Thomaston on the block

Don Hogsett, April 30, 2001

THOMASTON, GA — Dogged by mounting losses for almost five years, under pressure in a punishing retail environment, and unable to find a sustainable niche in a rapidly changing textiles environment, Thomaston Mills has thrown in the towel after 102 years of operation and put itself up for sale.

With losses now totaling more than $85 million over the past four years, Thomaston last recorded an annual profit in 1996, a barely break-even $615,000.

Now, only two months after the company's lenders forced the ouster of its top management team, all members of the founding and controlling Hightower family, the company has hired a private investment company, Equity Partners Inc. of Wye Mills, MD, to find a buyer for the company, or to sell it off in pieces.

In a frank, undated letter to prospective bidders, Equity Partners minced no words: "Our firm has been engaged to solicit offers for the assets of Thomaston Mills Inc."

The decision to hoist the white flag of surrender ends a valiant effort to save the troubled company begun 21 months ago with a wrenching restructuring that included the shutdown of the unprofitable denim and sales yarn business, a move that pared the company's sales from a high of almost $200 million in 1998, to $167 million last year. In an 11th-hour bid to ensure its survival, the company decided to focus on its core home fashions business, which last year generated $112 million in sales, and its smaller apparel fabrics business, which did $55 million. But when retail sales started to sour last June and the economy started to crumble, generating widespread layoffs and a suddenly anxious consumer, the small Southern mill was left foundering and on the ropes, struggling to find an identity.

Now Thomaston is up for sale, in whole or in pieces, said Equity Partners Inc., the company brought on board to find a buyer. "The complex asset base is available as an entirety or in segments. The two major business units, apparel and consumer products, may be purchased with or without `hard' assets."

Up for sale as part of the package are six Thomaston plants. On the a la carte menu sent out by Equity Partners:

  • "Peerless: a 540,000 sq. ft. greige mill for the conversion of raw cotton into woven cloth for sheeting. There is capacity for 380,000 card pounds or 1.05 million greige yards per week."

  • "Finishing: 651,000 sq. ft. plant for bleaching and dyeing of apparel and consumer products. There is capacity for 1.65 million consumer yards and 800,000 apparel yards per week."

  • "Sewing Plant: 195,000 sq. ft. operation."

  • "Lakeside: 433,000 sq. ft. sewing plant for fabricating cloth into consumer products (comforters and bedding accessories) with a capacity for 40,000 units per week."

  • "Thomaston: 831,000 sq. ft. plant formerly used as greige mill; conversion of raw cotton into spun yarn and woven cloth; weaving of industrial greige fabrics and indigo dyeing."

  • "Northside Plant: 70,000 sq. ft. Butler building currently not in use."

As a prelude to the solicitation, Equity Partners writes: "Thomaston Mills Inc. has been in business for over 100 years as a fully integrated textile mill. Present operations include an apparel finishing mill and facilities for production of bedding products for institutional (hospitality) and retail customers. It also operates a greige mill, converting cotton to cloth, primarily for bedding products. In June 1999, the Company exited the denim and industrial yarns business."

The decision to put the company on the block, while not necessarily a surprise, still came with unexpected swiftness. During last month's home textiles market in New York, newly named president Bill Ott seemed in control and at ease, and outlined to Home Textiles Today a strategy to focus on the company's historical core business with the discounters and "dollar stores." Indeed, by all accounts, Thomaston seemed to have a relatively strong market, as long-time customers rallied around the company to help to keep it going or responded to a strikingly innovative line from new designer Patricia Feiwel. Ott could not be reached as of press time.

Thomaston's big problem now may be finding a buyer for a money-losing company in an over-supplied and battered American textiles industry.

The Thomaston plants go on the block at a particularly disadvantageous moment, when other major mills are trying to shed capacity and moth-ball their own plants as they step up global sourcing.

Another challenge Thomaston faces is its lack of finishing capability. While it can bleach and dye solid-color sheets, it has no printing facilities of its own, and instead farms out that work.

As if all that weren't enough, even if a buyer can be found, the buyer may not be able to find the money to finance the deal at any cost. Venture capital money has dried up in general over the past 12 months as the American economy has soured. And it's especially hard to find investors willing to plunk down millions of dollars in a tumultuous U.S. textiles industry.

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