WestPoint Stevens, Inc.
WestPoint Stevens, Inc.
headquarters: 507 west 10th street, po box 71
west point, ga 31833 phone: (706)645-4000 fax: (706)645-4772 url: http://www.westpointstevens.com
WestPoint Stevens, Inc. is a manufacturer, marketer and distributor of bed and bath home fashions products. The company's trademark brands include Atelier Martex, Chatham, Grand Patrician, Martex, Patrician, Utica, Stevens, Lady Pepperell, Luxor and Velux. The company also has licensing agreements with Ralph Lauren Home, Dr. Scholl's, Designers Guild, Beautyrest, Joe boxer, Glynda Turley, Sanderson, Disney Home and Martha Stewart. In 2001, the company held the largest market share in domestic blankets, and had one of the largest market shares in domestic sheets and pillowcases and domestic bath towels. WestPoint Stevens has 34 manufacturing facilities, 16 distribution centers, and 52 outlets.
Westpoint Stevens' revenues for 2001 were $1.7 billion, down from $1.8 billion in 2000 and $1.88 billion in 1999. The company's sales were negatively affected by an unfavorable economy in nearly every segment but its basic bedding division. Gross profits fell from $550 million in 1999 to $469 million in 2000.
As sales began to slip, so did the company's earnings per share, which were $.84 in 1999, –$1.28 in 2000, and –$0.55 in 2001. Stocks hit a 52-week low in 2001 at $0.96 per share from a high price for the year at $10.15. At year end, the price was $2.45 per share, and by the end of the first quarter of 2002, it was $1.95 per share. The stock's 2001 high price was $19.63 and the low was $5.94, ending the year at $7.49. In 1999, the price per share had reached a high of $37.56.
In March 2002, a lawsuit was filed against WestPoint Stevens alleging that some of its directors and officers had breached their duties, had acted in bad faith, and had wasted corporate assets. The Complaint against the company named CEO Holcombe Green and was similar to a class action suit filed in October 2001, which alleged that during 1999 and 2000l, the directors and officers issued misleading statements regarding inventories and capacity in the towel products division. The March 2002 lawsuit alleged that company press releases were misleading because the company did not state it knew sales "would be adversely affected in future years and quarters."
The suit followed some tough financial news: in January 2002, one of WestPoint Steven's largest customers, Kmart Corporation, filed for bankruptcy protection. More than half of the company's sales in 2001 were to large retailers such as Kmart, J.C. Penney Company, Inc., Sears Roebuck & Company, Wal-Mart and Target, but WestPoint Stevens stated the bankruptcy would not likely have a long-term negative effect on the company. According to WestPoint Stevens' annual report, no single brand license comprises more than 12 percent of the company's sales. In 2000, Kmart and Target each accounted for approximately 14 percent of the company's sales.
Operating margins remained stable through the difficult financial times at WestPoint Stevens. Margins were in the 17 to 20 percent range through 2001, although they had slipped briefly to 15.7 percent late in 2000.
In the late 1990s and early 2000s, textile companies had a difficult time increasing sales and profits, and WestPoint Stevens was no exception. The weak economy had caused sales to drop 2.8 percent in 2001, and 3.6 percent in 2000. Standard & Poor's lowered the company's ratings twice between October 2000 and October 2001 due to "poor operating results and financial measures that were significantly below Standard & Poor's expectations. A sluggish and highly promotional retail environment, manufacturing downtime to reduce inventories, and high debt levels all contributed to weak operating results and the related negative impact on profitability and cash flow measures."
Standard & Poor's stated that despite the company's decreased rating, it was generally an extremely efficient manufacturer and had become a full- service supplier for its largest customers, global mass merchandisers, who increasingly favored full-service vendors.
Further, S&P looked favorably on the company's Eight Point Program for restructuring, as well as its steep ($700 million in six years), investments in modernizing its production facilities.
Stevens, the first textile company which would later become part of WestPoint Stevens, was opened in Massachusetts in 1813. Lady Pepperell Manufacturing Company, Inc. followed in 1815, opening in Biddeford, Maine. The Chattahoochee Manufacturing Company, which soon became the West Point Manufacturing Company, was established in Georgia in 1873.
