Fruit of the Loom revival is nothing short of amazing
Published 12:00 am Friday, May 3, 2002
When Warren Buffett, chairman of Berkshire Hathaway, announced his conglomerate was pursuing the acquisition of Bowling Green-based Fruit of the Loom, he said it was for two major reasons: the strength of the brand and the managerial talent of John Holland.Its a marriage made in corporate heaven. For Fruit of the Loom, the purchase (approved Tuesday) represents a journey from the dark days of bankruptcy and the delisting of its stock. That was during a time when the entire companys future was in doubt, but now it is an industry with a bright future for its 1,100 Bowling Green employees. For Buffett, it represents yet another success as a result of considerable skill and some good fortune of taking risks on old-economy industries. But its the instinct of one of the worlds great investors that is able to determine the future possibilities of a company many thought was down for the count that bodes well for Fruit of the Loom. After all, Berkshire initially announced its interest in purchasing then-bankrupt Fruit even as the company was going through a slow earnings period last year and as the already-weak garment industry was wading through its most severe economic period in a quarter-century.What makes a respected investor like Buffett plunk down $835 million to purchase a company in that position? One reason is name brand; most Americans at one time or another have worn products with a Fruit of the Loom label. Despite its bankruptcy, from which it emerged this week, Fruit remains one of the worlds largest manufacturers and marketers of underwear, lingerie, childrens wear, active and casual wear. And the very conservative forecasting by Holland indicates bright days ahead. For Holland to say hes optimistic that this years sales will exceed last years $1.34 billion effort is significant especially considering the well-publicized misrepresentations of the companys worth by former executives that resulted in several lawsuits by shareholders. Then theres Holland. With his skilled hand at the helm, its easy to understand Buffetts optimistic belief in the company. Holland, who ran the company in the mid-1970s during its heyday, came out of retirement to clean up the mess left behind by former CEO William Farley. Even as the company struggled financially, Farley reaped benefits at its expense, according to reports filed in August 2000 with the Securities and Exchange Commission. Those benefits included company-backed personal loans to Farley for $100 million, on which he defaulted. Not only has Hollands leadership been above reproach, his magic touch has revived an important industry to Bowling Green. For all the talk about attracting new industries, Fruit of the Looms survival and prosperity as part of one of the most financially solid empires in the world may be one of Bowling Greens best economic development stories ever.