"To print this page go to file and left
click on print"
Holding
its’ own in the international sports apparel and activewear
Apparel and Accessories
Consumer Cyclical
(NYSE:RML)
Russell Corporation
3330 Cumberland Blvd. - Suite 800
Atlanta, GA 30339
Phone: 256-500-4000
John (Jack) Ward
Chairman and
Chief Executive Officer
Interview Conducted By:
Diane Reynolds, Co Publisher
CEOCFOinterviews.com
September 18, 2002
Bio
of CEO,
John F. (Jack) Ward is Chairman and Chief Executive Officer of
Russell Corporation, a $1.2 billion international apparel company specializing in
activewear, casualwear and athletic uniforms with products under the Russell Athletic, Jerzees, Mossy Oak, Discus and Cross Creek brand names. Russell is listed on the New York Stock Exchange
under the symbol RML and has more than 13,000 employees worldwide.
Ward serves on the board of directors
of the Metro Atlanta Chamber of Commerce and the State of Georgia Chamber of Commerce and
is the immediate past chairman of the board of directors for the American Apparel and
Footwear Association (AAFA). He is a member
of the advisory boards of the Robert C. Goizueta Business School at Emory University and
the Kenan-Flagler School of Business at the University of North Carolina-Chapel Hill. He has previously served on the board of directors
of Delta-Galil Industries in Israel, Burlington Industries in North Carolina and Lanier
Worldwide in Atlanta, as well as several non-public businesses.
Ward is also a founder of the
Children’s Cancer Patient Support Program at Brenner Children’s Hospital in
Winston-Salem, North Carolina. While in
Winston-Salem, Ward served as president of Leadership Winston-Salem, chairman of the board
of The Crosby Scholars Program and chairman of the Alexis de Tocquerville Society of the
United Way there.
Ward began his career in 1966 with
Procter & Gamble and joined H.J. Heinz in 1968, where he was product manager for
several brands. In 1972, he joined Hanes
Corporation as product manager for the expansion of L’eggs hosiery and was named vice
president of marketing for L’eggs in 1975. From
1979 until 1993, Ward was president and CEO of several divisions of Sara Lee Corporation
(the acquirer of Hanes Corporation) and was appointed senior vice president of Sara Lee
Corporation in1992 and chief executive officer of the Hanes Group of companies in 1993. His responsibilities with Sara Lee Corporation
included apparel operations in more than 20 countries with multi-billion dollar sales
responsibility.
Upon retiring from Sara Lee
Corporation in August 1996, Ward was president of the J.F. Ward Group, an apparel and
textile consulting company. In addition, he
was an executive-in-residence and professor of ethics and leadership at Wake Forest
University’s Calloway School of Business and Accounting. Ward joined Russell Corporation as chairman,
president and CEO in 1998.
He
is a native of Longmeadow, Massachusetts, and earned his Bachelor of Science and MBA
degrees from Cornell University. He is
married with two daughters.
CEOCFOinterviews: Please give my readers a little background
information on Russell Corporation.
Mr. Ward:
Russell is an international sports apparel and activewear company with approximately $1.2
billion dollars in annual sales. Our major
brands are Russell Athletic, as well as Jerzees, Mossy Oak camouflage apparel, Discus Athletic and Cross Creek.
We are proud to be celebrating our centennial anniversary this year, having
been founded in Alabama in 1902. We also have
just completed a major restructuring program over the last few years aimed at changing
Russell from a great manufacturing company to a strong market focused company supported by
strong manufacturing and sourcing. Since
1998, we have exited businesses with over $150 million dollars in sales to redirect our
efforts to our more profitable businesses. We
have closed approximately 35 facilities, relocating more than 95% of our assembly
operations off shore, and have completely reorganized the structure of our company to
create more focus and accountability. This
restructuring effort was basically completed by the end of 2001and now we are in a
position to reap the benefits from it.
CEOCFOinterviews: Why the big change?
