Alba-Waldensian, Inc.

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Alba-Waldensian, Inc.

201 St. Germain Ave. SW
P.O. Box 100
Valdese, North Carolina 28690
U.S.A.
(828) 879-6500
(800) 554-2522
Fax: (828) 879-6595
Web site: http://www.albal.com

Public Company
Incorporated: 1961
Employees: 750
Sales: $75.24 million (1998)
Stock Exchanges: American
Ticker Symbol: AWS
NAIC: 315111 Sheer Hosiery Mills; 315192 Underwear & Nightwear Knitting Mills; 339113 Surgical Appliance & Supplies Manufacturing; 42232 Men’s & Boy’s Clothing & Furnishings Wholesalers

Located in Valdese, North Carolina, Alba-Waldensian, Inc. is a highly successful, publicly traded company specializing in the production and sale of seamless knitwear made specifically for medical supplies, such as gauze strips and high-tech, no-slip bandages, as well as women’s undergarments and hosiery. With annual sales in 1998 reaching over $75 million, and large production plants in both North Carolina and Tennessee, Alba-Waldensian has made a name for itself in the retail and apparel industry through its ability to profitably corner two separate niche markets due to the company’s unique factory knitting-production technique. Because of the differing marketing and production needs of the medical supply industry and that of the womenswear market, the company operates two separate divisions: the Consumer Products Division and the Health Products Division, with the former focusing on womenswear, and the latter, on specialty medical supplies. In addition, the company has a third division, Alba Direct, which distributes and markets Alba-Waldensian’s womenswear to retail stores both nationally and internationally.

Early History: Humble Beginnings to Rapid Growth

The company that is today Alba-Waldensian was first created in 1901 by Italian immigrants who had settled deep in the Blue Ridge Mountains of North Carolina. Operating initially in a space hardly large enough to house more than a few machines, the company which eventually became known as Waldensian Hosiery Mills produced knitted women’s undergarments and hosiery. By the 1950s Waldensian Hosiery Mills had developed a process by which the company could mass-produce women’s stretch panties and bras on special factory knitting machines, which used a circular weave to create the material’s desired—and at that time unique—flexibility. While successful, Waldensian Hosiery Mills was for its first few decades a decidedly regional business, with limited reach to a customer base.

Meanwhile, the development of a similar company offered Waldensian Hosiery Mills more than a bit of competition: incorporated as Pilot Fashion Mills in June 1928, this company also produced women’s undergarments, and sold their products at prices matching those of Waldensian Hosiery. Pilot Fashion Mills changed its name in 1955 to Alba Hosiery Mills, and continued operating under that name until, at the end of 1961, Waldensian Hosiery Mills and Alba Hosiery Mills merged, forming Alba-Waldensian, Inc. After the merging of the two companies, Alba-Waldensian’s focus remained on the production of the stretch knitted material developed by Waldensian Hosiery Mills, and it was this focus which allowed the new company to make its mark. With steady growth throughout the 1960s, Alba-Waldensian went public in 1969, listing its stock on the American Stock Exchange.

For Alba-Waldensian’s first five years as a publicly traded company, the business continued to produce womenswear, and focused exclusively on its growth within that industry. In the mid-1970s, however, the company saw an opportunity to put its stretch-knitting technique to use in an entirely separate area: the field of medical supplies. In 1974 Alba-Waldensian introduced its first medical specialty products, and therefore penetrated a new and potentially highly lucrative niche market. The low-tech products initially offered by the company, such as flexible bandages and sterile wound dressings, could be used by a variety of consumers in the medical field, from hospitals and nursing homes to local doctor’s offices, with the result being an increased visibility for the company.

