Springs: The New Colossus
September 19, 2003,
It may be flying underneath the radar as a private company these days, a status it clearly enjoys. But after bulking up its business through a handful of strategic acquisitions and rapidly adding in excess of $200 million in sales following the collapse of rival Pillowtex in late summer, Springs Industries Inc. has emerged as the industry's new Gulliver, a figure towering above the rival mills and a handful of lesser players.
As if to prove the proverb about the tortoise and the hare, Springs may not have run the fastest race or displayed the flashiest style, but its steady-eddy performance and its deeply ingrained fiscal prudence have enabled the major mill to weather the storm during the bruising retail environment of the first half of the year — a climate that led to the bankruptcy of one major rival and the extinction of another.
And that could climb even higher if Springs eventually succeeds in buying — as it clearly wants to — the powerful portfolio of brands once controlled by former rival Pillowtex — a stable of nameplates that includes Cannon, Royal Velvet and Charisma.
Those names will soon be sold at a bankruptcy court auction, and should they find their way later this year onto labels attached to products made by Springs, it could add many millions more in sales as Springs decides how it wants to deploy those brands. Perhaps it will assign some to specific retail customers, as it has already by giving the Springmaid brand to Wal-Mart.
So, where will that leave Springs by the end of this year? Not just numero-uno, but No. 1 by a very wide margin. With Springs bulking up as projected, that could place it as much as $750 million ahead of second-place WestPoint Stevens, which could end the year with roughly $1.6 billion in sales after suffering reversals during the first half. It might also come in a huge $1.7 billion ahead of third-place Mohawk Home, likely to end the year with about $630 million in sales, flat with 2002, even with the acquisition of the bath rug division of Brumlow.
And it doesn't stop there. A lot of the former Pillowtex business won't necessarily show up this year for Springs or anyone else, since canny retailers anticipated the company's crisis and have enough inventory to get them through the balance of this year. Next year is when Springs could start getting even bigger.
But even with the Pillowtex business it's already snapped up — and Springs is clearly the biggest beneficiary so far — the major mill is also consolidating its position now as the No. 1 supplier in most of the categories it serves.
Springs was already the leader in sheets, with about $640 million last year, a number that can now only grow, especially as it continues to build its bed-in-a-bag business. Furthermore, Springs is the dominant player in comforters, and it's becoming a dominant force in bath.
Now, after picking up the JCPenney towel program, replacing Royal Velvet there, it could finish this year tied with, or even overtake, WestPoint Stevens as the nation's largest towel producer.
In addition to its big position in towels, it's already leading in shower curtains and bath accessories, and is No. 2 in bath rugs. Moreover, with the recent buyout of Charles D. Owen Mfg., it automatically takes over as the nation's second largest blanket producer. And now that Owen is introducing the first serious flocked blanket to challenge WestPoint's Vellux and its virtual monopoly, Springs can only build its blanket business further if it can successfully erode that core WestPoint franchise.
To put it into additional perspective, look at 'big' in just one more way: Last year, the nation's top 15 home fashions suppliers produced $7.9 billion in sales — companies as diversified as WestPoint, Pacific Coast, CHF and Maples. But Springs, all by itself, with its $2.05 billion in sales, accounted for 26 percent of that total.
By the end of this year, it's conceivable that Springs will account for at least 30 percent of all the business generated by the top 15 home fashions suppliers. And before long, more than a third, steadily building sales and gaining share as it towers above all of its rivals in a rapidly shifting environment for U.S. producers.
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