Supplier Giants 2004: Top 15 Gains Slowly

Don Hogsett, January 10, 2005

New York — Helped once again by solid gains at the nation’s mid-tier home fashions suppliers — while the industry’s biggest players were stuck in neutral — composite sales of the nation’s 15 largest home fashions suppliers edged up a skimpy 1.8 percent last year, to $7.6 billion from $7.5 billion the year before.

And that wasn’t even as good as the 2.8 percent increase put up the year before, during 2003.

The numbers would have been higher — perhaps even much higher — but for the hammeringvendors are taking at the hands of their customers. A case in point: Springs Industries Inc., by far the nation’s largest supplier, where sales inched up just 1 percent, to $2.4 billion. Said a rueful Tom O’Connor, “Flat isn’t bad when you have to live with the staggering price deflation out there. Price is killing everybody in this business.”

O’Connor added, “It’s been a really tough year. This is a real tough business. Business just isn’t good, and the pricing pressure is unbelievable.”

And O’Connor wasn’t the only one feeling the pain. Virtually every supplier

contacted during this year’s canvass pointed to unrelenting pressure from customers — to the point where many are walking away from programs that will cost them money, opting for profits over volume. Loren Sweet, CEO of Brentwood Originals, said he’s deliberately backing away from a ferociously difficult throw business. “Throws we shrunk by design,” said Sweet. “A significant problem is price deflation. We could have maintained the volume, but we’d have had to buy the business, and that means losing money. I’d rather have the money than the sales.”

Prices alone aren’t to blame — import pressures play their part — but whatever the cause of the downward pressure, composite sales of the Top 15 players are now down 9.2 percent from their high-water mark of $8.4 billion reached in 2000 — a sales shortfall in excess of $776 million. And that’s factoring out the lost sales and the incalculable damage done to the industry by the demise of Pillowtex.

But making the hopeful point that there is a bright future for the fleet and the nimble is a company like Sleep Innovations, a producer of comfort sleep products, which joins the ranking this year after growing its sales in 2003 by a phenomenal 76 percent increase to $229 million. Founded in 1997, the company has gone from zero to more than $200 million in less than seven years, and plans to break $300 million this year, said CEO Michael Fuchs. “We almost doubled our sales last year, and we did that the year before, too. It may not last forever, but right now we’re a hot company in a hot category.”

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