Guilford Mills spiraling down: Guilford Home to be sold
February 25, 2002-- Home Textiles Today,
New York — In a move that effectively erases one more home textiles player from the picture but bolsters another, Guilford Mills announced last week an agreement in principle to sell its Guilford Home Fashions arm to Homestead Fabrics Ltd.
The Guilford Home Fashions name, trademarks, certain inventories and other assets are all part of the agreement, which is subject to definitive documentation and other conditions.
"We feel that Guilford Home is steeped in a lot of tradition and it's given a lot of great service and great product to its customers. It will be a great complement to what we're already doing," David Greenstein, one of the principals of Homestead, told HTT.
Homestead is a finished product importer that primarily services national chains and discounters with private label programs. It is owned by Broome & Wellington, a Manchester, England-based sourcer of products for the home textiles industry.
Guilford Home currently manufactures the Karen Neuburger Home and Jockey Home licensed lines of bedding, as well as others, any and all of which Homestead would be interested in adding to its product mix, Greenstein said. However, each licensor must agree to sign on with Homestead.
How Guilford's name would be marketed is also undetermined for the time being, Greenstein said, since "this whole process is very new to us."
"We tried very hard to sell Guilford Home Fashions as an ongoing business. But I'm sorry to say we were unsuccessful," said John Emrich, president and ceo of the Greensboro, NC-based Guilford Mills. "I know this will be very hard on our associates and their families."
While the Guilford Home Fashions name will continue to be seen on retailers' shelves, for all intents and purposes the company will cease to exist, as Homestead has said that its has no plans to continue any of the former's manufacturing or distribution operations here or in Herkimer, NY. Both locations together employ approximately 335 people. Guilford has already laid off more than 125 in preparation for the closure. However, Homestead plans on hiring an undisclosed number of people from Guilford Home, primarily marketing, logistics and IT personnel, Greenstein said.
Greenstein also said while the Guilford Home showroom at 261 5th Ave. will be closed, many elements will be incorporated into Homestead's showroom at 230 5th Ave., which will be expanded. He added that Homestead fully expects to have Guilford products ready for buyers in time for the market.
Ironically, Guilford Home just recently moved into new showroom space and was in the middle of an extensive remodeling in preparation for the April market.
According to a letter from Mason Carroll, vp of operations for Guilford Mills, to "Home Fashions Associates,"the sale of Guilford Home was the direct result "of the uncertainty of the Kmart business given their recent bankruptcy filing, the almost simultaneous announcement of Fingerhut's decision to close its business, and our failure to obtain an acceptable offer from a buyer or joint partner that would allow the continuation of the total business."
The letter further stated that most departments in Herkimer and in the New York showroom will be closed by April 30, although some positions may be extended slightly beyond that date to ensure continuation of service to customers. The letter went on to say that while offers had been received for Guilford Home to be bought as a business, there were none that included an acceptable offer which allowed for the continuation of the Herkimer operation.
The move by Guilford Mills, which also manufactures apparel and automotive fabrics, to sell its home textiles division comes in the face of ongoing financial concerns, chiefly the mill's ability to stay in business. Like many other U.S. mills, Guilford has struggled to weather increasingly hostile financial conditions and just recently indicated that Chapter 11 bankruptcy is likely. Guilford's net loss for 2001 widened to $160 million from a loss of $20 million in 2000. Sales also dropped sharply during the year, down 21 percent to $643 million.
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