MONTREAL — Gildan Activewear has struck a deal to purchase socks manufacturer Kentucky Derby Hosiery Co. for $45 million.
Privately held Kentucky Derby Hosiery, based in Hopkinsville, Ky., has annual sales of $130 million and is a supplier to major retailers, including Wal-Mart Stores Inc. Kentucky Derby will be the launch platform for T-shirt giant Gildan’s push to become a top player in the $1.5 billion North American sport socks business.
Kentucky Derby’s chief executive officer and majority owner, Bill Nichols Jr., will stay on after the deal becomes final on July 3.
Acquiring a major player in the sock-making business was a key part of Gildan’s strategy to more than double its sales to $1.5 billion by 2010, ceo Glenn Chamandy told WWD in March.
“We’re going after socks that don’t go out of style, and that’s what we’re building our business around — more of a staple-type product than something that is fashion-forward,” Chamandy said at the time. “The sock business is very fragmented in North America.”
Anticipating a move into the socks business, Gildan has almost finished what it said is the world’s largest socks plant at its Rio Nance facility in Honduras, which has an annual capacity of 20 million dozen units and could reach 27 million dozen by the second half of 2008. The company will move most of the production from Kentucky’s facility to Honduras.
The Kentucky plant is focused on private label, but Gildan said it plans to build its own brand name in socks.
Gildan also disclosed that its sewing plant in San Marcos, Nicaragua, was destroyed by fire, though fortunately no one was hurt. The company said annual production of 3.5 million dozen garments will be replaced by outside contractors and other Gildan sewing plants, including a second facility in Nicaragua.
The San Marcos facility will be back in full production by the first quarter of next year, and losses will be covered by insurance, Gildan said. The economic impact is expected to be minor, the company added.