West Point was founded at a time when textile milling in the post-war South was ready for takeoff. Lafayette Lanier is credited with much of the company's early success. Lanier quickly replaced old equipment with new machines to increase productivity in producing a canvas-type material called "flat duck." Before mill construction was widespread, he pursued large commercial accounts through a large Boston sales agent.
When "mill fever" became contagious throughout the South, West Point was already well established and ready to expand. In 1880, only 20 percent of all textile mills were located in the South. By 1920, the percentage had leapt to 60 percent. During that time, West Point had built three new mills just across the Chattahoochee River in Alabama.
FAST FACTS: About WestPoint Stevens, Inc.
Ownership: WestPoint Stevens is a publicly owned company traded on the New York Stock Exchange.
Ticker Symbol: WXS
Officers: Holcombe T. Green, Jr., Chmn. of the Board and CEO, 62, $899,444; M.L. "Chip" Fontenot, Pres. and COO, 58, $443,365; Joan E. Amberg, SVP, 40, $285,000; Lester D. Sears, SVP, 53, $226,666; Lanny L. Bledsoe, SVP, 65, $265,000; Michael J. Velsmid, Jr., SVP, 58, $300,000
Chief Competitors: WestPoint Stevens' main competitors include Pillowtex, Dan River, and Springs Industries.
Throughout the early twentieth century, the mill prospered under the leadership of Lafayette Lanier's son. George H. Lanier initiated a massive expansion in the 1930s, while the country was in the throes of an economic recession. In 1933, West Point acquired the Dixie Cotton Mill.
In 1965, West Point merged with Pepperell, Inc. and in 1988, it acquired Stevens. Soon after, the company defaulted on several financial obligations and filed for Chapter 11 bankruptcy in June 1992. By September of that year, the company had restructured and emerged from bankruptcy protection. In December 1993, West Point-Pepperell had merged into WestPoint Stevens.
In June, 2001, three banks—the Bank of Nova Scotia, First Union National Bank, and Bank One—seized 9.3 million shares of WestPoint Stevens stock. The shares had been offered as collateral in 1997 for a $130 million loan by a group of banks. The loan was to pay off debt held by the company's investors.
In 1999, WestPoint Stevens examined strategies and financial efficiency. In 2000, the company announced it would acquire the company in a leveraged buyout at $21 per share, which would value the company at $1.15 billion. However, by May, the company's board terminated the plan, which would have paid $22 per share to stockholders. Following the board's announcement, shares plummeted. The board also announced at the same time that it would discontinue examination of a merger or sale and approved a regular dividend of $0.02 as well as a special dividend of $2.00 per share, which was paid in June 2000.
In June, 2000, the company also unveiled its Eight Point Program to restructure WestPoint Stevens. The plan included a $195 million pretax restructuring impairment charge to cover the cost of implementing the plan. The plan addresses expansion of brands; exploration of the new licensing opportunities; rationalization of manufacturing operations; reduction in overhead expense; increase in global sourcing; improvement of inventory utilization; enhancement of supply chain and logistics functions; and improvement in capital structure. Four plant closings to be completed under the plan were announced.
WestPoint Stevens would also examine, under the plan, expanding its global market. In 2001, sales to retail establishments within the U.S. made up some 85 percent of its total sales. International sales accounted for only 5 percent of the company's total sales.
The home fashions industry is becoming increasingly competitive. According to WestPoint Stevens' annual report, the company believes it will face greater competition from foreign markets. In order to remain competitive, WestPoint Stevens stated that the company would likely increase its foreign sourcing.
WestPoint Stevens holds the country's largest market share of bed and bath fashions. Their product line includes sheets, comforters, bed accessories, towels, shower curtains, draperies and decorative pillows.
CHRONOLOGY: Key Dates for WestPoint Stevens, Inc.
Stevens Textile Company opens in Massachusetts
Lady Pepperell Manufacturing Company, Inc. opens in Biddeford, Maine
Chattahoochee Manufacturing Company opens in Georgia
Chattahoochee becomes West Point Manufacturing Company at beginning of big textile manufacturing boom in the South
West Point Manufacturing Company acquires the Dixie Cotton Mill
West Point merges with Pepperell, Inc.
