Russell Corporation will realign its operations to increase focus on both its athletic and activewear businesses. Under this structure, manufacturing, distribution and some administrative functions will be combined with sales and marketing to create a separate Athletic Group and an Activewear Group.
“This alignment creates two groups of businesses that need two different approaches for their operations,” said Jack Ward, chairman and CEO. “The new structure allows us to differentiate the operations between products that are
more branded and athletic focused and those that are more cost sensitive.”
“The Athletic Group will be able to better pursue the most cost effective means of developing products and sales plans for their brands and the Activewear Group can use company-owned manufacturing facilities to generate
the economies of scale they need to compete in their markets,” Ward added.
All of the branded athletic products will be part of the Athletic Group. As they expand their product lines, they will move toward a more sourcing-based model for manufacturing. In some cases, they will source from the
Activewear Group. This structure allows the athletic business to focus on brand building by leveraging our authentic heritage and also creating synergies among the Russell Athletic, Moving Comfort and Bike Athletic brands within their markets that include department stores, sports specialty stores, teamwear, catalog and college bookstores. Spalding, the Women's organization and Mossy Oak Apparel also will be part of this group.
The Activewear Group will focus on the JERZEES brand for the mass retail market and the JERZEES, Bike, Cross Creek and Three Rivers brands for the artwear channel. Production will primarily be through internal manufacturing
operations and strategic partnerships since that is the most cost-effective model for those product lines.
“We will continue to focus on building our athletic and outdoor businesses while at the same time ensuring a competitive model for our basic products,” Ward said. “By operating as two separate businesses, we believe we increase the growth potential for both the athletic and activewear sides of Russell which is important to our overall success.”
Jon Letzler will serve as CEO for the Athletic Group in addition to his duties as president and COO of the Company. As announced last week, Julio Barea has joined Russell to head the Activewear Group, reporting to Letzler.
Barea, an experienced CEO, spent nearly 20 years with Sara Lee Corporation's apparel group.
Additionally, Russell will support the realignment with a new, fully-integrated textile facility in Choloma, Honduras for the Activewear Group. The plant will produce both jersey and fleece fabrics to support the Company's
four sewing operations and 4,000 employees already in Honduras.
“Our new Merendon Plant in Choloma will play an important role in our efforts to continue to lower costs in this highly competitive portion of our business,” said Ward. “Our strategy is to continue to offer products that are an excellent value for the consumer, whether manufactured internally or sourced from other suppliers. We believe the low cost model for the Activewear business is based on internal manufacturing and strategic
partnerships.”
“We evaluated many options before deciding on Choloma,” added Ward. “With the support of President Ricardo Maduro Joest and our existing partnership with Elcatex in Honduras, the Merendon Plant will be on a rapid start-up
schedule.”
Construction of the $50 million facility is scheduled to be completed by late 2004 and production will begin by early 2005. The vertical textile operation will employ up to 700 people. Once fully operational in 2006, the
projected annual pre-tax savings for phase one of this project should be approximately $15 to $20 million.
