Fruit of the Loom

About Fruit of the Loom

Fruit of the Loom wants to be in everyone's drawers. Besides the basics -- underwear made under the BVD, Fruit of the Loom, and Lofteez names -- its products include activewear, casualwear, and children's underwear sold under such labels as  Russell, Funpals, Fungals, and Underoos (with licensed characters). Its items are sold primarily in North America – more... through discount and mass merchandisers the likes of Wal-Mart and Target, as well as to department stores, wholesale clubs, and screen printers. Fruit of the Loom, owned by Berkshire Hathaway, enjoys the largest market share for branded men's and boy's underwear and its Russell Athletic unit leads in team uniforms.

Headquartered in Bowling Green, Kentucky, alongside other Berkshire Hathaway brands Russell and Vanity Fair, vertically integrated manufacturer and distributor Fruit of the Loom produces most of its products in Latin America. In general it maintains its own spinning, knitting, cloth finishing, cutting, sewing, and packaging functions. To cater to its large North American market (which comprised 81% of 2011 sales), its spinning operations are located in the US; cloth manufacturing is conducted in the US and overseas. Sewing and finishing are performed in low-cost countries Central America and the Caribbean. To serve its European market, Fruit of the Loom's products are either outsourced to third-party contractors in Europe or Asia or sewn in Morocco using the country's textiles.

Included in Berkshire Hathaway's "other manufacturing" sector, which accounted for 29% of the parent company's 2011 revenue, Fruit of the Loom has felt the adverse effects of the global recession in recent years as consumers tightened their belts and tried to get more wear out of their underthings. As the company waited for an economic rebound, it implemented cost-management initiatives and improved manufacturing efficiencies. Indeed, the apparel maker saw sales pick up in 2010. Fruit of the Loom attributed the turnaround to a rise in customer demand for its products and the impact of its cost-containment efforts. But 2011 was another stitch in time. While Berkshire Hathaway's other manufacturing segment logged a 20% rise in 2011 revenues vs. 2010, the increases were generated by other such business as metal cutting tools and equipment manufacturing for the livestock and agricultural industry. Fruit of the Loom in 2011 negatively offset successes in the segment due to significantly higher cotton costs, which peaked at more than $2 a pound before settling down by the end of 2011.

As part of its strategy Fruit of the Loom works to diversify its portfolio. Other than undershirts, the company outfits its customers in many ways. The manufacturer markets and sells sports equipment and balls to team dealers. It caters to college bookstores with college licensed T-shirts and fleecewear, and peddles athletic apparel, equipment, and balls to sporting goods stores under the Russell Athletic and Spalding brands. Fruit of the Loom also operates the Brooks running shoe business. Über global retailer Wal-Mart accounted for some 30% of Fruit of the Loom's sales in 2011.

While parent Berkshire Hathaway indicated in 2011 it was "itching" to acquire companies, its Fruit of the Loom subsidiary has put add-on acquisitions on the backburner for years. The manufacturer has logged some impressive purchases in the past, however. Fruit of the Loom greatly expanded its intimates portfolio when it acquired athletic apparel and sporting goods company Russell Corporation for about $600 million in 2006. It also bought several intimates brands from VF Corporation for another $350 million. The 2007 deal involved US brands (Vanity Fair, Lily of France, Vassarette, Bestform, Curvation), as well as those in Europe (Lou, Gemma, Belcor). Fruit of the Loom runs the operation as Vanity Fair Brands. – less

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