Davidson rethinks sourcing strategy

Marvin Lazaro, May 25, 2001

HUNTERSVILLE, NC — Slightly more than three years after entering the home textiles industry as a brand new company which focused its energies on sourcing products internationally and domestically, Davidson Cotton Company will scale back a majority of its sourcing operations and gradually pull out of the sourcing business altogether.

The decision to withdraw from the sourcing aspect was made by Davidson's main financial backers, Crown Capital, Jim Fitzgibbons, chairman, told Home Textiles Today. Factors playing roles in the choice were the amount of expense generated by keeping inventories, generating new business and the bleak retail picture that has only increased in scope over the last several years. Instead, Crown chose to allocate its funds toward Davidson's new towel factory in Mexico, which is tentatively scheduled to begin operations early next year.

"We'll gradually withdraw from the sourcing part because it doesn't fit into the Mexican plan," Fitzgibbons said. "We're not quitting the business. We're just shutting our sourcing down."

"It's no big deal," he also said, adding that the move did not come as a surprise and that nothing had come easy for the privately-held Davidson since it began doing business.

"We've been gradually pulling our horns in for a while and have been doing less pick and pack for months."

Although Crown will invest its money in a towel mill, Fitzgibbons said, both the towel and bedding business will be substantially downsized.

Davidson sourced many of its products domestically or from Pakistan, India, China, Japan and Turkey, among others.

The company's embellished towel resource arm, Abouchar, will be unaffected.

Hardest hit by the decision to withdraw from the worldwide sourcing market will be Davidson's base of 50 employees. Approximately 25 will lose their jobs as the company's Charlotte, NC warehouse is substantially downsized. The status of Jim Munro, senior vp, has also come into question since he was heavily involved in Davidson's sourcing activity.

Fitzgibbons and Bob Dellinger, who resigned from his post as president of the company earlier this year, founded Davidson Cotton in 1998. The two men, who were Fieldcrest Cannon executives, were subsequently joined by industry veterans Munro, Fulton Allen, Steve Puckett, Bill Heitman and John Coles.

Despite the pullback, Davidson will continue to source products for Spanish bedding supplier Atrivm, which it has been doing since August, 1998 when Davidson inked Atrivm to an exclusive sales, marketing and distribution arrangement. In addition, Davidson will continue to source the Joseph Abboud line under the conditions of that license, which it obtained in November 1998.

Atrivm is a major European supplier of percale, flannel, jersey knit and sateen sheeting and decorative bedding.

"Atrivm will continue to be a force in the U.S. bedding business," Fitzgibbons said about the license.

At various times, Davidson's designer stable included beach towels by Alexander Julian, as well as bedding by Eileen West, Kathy Maney and Lanz of Salzburg.

According to Fitzgibbons, since virtually all of Davidson's customers will be affected by the new strategy, the company is currently "working out arrangements that won't hurt them." However, there is no set timetable for the withdrawal to be complete.

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