And then there were two

Brent Felgner, May 31, 2004

Two of the four principal brands formerly made by defunct Pillowtex — Royal Velvet and Fieldcrest — will re-emerge at retail next year after separate agreements were announced within a day of each other — first by Target, then Kohl's.

The announcements last week involve the two competing retailers as well as two brand management companies licensing the names: Earthbound LLC for Fieldcrest and Charisma, and Group 3 Design, which is handling Royal Velvet and Cannon. No license announcements involving Charisma or Cannon have been forthcoming to date.

On May 25, Target announced that will be the exclusive retailer of the Fieldcrest line, initially in bed and bath, to be available in all 1,249 Target stores "in early 2005," according to the company. The initial line will include towels, bath rugs, shower curtains, bed sheets, duvets and quilts.

The following morning, Kohl's said it would introduce Royal Velvet to all its 589 stores and on, in spring 2005. It repeated the announcement during an investors conference later the same day, also announcing the addition of Chaps, the Ralph Lauren line, in its men's department early next year.

Royal Velvet is not exclusive to Kohl's. The retailer said it would extend the brand into other home areas over time.

"Kohl's is very excited to have a brand as important as Royal Velvet on our floor," said Jack Moore, executive vice president, home, in a telephone interview. He said details on how the brand will be merchandised and its impact on the existing floor space will be determined in the coming months.

"Once the current ownership group controlled the family of Fieldcrest brands, Mary Gleason of Group 3 (Design), called many retailers and asked our points of view on marketing the brands," Moore explained. "From that very first call we expressed interest. Once we knew Royal Velvet would be in the moderate zone, we reconfirmed our excitement at the possibility" of obtaining it.

Moore said he reached the terms of the agreement with Rick Darling, president of Li & Fung USA, which was licensed by Group 3 to source Royal Velvet bed and bath. It's the only Royal Velvet manufacturing licensee announced to date, although negotiations are said to be continuing in several other categories, including hard goods.

Senior executives at Group 3 and Li & Fung either had no comment on Kohl's announcement or did not return calls. Li & Fung is already a supplier to Kohl's, including in home.

Kohl's has struggled in the last year with lagging comp-store sales and increased competition from other mid-tier retailers, notably JCPenney and Target. During Wednesday's analysts' presentation, the company outlined a number of new initiatives to reverse that trend, including a bolder emphasis on brands. Earlier this year, the merchant launched Gloria Vanderbilt Home and Laura Ashley Lifestyles.

Royal Velvet "is a great addition to Kohl's already stellar line up in home and adds momentum to our ongoing effort to deliver well-known brands, value and convenience to Kohl's shoppers," Kevin Mansell, president, said.

Few additional details of the Fieldcrest and Target agreement were forthcoming

"Fieldcrest is the perfect complement to our 'wants and needs' strategy," said Gregg Steinhafel, president of Target Stores in a prepared statement.

Home executives from Target and Jeffery Cohen, co-chairman of Earthbound, could not be reached last week.Last week's news followed a nearly year-long effort initially aimed at preserving and then reviving the brands, which began almost immediately after Pillowtex filed for bankruptcy last July. The mill immediately announced it would liquidate following its Chapter 11 bankruptcy. Investment consortium GGST won Pillowtex's assets for $121 million in an active auction. The ownership group currently controlling the brands portion of those assets is now known as Official Pillowtex LLC.

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