Slimmed down Glenoit ready for life after Ch. 11
October 7, 2002,
New York — As it prepares to turn the page on Chapter 11 later this week — just in time to face retailers at market without having to adopt a defensive "no, honest, we're going to be okay" posture — Glenoit Corp. is about a third smaller than it was a year ago. It is also free of a crushing debt load that drove it into bankruptcy as well as unfettered by its money-losing apparel fabrics business and is ready to slake an appetite for growth it's had to curb for 27 distracting months of coping with creditors, the courts and skeptical retailers.
And letting the marketplace know that Glenoit is back, and in the game for good, new ceo Barry Leonard is betting that his slimmed down, more highly motivated company can double in size over the next five years — and do it without making a costly acquisition. "That's something we can do internally. I don't think there are any acquisitions in our future. I think we've learned our lesson there."
After a painful downsizing — to about $150 million in sales this year from about $250 million in its home business in 2001 — Glenoit is managing its resources carefully, hacking away at overhead and finally combining its disparate operations and staff.
Diversifying into the higher-margin home fashions business to ballast its listing apparel fabrics operation, Glenoit, under a previous management, acquired Ex-Cell Home Fashions and American Pacific, grafting their operations and overhead onto its existing framework — but without taking time out to combine duplicate functions, consolidate plants, and eliminate unnecessary jobs. "When all these companies were acquired, it was a rollup that never got rolled up," said Leonard.
But now, Leonard told HTT, the company has sold off its American Pacific business to its original owners, the Block family, and has streamlined operations into two North Carolina manufacturing plants, a New York headquarters and a Chinese manufacturing operation, generating enormous savings. "We have saved millions and millions of dollars," said Leonard. "And there's still more to be saved."
Striking a balance between U.S. manufacturing and off-shore sourcing through a Chinese bath manufacturing plant that now employs about 700 workers, Leonard said Glenoit is uniquely positioned to produce goods, build inventories and ship to customers without skipping a beat. "We're in a very good inventory position now, and we're picking up some customers because of it. "
With a West Coast dock slowdown threatening the flow of goods, and with an unstable political situation causing some retail jitters, "Some of our customers are finding out that direct sourcing is not the panacea they thought it would be. And with our bricks and mortar here and in China, our operations are very well balanced, and we're in a strong position to ship."
Giving Glenoit a further lift, said Kennedy, "now that we're coming out of bankruptcy, a lot of retailers who couldn't buy from us while we were in Chapter 11 are talking to us now. So there are a lot of good things in the works."
One of the most promising developments, said Leonard and Kennedy, is a new impetus in the fashion bath business.
While trading up its product line, Glenoit and Ex-Cell will also be targeting new channels of distribution. "We've always been strong in the mass area, and now we're putting more emphasis on the other channels and rounding out our base," said Leonard.
In the Glenoit Consumer Products business — covering decorative pillows and rugs — which Kennedy runs, "We're going to try to get into the home centers and evolve into other areas. We think there's a lot of growth potential there."
And the big boxes, department stores and specialty retailers will be another major point of emphasis, said Leonard.
Leonard has been on the job at Glenoit for only the past six months, but Kennedy has been there for years, guiding the company safely through Chapter 11 and helping the company to cope with the sudden death last year of its former ceo Tom O' Gorman — all the while juggling joint commitments of selling products, managing staff and dealing with bankers and creditors.
What did he hate most?
"Playing defensive," said Kennedy, without a second's thought. "You're constantly on your heels. You're always treading water, trying not to drown. It's not a lot of fun. And at the same time you're dealing with this, you're trying to convince your team and your customers that everything is okay. It's going to feel really good to go into market and have a meeting without having to hash over old news and deliver an update on where you are. Now we can talk about going forward. That's going to feel real good."