Mr. Ward:
As I mentioned, Russell had been manufacturing driven and that worked great for many
decades. As we entered the mid to late
1990’s the business became much more competitive and our competitors were focusing
more on marketing. Additionally, the company
had to become more globally competitive to compete in today’s marketplace. Thus in 1998, we proactively implemented the
necessary changes to be competitive long term. We
had to become more market focused and establish a low cost structure.
CEOCFOinterviews: You had done three acquisitions in 2000 how many
more have you had and do you see any for the future?
Mr. Ward:
Yes, in 2000 we completed three acquisitions. One
was Mossy Oak hunting apparel and we continue to
grow and expand that business. Another was
A&C International. Their Three Rivers brand was the leading supplier of
woven and denim shirts to what we refer to as the artwear or printable market. In this market channel, our products are sold to
screenprinters and embroiderers who sell embellished products to retailers, corporate
customers and others. Our third acquisition
was the Discus Athletic brand. We have now reintroduced the brand into the
marketplace here in the U.S. and in Japan. We
continue to look at acquisitions and have recently made another one. In August, we acquired Moving Comfort, which is a leading brand of
women’s performance athleticwear. We see
acquisitions as a part of our growth strategy when they are complimentary to and add value
to our current businesses.
CEOCFOinterviews: Now you had mentioned you are doing business here
in the US and internationally. Where is the
growth of your business coming from?
Mr. Ward:
We market our products in Europe, as well as in Canada, Japan, Mexico, Australia and a
number of other countries. We reorganized our
international division two years ago, existing or restructuring unprofitable businesses. International is now profitable and we have plans
to grow our business in the major areas of the world.
CEOCFOinterviews: There was a time that a lot companies in your
industry were filing bankruptcies, going under, how were you able to survive this?
Mr. Ward:
Mainly because we were proactive and aggressive in changing our business model. Generally these companies got into trouble because
they didn’t take the necessary steps to become competitive or made major mistakes in
trying to do that. Even though we undertook a broad-based restructuring effort, we were
able to successfully complete it in a more rapid fashion than anybody in our industry of
our size had ever done. We moved from almost
totally domestic assembly of our products to almost totally off shore assembly in a period
of three years.
CEOCFOinterviews: Because the manufacturing is done overseas, how
are you able to oversee the quality?
Mr. Ward:
The vast majority of our fabric is manufactured in the United States and most of our
assembly is done in our own plants in Mexico and Honduras.
In those facilities, as well as our contractor plants, we ensure high
quality standards by properly training employees and by inspecting the work. In fact, our quality levels today are higher than
they were a few years ago. It isn’t that
people are better or worse in any one country, but we have installed best practices as we
have opened new operations.
CEOCFOinterviews: Financially, your restructuring obviously took a
lot of cash from the business, how is the company financially situated today?
Mr. Ward:
We are in excellent financial shape and have an attractive cash flow this year, as well as
last year. We refinanced our debt in April
with a $250 million dollar senior notes offering to establish a strong long-term financial
structure. In fact, our senior notes offering
was upsized because we were greatly over subscribed.
CEOCFOinterviews: Has the Internet brought any benefit to the
company?
Mr. Ward:
Its greatest benefit has been in supply chain management.
While we do sell on the Internet through several of our customers, it is not
a large part of our business. On the supply
chain side, however, we can now connect with suppliers all over the world, which increases
the speed and accuracy of information.
CEOCFOinterviews: Other than everything you have done to date how
else do you see expanding the company?
Mr. Ward: With our restructuring behind us, we can now focus more
of our resources on growing our businesses. In fact, we are forecasting significant
growth in the second half of this year, having added more than $60 million dollars of new
business for the July to December period. We have new products like Dri Power, our
moisture management product, and Vintage Varsity by Russell Athletic. We also have
new sock programs, new Mossy Oak programs and a number of licensing agreements throughout
the world. We are much more focused on growing the business, especially in the
performance athleticwear arena.
CEOCFOinterviews: Your history going back, you were at Procter and
Gamble, Heinz, L’eggs Hosiery. What made you go to Russell Corporation?