Starting in the late 1970s Alba-Waldensian began a series of buyouts and acquisitions which greatly increased its growth in both its divisions. In 1976 the company obtained part of Shelby Seamless Hosiery Mills and, that same year, acquired 50 percent of a company called Alba-Eiser, Inc. The next year Alba-Waldensian acquired the remaining percentage of Alba-Eiser, which was then merged into Alba-Waldensian by 1979. Beginning in 1978 Alba-Waldensian acquired all or part of several businesses for cash: that year, the company bought Commercial Flocking Corporation and 50 percent of Selective Electronic, Inc.; and, in 1983 and 1984, the company acquired W.G. Whitney Corporation and Electric Sok Corporation.

Although the 1980s were far from stable for Alba-Waldensian, with annual sales varying widely from year to year, the company through both its acquisitions and its new focus on the production of medical supplies continued to expand. The company’s Consumer Products Division was by now producing a large variety of womenswear under such labels as Some-Body, All Day Long, While You Wait, and Big Beautiful Woman. Placing an emphasis on comfort and affordability, Alba-Waldensian’s womenswear labels were by the 1980s carried by such national department stores as J.C. Penney and Sears. Particular attention was paid by the company to the needs of plus-sized women, with the company’s hosiery lines specifically marketed to this customer base; one which had traditionally been ignored within the retail industry. The company also began manufacturing hosiery and briefs for the small but growing maternity market, thus further expanding its targeted consumer base.

Alba-Waldensian’s willingness to branch out in the 1970’s and ‘80’s into previously under-developed fields is what made the company stand out in the apparel industry. The company proved itself as one ready to take a risk in order to fill, or even help create, a niche market. It was unusual to say the least to find a company involved in the production, marketing and manufacturing of women’s intimate apparel suddenly making a foray into the very different business of gauze strip and bandage manufacturing; but it was just such a move which caused Alba-Waldensian to become a major player in the retail industry. What tied the company’s two quite disparate divisions together was its highly specialized factory-knitting formula: Alba-Waldensian created profits by focusing not on the variety of materials the company could successfully utilize but instead on the amount of products a single manufacturing technique could produce. This way, it mattered not at all if what was being created fit together in any orthodox sense, at least in terms of marketing; what was important was that an abundance of products, in a variety of fields, could be created from one, uniquely developed production technology. Alba-Waldensian had, then, by the end of the 1980’s become better known for its material than its designs or styles, though it continued through its womenswear marketing to emphasize comfort and wearability.

Further Expansion: 1990s

In 1992 Alba-Waldensian’s Consumer Products Division experienced a great boon through the acquisition of the U.S. operations of Byford Apparel. Byford was a British-based company, begun in 1919 in Leicester, England, which designed and marketed clothing to upscale retail stores. By purchasing Byford, Alba-Waldensian had the opportunity to turn its attentions for the first time to outerwear for both men and women. By the mid-1990s, the company was producing men’s socks and sweaters under the Byford label, gaining yet a broader consumer base.

From its inception Alba-Waldensian had always sold its products through distribution to department and specialty stores. In 1994, in order to gain more label recognition for its many apparel brands, the company opened its first outlet store, in the Factory Merchants Outlet mall in Branson, Missouri. While such a progression from distribution to handling its own store was a natural one, the company continued to concentrate its primary efforts on wholesale marketing to other retailers.

Impressive as Alba-Waldensian’s growth was in relation to its apparel lines, the company’s real growth came in the 1990s from its Health Products Division. In 1994 the company acquired the Pulsatile Anti-Embolism System, which refocused the company’s healthcare division by manufacturing products especially geared towards vascular care. A year later, Alba-Waldensian bought Balfour Health Products, which in effect doubled the size of the company’s healthcare division. With these two acquisitions Alba-Waldensian now produced a large variety of medical supplies, including anti-embolism stockings (used to prevent blood clots); compression devices designed to improve circulation; sterile wound dressings such as petrolatum and xeroform gauze; and non-adhering gauze strips. Also manufactured by this growing division was net tubing which held dressings in place without adhesive and specialized treaded patient footwear, which prevented patients from slipping on slick hospital floors and could be worn as slippers or socks.

