D
uring 1998, the economy continued to show resilience — the Dow Jones Industrial Average
gained 16.1 percent, and the S&P 500 advanced 26.7 percent. However, the Russell 2000 declined
3.5 percent and on average, each stock in the Bank of America Stock Watch lost 25.5 percent of its
value.
Among the factors contributing to this poor performance were the lingering Asian crisis,
leading to a surge in cheap imports; cautious buying from retailers with requests for shipping
delays; lower mill operating rates as longer holiday downtime is scheduled to prevent excessive
year-end inventory; flat to declining industry pricing reflecting import pressure; and unseasonably
warm weather that dampened the demand for fleece, outerwear and blankets.
In Textile News
On December 30, Worldtex completed its previously announced acquisition of the Lexington, S.C.,
narrow-elastic fabric manufacturing facility of Fruit of the Loom. Worldtex signed a long-term
supply agreement in connection with the purchase. According to a Fruit of the Loom spokesman, the
sale price was between $10 and 15 million.
Elsewhere, a unit of JPS Textile Group agreed to sell its home furnishings business to Belding
Hausman for $11.4 million.
Consolidation in the carpet industry continues with two recent transactions. On December 23,
Mohawk Industries announced an agreement to acquire Durkan Patterned Carpets, a leading supplier of
commercial carpet to the hospitality market. Durkan has annual sales of roughly $110 million.
On January 11, The Dixie Group completed its acquisition of the assets of Multitex
Corporation of America, a carpet and carpet yarn producer with annual sales of $85 million. The
purchase price was $30 million in cash plus certain future payments linked to revenue growth. Dixie
expects $600 million in floorcovering sales in 1999.
Information contained herein is based upon sources believed reliable, but is not guaranteed as
to accuracy or completeness. This report is not to be construed as an offer to buy or sell
security. Certain prices listed herein are indicaton quotes only and may not necessarily reflect
prices at which transactions were executed.
February 1999
