed the notion that his own job might be in jeopardy.
“We have had crises which were 1,000 times more damaging” than the failed $574-million buyout, Sigoloff said. “We will continue to improve.”
When asked who was to blame for the failed buyout offer, Sigoloff said, “I blame everybody, including top management.” He added: “The people who run the operation are fiduciaries for the shareholders. The facts are . . . (our) businesses did not return to the (level of) profitability that everyone expected.”
Sigoloff said he was “not worried” about losing his job. “I do not see the (financial) situation as dire,” he said. “The board and I have a good relationship.”
Sigoloff vowed to submit a new, lower bid this week for the consumer and industrial products conglomerate that is best known to Southern Californians for its Builders Emporium stores. “Our goal is to review the figures and submit a proposal to the special committee” of company directors this week, Sigoloff said.
While some analysts continued to doubt that a new buyout offer would materialize, Wall Street appeared to expect something. In trading Monday on the New York Stock Exchange, Wickes shares closed at $7.875, up 50 cents a share. Wickes shares fell $3.25 on Friday when the management group led by Sigoloff and backed by New York investment house Drexel Burnham Lambert announced that it was withdrawing the $12-a-share offer for Wickes.
The management buyout offer for Wickes was announced two months ago but put on hold for 60 days so that others could make a higher offer. Although some 200 potential buyers communicated with Wickes about a possible purchase, none made a solid offer for the company.
The management group said the withdrawal of its bid was prompted by its own forecast that Wickes’ operating income for the fiscal year ended Jan. 28, 1989, could be $40 million less than the $256.9 million that was predicted when it made its buyout offer.
Industry analysts and officials of Wickes, a major supplier of upholstery to the automobile industry and a leading producer of wallpaper and decorative fabrics, had blamed the income drain mainly on the Collins & Aikman textile firm it brought last year for $1.16 billion.
Sigoloff said the poor performance of the Collins & Aikman unit was not totally unexpected.
“It was known that they had a difficult first half,” Sigoloff said. “We were not surprised that things slowed down.” But Sigoloff said the slowdown went “beyond our margin of safety” for completing the management buyout.
Until recently, sales at Wickes’ wall covering and decorative fabrics group, the bulk of which was acquired with last year’s purchase of Collins & Aikman, had been doing well. However, Sigoloff said demand has decreased throughout the industry in recent months. As the industry leader, he said, Wickes suffered the most.
Wickes sales related to automobile supplies--about $1 billion annually--also suffered, Sigoloff said. The Collins & Aikman automotive group, which has a major new automated plant in Albemarle, N.C., makes seat coverings, carpet, headliners and other products for automobile manufacturers.
Sigoloff and a carpet industry spokesman said Collins & Aikman’s problems were not traceable to the carpet facility in the unit’s headquarters town of Dalton, Ga.
“There’s no indication that they are doing poorly,” said Ronald E. VanGelderen, president of Carpet & Rug Institute, a trade group. “They appear to be doing as well as the industry average.”
“Carpeting is doing well,” Sigoloff agreed. By contrast, he said, there has been a sharp decline in demand for wall coverings produced by other Collins & Aikman facilities.
“When you add up all those things, there was a big falloff in meeting our business plan,” Sigoloff said.