January 14, 2002-- Home Textiles Today,
Now that the Year of Upheaval is behind us, we embark on the Year of Transformation. Here's a short list of some of the most interesting developments to watch this year.
Pillowtex reborn: By its own projections, Pillowtex — which expects to emerge from Chapter 11 bankruptcy protection by spring — will drop out of the billion-dollar club this year, churning net sales of about $970 million, or roughly $63 million less than in 2001. However, it expects to break back through the $1 billion sales mark next year through a combination of strengthening the position of its powerhouse brands, expanding international production arrangements, and moving toward sales in overseas markets. The question is whether its banks, which after emergence will hold a stake in the business, will give it the time to execute the plan.
Springs sprung: Now the nation's top home textiles company — having eclipsed venerable WestPoint Stevens last year by just $82 million in sales — Springs will be under pressure this year to make the sort of headway that its fall privatization indicated it was prepared to pursue. There are four key areas to watch: the AFI basic bedding business; the scope of its towel business under partnership with Brazilian manufacturer Coteminas; acquisitions; and the little heralded Custom Designs division, which is responsible for client-specific outsourcing projects.
WestPoint Stevens re-energized: Over the past 12 months, this manufacturing behemoth has brought in new top management, restructured its organization and reworked the way it presents to the market. Despite its size, it is still the low-cost producer among U.S. mills, and it has handed retailers a truly refreshing program in the new Designers Guild line — if they're smart enough to treat it properly. WPS is positioning itself as the ultimate one-stop shop for major retailers. But then again, so is rival Springs. Let the games begin.
LNT's position: Chief competitor Bed Bath & Beyond has pulled away both in terms of sales and store count, leaving the impression that Linens 'N Things is already doomed to play second fiddle in the home furnishings superstore field. 'Taint necessarily so. Target has long lagged both Wal-Mart and Kmart in terms of store base and overall sales, and was a relative Johnny-come-lately to the east and west coasts. What it brings to the party is distinctiveness. Can LNT carve out a similar niche?
The Questrom quotient: When Allen Questrom took over the reigns at JCPenney in late/mid 2000, he candidly acknowledged the process of overhauling the company would take at least five years before it began to bear fruit. Although we're not quite there yet, if the new direction is to produce the hoped-for results, we should see the early signs of momentum by mid-year.
One could easily add to that list, of course. Will Kmart bite the bullet and shear away more underperforming stores — and how badly will Wall Street treat it in the process? What is to become of Ames? Will vendors learn to just say no to the devolutionary practice of reverse auctions? And will the war on terrorism disrupt international supply lines.
No doubt about it, 2002 is going to keep everybody on their toes.
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