Mr. Ward: In 1972, I joined Hanes Corporation’ as
product manager for their new L’eggs pantyhose brand. Hanes was ultimately
acquired by Sara Lee Corporation and between 1984 and 1996; I was responsible for building
their Sara Lee Knit Products operation into a multi-billion dollar business. Because
of my experience in building brands, and with my understanding of operations, it was a
natural for Russell to approach me. Even as a competitor, I always respected Russell
and considered Russell as having tremendous potential. I believed that by
concentrating on marketing and making the company more globally focused; Russell would
have significant growth opportunities.
CEOCFOinterviews: Obviously there is still competition out there
for you. How are you addressing it and how does this company remain unique?
Mr. Ward: Like most industries, this one remains highly competitive
and we continue to have a strong focus on reducing cost. We will source or make
products wherever it is the lowest cost place in the world. Currently we make most
of our products in our own facilities, but we also source production in more than 20
countries. At the same time, we must continue to put more focus on innovative
products and concepts, ensuring that those areas are receiving the resources they need to
be successful.
CEOCFOinterviews: Do you find as fashion changes, even in the
sportswear that still has its trends, some of it stays in some fades out? How do you
handle the inventory?
Mr. Ward: First, we have more basic types of products. Yet,
even with the basics you have to continue to change For example, last year we
upgraded our basic sweatshirts and sweatpants sold in Wal-Mart. We added
“department store features” that did not increase the retail price. In
other cases, we will introduce new colors or new types of products such as hoods, but
these are still considered basics. There is minimal inventory risk with these types
of products. The department store channel wants more variety and customization. We
still, however, control our supply chain to minimize risk. In all channels of
distribution, supply chain management is crucially important. We have reduced our lead
times by up to 50%.
CEOCFOinterviews: How about your management team, there has been a
lot of change there, how do they feel about it and are you happy with the team that is in
place?
Mr. Ward: We have an excellent of people including those who have
been with Russell for many years as well as new people. Many of the new people have
worked with me before and have a great deal of experience in this industry. They
were able to immediately hit the ground running when they joined Russell. Others
have joined Russell from high performing companies outside of the apparel industry such as
Pepsi and Coke. It is a wonderful blend of people with experience inside Russell,
inside the apparel business and from other industries.
CEOCFOinterviews: Are there any closing comments or notes that you
would like to leave with my readers?
Mr. Ward: We believe Russell has a very positive future. We
have been successful for 100 years and established a long history of strong values and
ethics. We have the fundamentals in place, and we are number one or two in most of
our major product categories. We have a strong foundation on which to build for the
future.
CEOCFOinterviews: To a potential investor, they are looking at
numbers. Face to face with an investor who has never invested in your company before
and would like to know why?
Mr. Ward: It is because we have strong growth prospects. We
have a six-point plan to grow profits in 2002 and 2003, including a strong sales growth
element of the plan. I’ve mentioned the more than $60 million dollars in new
customers and programs for this year alone. In addition to that growth, we are
improving our operations from both a cost-savings and an efficiency standpoint. We
restructured our yarn operations into a joint venture; we are restructuring our Russell
Athletic distribution operation; and we have consolidated our Cross Creek division. From
the stock market side, we believe our P/E is very attractive right now and that Russell
can be a very good investment for the long term.
CEOCFOinterviews: Some companies do not give out dividends anymore.
Do you feel that this is changing for you or do you still want to remain giving
dividends?
Mr. Ward: We reduced our dividend pay out last year to a level we
believe is more appropriate for a growth company. We will continue to pay a
dividend, but we also believe that our shareholders will be better off if we invest the
money in the growth of the business.
CEOCFOinterviews: That is what a lot of companies do instead of
paying the dividends; they take that money and put it back into the company for continued
growth opportunities.
Mr. Ward:
Yes, and that is what we have done as well.
disclaimers
© CEOCFOinterviews.com – Any reproduction or
further distribution of this article without the express written consent of
CEOCFOinterviews.com is prohibited.
|
