Pillowtex closes its doors
July 30, 2003-- Home Textiles Today,
Kannapolis, NC — The nation's third-largest home fashions supplier has closed its doors for good, leaving thousands of textiles workers jobless.
Shortly after 1:30 p.m. today, Pillowtex issued a statement saying it will shutter 16 plants and lay off 6,450 workers because of "a severe liquidity crisis." The company said it does not have the cash available to continue operating the business. It will file for Chapter 11 bankruptcy protection — for the second time in three years — and will retain a staff of about 1,200 to assist with the bankruptcy process.
Pillowtex was done in by successive generations of management fumbles, a string of acquisitions that never made sense, a debt that siphoned off cash, and finally succumbing to a retail environment that had slashed its sales to tatters. After weeks of delays that kept the struggling company on the most tenuous form of life-support, anxious and impatient lenders finally pulled the plug, a move that will lead ultimately to a liquidation of the company's assets, most notably an arsenal of brands including the Cannon, Charisma, Royal Velvet and Fieldcrest nameplates, and the products piled high on pallets in its warehouses around the country.
In a move that alters forever the landscape of the American home textiles industry, the move effectively spells the death of what had once been, — until they were joined by acquisition in separate deals sparked more by financial ambition than any real strategic need — three of the strongest, most powerful and well known companies in the business: Cannon Mills, founded in 1887; Fieldcrest Mills, begun in the 1950s as the towel producing arm of Chicago retailer Marshall Field's; and Pillowtex, an aggressive pillow, pad and comforter producer that fatally over-reached when it bought out the combined Fieldcrest Cannon operation in 1997 in a costly deal that ultimately bankrupted the company.
Pillowtex broke the news to company managers at a 10:30 a.m. meeting at its Kannapolis, NC, headquarters, after earlier shutting down the company Web site and computer system. Later in the morning local news stations showed Pillowtex workers leaving the building carrying boxes of their possessions.
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