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Mondavi Regains Profitability on 22% Increase in Revenue

The winemaker performed well despite competition from imports that forced it to sell at a discount.

October 25, 2002|Melinda Fulmer | Times Staff Writer

Winemaker Robert Mondavi Corp. posted a fiscal first-quarter profit Thursday after a loss in the year-ago quarter, when the Sept. 11 attacks depressed sales and the company took a charge for withdrawing from its winery exhibit at Disney's California Adventure.

The Oakville, Calif.-based company reported net income of $8.2 million, or 50 cents per share, for the period ended Sept. 30, compared to a loss of $2.5 million, or 15 cents, a year ago.

The loss included $3.8 million in charges to write down inventory and $11.2 million in restructuring when it turned over control of its winery attraction to Walt Disney Co.

Revenue grew 22% to $98.6 million from $80.9 million, reflecting a 25% increase in sales volume, albeit at slightly lower prices. Mondavi's margins were trimmed as more wine was diverted into the lower-priced jug wine market, and the company was forced to spend more to promote its luxury wine brands.

Mondavi stock rose 86 cents to close at $31.39 on Nasdaq.

Generally, analysts said Mondavi fared well, given the amount of lower-priced foreign wine flooding the U.S. market. To better compete, and stave off having to discount, the company will launch a new advertising campaign in coming weeks, a move analysts say could have been made sooner.

"I think they are moving in the right direction," said Leonard Teitelbaum, an analyst with Merrill Lynch Global Securities. Company executives are "putting more marketing muscle behind their brands."

Excluding one-time items, Mondavi reported net income of $9.5 million, or 58 cents a share, up from $8.2 million, or 50 cents, a year earlier. These results exceeded analysts expectations by about 10 cents

For the full year, Mondavi still expects to earn $2.55 to $2.60 per share, in line with analysts' forecasts.

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