Waiting for the other shoe
June 9, 2003,
This could be the year when the landscape changes utterly.
Now it has come down to five major mills — Springs Industries, WestPoint Stevens, Pillowtex, Mohawk Home and Dan River. They are also, respectively, the country's five leading home textiles suppliers, with nearly $6 billion in sales between them.
The question is whether, by year-end, this group may constitute a party of three. WestPoint Stevens' bankruptcy filing last week and Springs' decision last month to withdraw its offer for Pillowtex could accelerate the process.
WestPoint's filing, ironically, has to be seen as largely positive — not only for WestPoint, but also for the suppliers that trade with it and the retailers that want to see a counter-balance to top supplier Springs Industries.
If through restructuring it can cast off the albatross of some $2.1 billion in debt, WestPoint can hit the accelerator on growth. Springs passed it by for the lead spot in the industry just two years ago. If WestPoint can get through bankruptcy cleanly and quickly, it stands a much better chance of narrowing the breach. WestPoint's overseas sourcing operations may not be as fully developed as Springs, and it has certainly not had the opportunity to gobble up acquisitions, but it remains the country's low-cost producer.
The ultimate fate of Pillowtex and its brands stands to greatly impact the future of its competitors, each of which now represents a potential acquirer of some part of the business. Pillowtex has been hemorrhaging red ink since it emerged from bankruptcy protection 13 months ago. If a white knight fails to arrive in the coming weeks, it is not likely to see out the summer.
Who will snatch which pieces? The Cannon brand would bulk up WestPoint's mass-market business. The Fieldcrest and Royal Velvet brands would provide Springs with department store ballast. And, any of them could provide the next step forward for Mohawk or Dan River — unless there is quite a different shoe waiting to drop. Although Mohawk has lately added blankets and bedspreads, it has yet to leap whole-heartedly into the bedding business. Meanwhile, Dan River's lack of overt succession planning and fairly low profile have it looking like a company that's waiting to be sold.
Party of three? Stay tuned.