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NEW YORK — For Wilbur L. Ross and Joseph L. Gorga, turning Burlington Industries around is as easy as one, two, three.
The two executives laid out a three-point plan Wednesday during a press conference following the news that creditors had given W.L. Ross & Co. the green light to buy the textile firm when it emerges from Chapter 11 reorganization, currently slated for Nov. 10. The deal is valued at about $614 million.
Ross will assume the title of chairman, while Gorga will be named president and chief executive officer. The rest of the senior management team at Burlington is “leaving to pursue other opportunities.”
“We have a threefold process for Burlington,” said Gorga, via telephone from the firm’s headquarters in Greensboro, N.C. “We have to have an obsession for cost reduction and align our prices with the global marketplace. We need to bring new technology to the industry and we need to enforce the existing strength of the Burlington brand name.”
Gorga, who is the only senior executive remaining with the company, joined Burlington last year as executive vice president of North American operations. Prior to that, he was general manager for the automotive and elastic fibers business at Milliken & Co. and was ceo of CMI Industries. Gorga held the post of vice chairman of the American Textile Manufacturing Institute and is currently a director of the National Textile Association.
The departing Burlington management team includes chairman and ceo George W. Henderson; senior vice president, corporate development and law, John D. Englar; senior vice president and chief financial officer Charles E. Peters; senior vice president, global operations support; chief information officer Judith J. Altman; vice president and general counsel Robert A. Wicker, and James M. Guin, vice president, human resources and corporate communications.
Ross said the senior-level staff had planned to leave the company once it exited bankruptcy and commended the team for its performance.
“This is not a criticism of prior management,” he said. “The outgoing management did a heroic job keeping the company together under the difficult circumstances both before and after bankruptcy. It is one of the few companies in bankruptcy that I’ve seen actually pay down its debtor-in-financing.”
Ross said Burlington is reducing the various layers of management as a cost-cutting effort. Now that the company will be privately held by W.L. Ross & Co. — it was publicly traded before it filed for Chapter 11 — it’s possible to reduce the number of senior-level personnel.
Further, Ross will sell the Lee’s Carpet division to Mohawk Industries Inc., as reported, which also reduces the number of senior managers needed. Since it is considerably smaller staffed than it has been in the past, Burlington will likely move its offices to a new, smaller location somewhere in Greensboro.
Last month, Ross also agreed to buy the assets of Cone Mills Corp. in a $90 million deal that was contingent on that mill’s Chapter 11 filing. Cone’s board, in a Securities and Exchange Commission filing on Wednesday, said it was moving forward with the process of a sale to W.L. Ross & Co., though the deal is subject to higher or better offers.
Under the agreement, W.L. Ross & Co. would purchase Cone’s assets for $46 million in cash and the assumption of the company’s outstanding debtor-in-possession loans and other liabilities in a deal worth more than $90 million. The filing listed a closing date no later than Dec. 31.
John Bakane, ceo of Cone, said, “For many years, we have followed a strategy aimed at recapitalizing the company and establishing access to lower-cost denim manufacturing capacity. The W.L. Ross & Co. proposal is consistent with that strategy.”
During Wednesday’s press conference, Ross spoke about the possibility of merging Burlington and Cone Mills Corp. — something he has said in the past he plans to do — and listed similarities between the two firms, such as denim fabric production and Mexican manufacturing capability. Burlington has a joint venture in India, while Cone has its own in Turkey, so the two firms have their respective resources to share, should they join forces.
To this point, Ross has contended that by consolidating companies, improving efficiencies and cutting costs, U.S. textile firms can remain competitive in a market that has grown increasingly weak due to imports and offshore sourcing. Ross has said he would consider acquiring other American textile companies, though when asked about an interest in Guilford Mills, he said he wouldn’t comment on potential deals due to company policy.
Guilford Mills exited bankruptcy about a year ago and hired investment bank Goldman Sachs on Monday, as reported, to take a closer look at its infrastructure and explore possible strategic alternatives.
As an example of how it plans to beef up its name recognition, Burlington, which is renegotiating its long-standing hosiery and sock license with Kayser Roth Corp., is exploring the concept of launching a younger-spirited men’s and women’s hosiery line called B. Certain products could be found in Sam’s Club stores in the next few weeks, though the project is still in its infancy, according to Jed Holland, vice president and general manager of Kayser Roth. But a new line with a hip edge could allow Burlington to extend into other product categories, Holland added.
Regardless of a new line, Kayser Roth will likely continue producing socks and hosiery for men and women under the Burlington label, as it has for more than 10 years.
In other licensing news related to Burlington, its Nano-Tex affiliate said Wednesday that its relationships with branded apparel manufacturers that use the technology in their garments is growing. Nano-Tex, which specializes in stain resistance, repellency and wicking features based on nanotechnology, is majority owned by Burlington.
Apparel brands licensing Nano-Tex technology now include Eddie Bauer, Gap, Nordstrom, Nike, Levi Strauss & Co., Lands’ End and Perry Ellis.