What Fruit of the Loom can do to protect itself against a low cost competitor like Gildan
Warren, I’m sorry. My last question about solar was directed at Charlie, but my next question is about underwear, so I think you can probably field this one.
Boxers or briefs?
I’m not talking.
Over time, Fruit of the Loom and others have lost nearly all of the T-shirt-focused wholesale screen print market to Gildan, a relatively new player with very low cost structure.
Gildan is now going after the underwear-focused retail market and is having some success with certain large customers. Branding is obviously more important in the retail market, but is there any reason to think Fruit of the Loom won’t lose significant amounts of share here over time, just as they did in the wholesale screen print market?
What can they do to protect what remains of their franchise?
Yeah. You keep… you keep your costs down and you constantly work at brand building, and you try very hard to make sure that your main customers, in turn, have their customers happy with the product, and are happy with the price points that you can deliver it at.
And you’re correct that Gildan, in terms of certain aspects, the non-branded aspects, basically, of some parts of the business, has hurt Fruit in the last… well, last 10 years, certainly.
But we turn out first-quality, low-priced underwear with a strong brand recognition. And I think it will be very tough to either build a brand against it or to beat our costs significantly.
Now Gildan pays very little in the way of income taxes, you know, because they route stuff through the Cayman Islands, and that’s a modest factor.
But I think you’ll find five years from now, or 10 years from now, that our market share in men’s and boys’, particularly underwear, will hold up.
But you’re right. They’re a competitive threat. Hanes is a competitive threat. And it’s not a business that you can coast on. It’s not Coca-Cola, but it’s not an unbranded product, either.
And I think Fruit will do reasonably well, but it will not get anything like, you know, the kind of profit margins that you can get in certain branded products.
Yeah. And then, too, as many products as we have, we may average out pretty well, in terms of market shares, but we’re not going to win every skirmish or every battle.
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