P'tex pins turnaround on Perdue

Gary Evans, Don Hogsett, June 17, 2002

Kannapolis, NC — In a final act of healing at long-battered Pillowtex Corp. — recently emerged from Chapter 11 and eager to get back on its feet — David Perdue, the No. 3 man at world-class brand-maker Reebok International, has been named chairman and ceo, the first person to take the helm at the mill since the ouster of Chuck Hansen 18 months ago.

A turnaround specialist who helped restore the Reebok footwear brand to profitability and prominence, Perdue had been executive vp of the Reebok corporation and brings to the textiles producer broad experience in branding and sourcing — two skill sets crucial to the revitalization of Pillowtex and its portfolio of neglected and languishing brands.

At Reebok since 1998, Perdue, 52, had been executive vp of the corporation and president and ceo of the Reebok brand, with key responsibilities for branding and licensing. In addition to branding re-

sponsibilities at the global footwear producer, Perdue had earlier been involved in sourcing and global operations at Reebok and elsewhere. He had joined Reebok International as senior vp of global operations, and earlier was senior vp of global operations for apparel producer Haggar, and senior vpt of Asian operations for Sara Lee, based in Hong Kong.

Nor is Perdue entirely a stranger to the U.S. textiles industry. His early career was nurtured at industry incubator Kurt Salmon Associates, the Atlanta-based consulting mainstay of the textiles, retail and footwear industries, where he spent 12 years as a rainmaker, adviser and corporate partner. "So I've been doing this turn-around thing all of my life," he said.

While Perdue comes with the credentials to restore the fortunes of Pillowtex Corp. — an uneasy, and costly, amalgam of two vastly different marketing and manufacturing cultures, Fieldcrest Cannon and Pillowtex — the unresolved question concerns his mandate. Is he there, like many turnaround specialists, to dress up the company for sale or to restore it to its former glory as a cornerstone of the home fashions industry?

Following its bankruptcy restructuring and the cancellation of its original issue of common stock, Pillowtex's former creditors, mostly banks and bond holders, are now its majority owners. And many are likely to be eager to cash out and move onto investments more attractive than a textiles industry that's already scorched them.

So how does Perdue answer the question? Taken aback, but cordial and candid, Perdue told Home Textile Today, "You can't rule anything out. As I tell my wife all the time, 'You never say never.'"

However, he quickly added, "My focus is not to dress it up; I want to fix it. I want to strengthen the team and make it work."

So just how patient are the company's new owners — a loose consortium of hard-nosed investors who are, in effect, Perdue's new bosses through their seats on a new Pillowtex board? "I think their expectations are realistic. They know the situation in the industry, and I think they're very realistic in their timetable."

So far, the company's new owners are doing okay with their new issue of Pillowtex stock — it's one of the highest-priced in the home fashions sector. The stock traded last week at $8.30 a share, a far cry from its trading range of about $0.25 a share just a few weeks ago. But the stock has yet to find a home on one of the major exchanges and is currently traded on the over-the-counter bulletin board under the ticker symbol PWTXV.OB.

Perdue described his most urgent priorities as new ceo as knitting together the wildly divergent corporate cultures that make up Pillowtex, then refining and focusing the company's branding and marketing messages, all this while rebuilding sales, margins and earnings.

Perdue characterized the jerry-built company — built up through a string of acquisitions, some wise, others not, but all of them costly — as "an amalgam, if ever there was one, of differing cultures. The first thing is to pull these different cultures into a single, more focused organization and building sales."

Improving sales, to a large extent, will be a function of a more tightly focused and executed branding strategy. "We have to focus on who's buying the product and connect the brands to the consumer. There are segments of our consumer base, the segments of women customers, we need to understand better. We're going to get behind each of these brands and connect them to the consumer."

And where does he start? "Cannon is the one I'm initially paying attention to. We're going to put some heat and light behind the Cannon brand. It's a powerhouse franchise internationally, not just domestically. And it's the most neglected of the brands."

Perdue made it clear he's not alone in rebuilding the company and emphasized that Tony Williams, president and coo, will remain on the job as a steadying presence. After the banks and the board ousted Chuck Hansen as chairman and ceo, it was Williams, then cfo, who ran the company on a day-to-day basis, holding its fragile operations together.

"Tony is with us," said Perdue. "We're not anticipating any changes. He's to be commended for his work over the past 18 months keeping the company together."

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