West Point acquires Stevens
West Point files for Chapter 11 bankruptcy, restructures, and emerges from bankruptcy protection
West Point-Pepperell merges into WestPoint Stevens, Inc.
WestPoint Stevens announces its Eight Point Program, a $195 million restructuring plan
Three banks seize 9.3 million shares of WestPoint Stevens stock that had been used as collateral in 1997 for a $130 million loan to pay off debt of company investors
The company's brands include its best-selling brand Martex, Grand Patrician, Patrician, Stevens, Lady Pepperell, Utica and Veliux. WestPoint Stevens also holds licenses on Ralph Lauren Home, Disney Home, Joe Boxer, Sanderson, Designer's Guild, Simmons Beau-tyrest, Dr. Scholl's, Glynda Turley, and Martha Stewart Bed and Bath.
Its products are largely marketed through partnerships with major global retailers such as Target and Kmart. The company also sells its products in specialty stores, catalogs, warehouse clubs, television shopping networks and supermarkets. The remainder is sold to large commercial customers such as healthcare clients and hospitality chains.
The charitable arm of WestPoint Stevens is the WestPoint Stevens Foundation. Through the foundation, employees may contribute money and volunteer time. The foundation's primary benefactors are the United Fund, United Way, and the American Red Cross. The foundation donates blankets, towels and bed linens to the Red Cross during disasters. It also helps to sponsor arts programs and scholarships. Associates are encouraged to volunteer in literacy programs, as well as hospice or emergency aid programs.
While only 5 percent of WestPoint Stevens' sales were generated outside the United States, the company began examining, as part of its plan, expansion in Europe, Australia, Canada, Mexico, the United Kingdom, the Middle East and the Far East.
WestPoint Stevens has had a long history of global sourcing, purchasing specialty yarns and fabrics from around the globe. In 2001, it imported materials and finished products from 20 countries, compared to 14 in 2000.
The company established strict policies on global sourcing. It doesn't purchase any merchandise produced in whole or in part by "indentured, prison or illegal immigrant or child labor." WestPoint Stevens requires proof from its vendors that they do not violate human rights or engage in labor practices prohibited in the policy.
"Corporate responsibility starts with being a good employer," states the WestPoint Stevens Web site. The company describes itself as diverse and strongly committed to embracing workplace diversity and to empowering its associates to achieve on their own merit.
AT HOME AWAY FROM HOME
WestPoint Stevens has made a home in the away-from-home business, supplying hospitals, nursing homes, and hotel chains with bedding and linens.
Some of the company's larger clients include Hilton, Hyatt, Mirage, Adams Mark, Embassy Suites, Double-tree, Wyndham Hotels, Ramada and LaQuinta Inns.
WestPoint Stevens produces enough sheets to make 36 million beds every year, which, according to the company, averages out to 330 items for the bed every minute its plants are in operation. The company's plants produce more than 5,000 miles of cloth every week, which West-Point Stevens calculated in one year is enough to reach the moon with 20,000 miles of fabric left over.
According to the company's 2001 annual report, WestPoint Stevens had not experienced a labor dispute in 20 years. Approximately 10 percent of its workforce is unionized.
SOURCES OF INFORMATION
"banks seize shares of westpoint ceo." cfo, 20 july 2001.
marino-nachison, dave. "westpoint stevens shredded." the motley fool, 22 may 2000. available at http://www.fool.com.
mcpike, joanne. "westpoint stevens officers sued for breach of duty." dow jones newswires, 29 march 2002.
ross, jayne m. "westpoint stevens analysis." standard & poor', 30 november 2000.
"textile firm linked to 'negro cloth' for slaves." money, 20 february 2001.
turner, julie. "industrial history of troup county." travels through troup county: a guide to its architecture and history. published by the troup county historical society, troup county, ga, 1996.
"westpoint stevens announces manufacturing restructuring." hoover's, 21 march 2002.
For an annual report:
on the internet at: http://www.westpointstevens.com.
For additional industry research:
investigate companies by their standard industrial classification codes, also known as sics. westpoint stevens' primary sic is:
2392 housefurnishings except curtains
also investigate companies by their north american industry classification system codes, also known as naics codes. west-point stevens' primary naics code is:
314129 other household textile product mills