Chief quits after 10 months in top job

By Don Hogsett -- Home Textiles Today, 3/24/2003 12:00:00 AM

KANNAPOLIS, NC —

Amid mounting speculation that textiles giant Pillowtex Corp. is on the block and could soon be sold or split into pieces — perhaps as soon as next month — chairman and ceo David Perdue has jumped ship only 10 months after joining the mill from Reebok.

Succeeding Perdue is Michael Gannaway, who joined Pillowtex six months ago as president and coo after a career at Sara Lee Corp.

Perdue leaves as doubts continue to swirl about Pillowtex's future as an independent company, speculation that intensified when Gannaway confirmed in a statement the hiring of investment banker Credit Suisse First Boston "to evaluate and explore a broad range of strategies," boiler-plate language that usually indicates a company is for sale.

The Perdue defection was not entirely unexpected, since the ceo was widely reported to be unhappy in the job

and concerned that headhunters had misled him about the company's market position and sales and earnings prospects when he was recruited for the job. Since joining Pillowtex, the company successfully emerged from Chapter 11, but only to start losing money once again as it recorded double-digit declines in sales. Moreover, a big chunk of Perdue's compensation was in stock, which is now trading at just $0.26 a share, down more than 97 percent from a 52-week high of $9.15 a share.

Perdue's is just the latest vacancy in the executive suite, following the recent resignation of Scott Shimizu, executive vp and sales and marketing chief, and the ouster last fall of Tony Williams, former president and coo, who had guided the major mill off the shoals of bankruptcy.

Assessing the outlook for Pillowtex, Gannaway said, "There's no question the business has been very difficult, very soft." He added, "Business has been tough, especially the last month — especially the towel business."

And his focus for Pillowtex going forward? Gannaway's answer was opaque. "Our first set of priorities is to drive our business by working with our partners for growth. Personally, I've spent the last six to seven months focused on bringing value by building a vital brand on strategically partnering with our customers."

But then he unmistakably dropped the other shoe when he added, "But the best strategy is to maximize shareholder value for the company."