The fighting four
December 2, 2002,
It's been another year of contraction for home textiles mills, with both Burlington Industries and Guilford Mills selling off their home textiles businesses under bankruptcy protection and Glenoit's divisions either pared down or sold off in bankruptcy.
Springs has had the best time of it, relatively speaking. The company walked into the year having just eclipsed WestPoint Stevens to become the country's largest supplier of home textiles. The question Springs faced was how aggressively it would pursue the sort of rapid growth that its fall 2001 privatization indicated it was prepared to go after.
Springs didn't wait long to make its move, kicking off the year by picking up the Beaulieu Rugs division of Beaulieu of America. The No. 3 area rug supplier brought another $125 million in annual sales to Springs' coffers. It was soon joined by the Burlington House window and bedding business, which added $190 million to the pot.
The upshot: Springs should close out this year as the industry's first $2 billion supplier. Its challenge now is to digest it all and leverage the full potential of so much breadth.
For the others, the year began with some promise as retailers moved to restock depleted inventories. But a variety of factors, including wobbly consumer confidence, the torpid economic recovery and the Kmart bankruptcy, combined to stall the momentum.
Among the three, Dan River had the best news to report — again, relatively speaking. Although sales in its home fashions division declined through the first nine months of the fiscal year, operating income jumped by 215 percent. It still must address two key questions: how far can it grow its core bed-in-a-bag business in a thorny competitive environment, and whether a mill business almost entirely dedicated to bedding can sustain itself against giant mill operators that are turning themselves into one-stop shops.
WestPoint Stevens, which along with Springs is one of the one-stoppers, continues to wrestle with the albatross of debt — some $1.4 billion long-term — which is literally sucking the life out of its enormous cash flow. In the plus column, WestPoint remains the domestic industry's low-cost producer, and the new management assembled over the past 24 months has proven itself innovative and energized. But it also contends with a dilemma that has dogged it for some time: wipe the slate under Chapter 11 or muddle through without it.
And then there's Pillowtex, the company with enduring brands and enduring woes. If any in the group is to be swept up by a competitor over the coming year, this is the one.
But looking on the bright side, a year in which only one major contraction takes place would be a good one.