By  on February 25, 2002

NEW YORK -- Industry reaction has been positive to chemical giant DuPont's plan to spin off all of its fiber businesses, as well as its stable of Lycra branded apparel operations, into one $6.5 billion unit called DuPont Textiles & Interiors.

Observers said they believe the bold move could ultimately be a boon for a beleaguered textile industry and for DuPont's international presence. It could also bolster intimate apparel sales on a global scale through a faster, cost-efficient network of production at DuPont plants, comanufacturing and contracting in Asia, as well as speedier distribution down the supply chain to mills, manufacturers and retailers.

Since announcing its dramatic strategy Feb. 11, DuPont has begun receiving accolades from the financial community, including an upgrade from "market perform" to "strong buy" from Deutsche Banc Alex. Brown, with a 12-month target price of $57 a share.

DuPont shares rose $1.84 to $44.56 when news of the divestiture of the newly christened DuPont Textiles & Interiors sent shock waves through the intimate apparel, textile and retail industries. DuPont closed at $47.30, up 64 cents, on the New York Stock Exchange Friday. The restructuring is expected to be completed by yearend 2003. DuPont's market capitalization is $45.68 billion.

Industry observers also believe the reorganization could finally make chairman and chief executive officer Charles O. Holliday Jr.'s oft-stated goal of 10 percent annual growth in earnings per share an attainable feat.

Although market receptivity tends to be time sensitive to initial public offerings, the prospect of an IPO for the new fibers-related operation was met with optimism. Formerly operating as DuPont Apparel & Textile Sciences, a more efficient organization is being structured that will most likely include low-cost production and employee layoffs. A timetable to come up with a plan to cut operating costs is expected in the next six weeks or so.

Led by Richard Goodmanson, DuPont's executive vice president and chief operating officer, DTI's management team includes Steven R. McCracken, the group vice president who served as president of Dupont's ATS. McCracken is a top executive who has a track record of turning around lackluster businesses. In the mid-Nineties, McCracken tripled sales of the Corian countertop business by giving a basic home product a lifestyle image, and in 2000, DuPont turned to McCracken to devise a strategy to beef up its signature Lycra business, which had begun suffering amid intense competition.

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