Blog: Buffett snares Russell Corp
Leonie Barrie | 18 April 2006
The sale of Russell Corp to Berkshire Hathaway should certainly place the sportswear maker in a stronger financial position after suffering a series of recent trip-ups. Last year’s annual earnings slipped 28% to $34.4m, and the company is likely to post a loss in the first quarter of 2006 after embarking on a hefty restructuring and cost-cutting exercise in January that saw the loss of around 2,300 jobs, mainly in the US.
But its woes haven’t ended here. The catalogue of misfortune includes the loss of the boys' fleece programme at Wal-Mart, delays to the passage of CAFTA, and the loss of containers of fabric and cut parts coupled with higher shipping costs during Hurricane Katrina.
Russell Corp, which makes the Jerzees, Spalding and Russell Athletic sportswear brands, has been pinning its hopes on these structural changes helping improve its competitiveness, with fewer, larger facilities able to move quickly and achieve lower costs. But now it seems the knight in shining armour has come in the form of billionaire Warren Buffett. The acquisition will also expand Berkshire Hathaway’s apparel holdings, which includes the Fruit of the Loom, Garan and Fechheimer brands.
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