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NEW YORK — Russell Corp. is evolving from a quiet giant into an industry powerhouse.

The Atlanta-based activewear company, which was in financial distress in 1998, has acquired a range of athletic and equipment firms, is racking up sales and profit gains and is positioning itself for double-digit growth.

“We believe all of our businesses now have great growth potential,” Russell’s chairman and chief executive officer, John F. “Jack” Ward, said in an interview. “The items that don’t, we have gotten out of, and we believe we are positioned now for much greater growth than we have had in the past.”

Russell had sales of $1.3 billion last year and expects volume to grow to $1.5 billion to $1.52 billion in 2005 because of increases in existing businesses, as well as from acquisitions, which have become key to its strategy.

In the last year, Russell made three purchases: Brooks Sports, Huffy Sports and equipment maker AAI, and in the last three years it also bought Moving Comfort, Spalding and Bike Athletic.

The company is stepping up its efforts for women with a broader range of gender-specific merchandise, colors and sizing, and is upgrading offerings of technical performance merchandise across its brand portfolio. In addition, Russell is combining back-office functions, improving its supply-chain operations and leveraging its brands to reduce costs.

Russell, founded in 1902 in Alexander City, Ala., is one of the country’s oldest activewear firms. For almost 100 years it was best known for its two big brands, Jerzees and Russell, and its cotton sweatshirts, T-shirts and athletic team uniforms, all of which were made domestically. While athletic firms such as Nike and Adidas became global marketing giants in the Eighties and Nineties, Russell took a quieter approach and was known for its basic athletic styles that may have lacked flair, but were staples in mass merchants and sporting goods chains and among high school and college teams.

The company fell on hard times in the Nineties as overseas apparel makers began to flood the market with items made for far less than Russell could produce them in its U.S. plants. The company’s president and ceo, John C. Adams, stepped down in 1998 amid steep earnings and sales declines. Ward took over that year after holding executive positions at Sara Lee Corp., as well as a stint at J.F. Ward Group, a consulting firm specializing in the apparel and textile industries.

This story first appeared in the May 26, 2005 issue of WWD. Subscribe Today.

In Ward’s first few years, Russell underwent major restructuring to reduce costs. It closed plants, cut hundreds of jobs and moved most production abroad, which marked the first cycle of Ward’s plan for Russell. He moved the headquarters to Atlanta and began to position the company as a sporting goods firm. To that end, Russell has broadened its brand portfolio through the acquisitions, the second phase of the strategy.

Now Russell is ratcheting up for the third phase: leveraging the brands to achieve growth.

“The company now is pulling all the pieces together,” said Nathan Lewis, an analyst with Jackson Securities in Atlanta. “We look favorably upon how they are expanding their business. Jack Ward has a fantastic management team, and he has done a great job executing his strategy. Each time you have a merger-and-acquisitions strategy, the question is whether the management team can execute on its given strategy. From what we have seen, they have done extremely well [in] executing.”

The company recently reorganized its operations under three broad categories:

  • The Sporting Goods segment includes Russell Athletic, Spalding, Brooks, Huffy, Moving Comfort and Bike, as well as niche brands such as Mossy Oak (camouflage hunting apparel), Dudley and Sherring.
  • The Activewear segment includes Jerzees and Cross Creek brands, selling basic products such as printed T-shirts primarily sold in mass merchants.
  • Russell also has an “Other” segment that includes a fabric division and yarn operations.

The brands reach a broad distribution that stretches from Wal-Mart and Target to sporting goods chains like The Sports Authority, as well as college bookstores, specialty running shops and hunting retailers. While other athletic companies are extending their reach — Danskin and Champion are now sold in mass stores such as Target, while Nike is selling in Wal-Mart via its new Starter business — few other companies can match Russell’s distribution reach.

Among Russell’s biggest growth targets is Spalding, which it plans to build into a $1 billion global sports megabrand, Ward said. Spalding is now a $400 million brand with distributors around the world. It is primarily a supplier of basketball equipment, but the company is planning to expand into new categories and will be making Spalding apparel in-house and pushing international sales.

Jerzees is Russell’s largest sports apparel brand. The profit and cash generated from Jerzees has allowed the company to invest in other firms, Ward said. The focus on Jerzees is to continue to build it as a low-cost provider of activewear, while adding performance elements such as moisture management and antimicrobial properties.

Reflecting the growth of technical fabrics and the fast rise of firms such as Under Armour, Russell has been building its performance products in all divisions, including Jerzees and the core Russell brand. The company introduced its proprietary “Dri-Power” technology a few years ago, and that has now become a key aspect of the signature line.

“For us to continue to grow and improve sales and profitability, we need to really move the Russell Athletic brand portfolio and product range into the higher-end performance category,” Calvin Johnston, who took over last month as ceo of the Russell Athletic division, said on a conference call with analysts last week. “We want to take our solid brand strength and move consumers up to the higher-end performance products, allowing for higher retail pries and improved profitability.”

Among its other brands, Moving Comfort, one of the first women’s-specific athletic brands, is being poised for a national rollout and is adding activewear categories to its mix.

Ellen Wessel, president of Moving Comfort, who co-founded the company 28 years ago, said the brand has doubled its distribution since being acquired in 2002 and has been growing in chains such as Dick’s Sporting Goods and Sports Authority.

“Our sports bra category has expanded dramatically now that we are under Russell,” Wessel said. “We have better investment in inventory and access to global sourcing that we hadn’t had before. We have been able to hire new designers. I also really like that we can share ideas with people from other divisions in the company.”

Brooks, meanwhile, is another brand with big potential. Brooks is known in the running arena for its high-tech sneakers, apparel and accessories. The company has an estimated $170 million in sales worldwide, and about 35 percent of that is under licenses. Jim Weber, the division’s ceo, said the plan is to double sales and profits over the next four to five years by growing in sport chains like Finish Line and Sports Chalet, since the core of its business is in running specialty shops, and also by expanding internationally.

As it moves into its next cycle of growth, Russell continues to seek ways to cut costs and streamline operations to improve profitability. For example, the company is negotiating all of its transportation agreements both internationally and domestically, on a corporate-wide basis, Ward said.

“We also have to maintain a low-cost supply chain,” he said. “Whether we do that ourselves or work with partners, our strategy is simple: We do whatever has the lowest cost.”

The company recently opened a plant in Honduras and has also established a sourcing office in China.

Russell has sought to expand its reach through new marketing partnerships and events. Last year, it signed a multiyear deal with the Women’s National Basketball Association, and it is also pumping up its in-store merchandising with new signage.

“We are not trying to compete in marketing with other companies who spend a lot in that area,” Ward added. “We try and target our marketing, and focus on building customer loyalty and stressing our heritage.”

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