Because of Alba-Waldensian’s increased concentration on its healthcare division, which grew exponentially in 1994 and 1995, the company decided to relocate its Health Products Division in a new, separate area. Though the company’s headquarters remained in Valdese, its medical products were now designed and manufactured at a large new plant in Rockwood, Tennessee. Alba-Waldensian’s North Carolina location was then free to devote itself exclusively to its Consumer Products Division, a separation which, while indicating the continuing expansion of the company, also created a large amount of overhead costs.

Company Perspectives:

The highly innovative spirit of Alba-Waldensian for close to a century continues today to be our “secret weapon” that enables us to continue to develop and market highly unique products and be extremely competitive throughout the world. It is with a keen sense of heritage that Alba-Waldensian commits itself to the future.

Due to a variety of factors, 1996 was a particularly difficult year for Alba-Waldensian. Between the expensive acquisition of Balfour Health Products, and the company’s relocation of its healthcare division, the company’s profitability fell drastically by year-end, its bottom line in the red by well over $1 million. While the acquisition of Balfour proved eventually to be a fiscally sound risk, the company for the moment was hurting: stockholders were nervous and revenue in both divisions was threatened.

In February 1997, Alba-Waldensian’s president and CEO of over five years, Thomas F. Schuster, resigned, declining to elaborate to the press his reasons for doing so. Replacing him was Alba-Waldensian insider Lee Mortenson, who had been on the company’s board of directors for over ten years. Mortenson began an aggressive campaign to bring his company back to an acceptable level of profitability, making the slump of 1996 short-lived.

Though 1996 was not a profitable year, the company did strike a couple of deals that year which paid off quite handsomely within a short period of time, helping Alba-Waldensian regain ground both in reputation and financial stability. One such boon was the granting of a patent for what the company called “Comfort Knit” stretch bras and panties which allowed for the creation of the same seamless, wireless shaping found in intimate apparel which utilized more inhibiting, body-constricting materials. Claiming that the “Comfort Knit” material gave shape and flattering contour to a woman’s figure without any discomfort, the company soon found the patent to be of great use, and much coveted as well. Indeed, the patent was contested by apparel company I. Appel, a claim which backfired the next year when I. Appel had to pay Alba-Waldensian compensation.

In April 1996 Alba-Waldensian’s Byford Apparel line signed a lucrative licensing deal with the Smithsonian Institute. According to the terms of the agreement, Byford created and manufactured men’s sweaters and other outerwear under the label“Smithsonian Institution Collection by Byford.” The deal came at a serendipitous time for the company, since that year was the Smithsonian’s 150th anniversary, and the Institute was receiving—and coveting—much publicity.

Meanwhile, the company continued to develop original and innovative products in its healthcare division, and at the beginning of 1997 was given FDA approval for a compression device created to prevent DVT (deep vein thrombosis). Calling the product PulStar, the company marketed the new device to patients undergoing either prolonged hospital stays or major surgical procedures. Within two decades, Alba-Waldensian had evolved from producing low-tech medical supplies to designing and manufacturing products which were considered revolutionary in their field.

By 1998 Alba-Waldensian was back in the black, with double-digit revenue growth. Part of this growth was attributed not only to the company’s medical supply designs, but also its new focus on women’s outerwear, which was developed by an offshoot of the company’s Consumer Products Division called Alba Design Group. The Alba Design Group signed a licensing deal with Moretz, Inc. under which the former company produced and manufactured women’s bodysuits, bandeaus, dresses, and socks using the popular Diahann Carroll label. Because of a renewed consumer interest in intimate apparel in the late 1990s, and Alba-Waldensian’s new foray into women’s outerwear, the company’s Consumer Products Division had sales in 1998 of over $42 million—a record year.

The success of Alba-Waldensian’s womenswear was also due in part to the growing development of the company’s third division, Alba Direct. Alba Direct’s exclusive aim was to bring via telemarketing new clients to the company’s Consumer Products Division, a goal which proved more than achievable, as by 1998 the division had obtained clients from as far away as Turkey and Japan.

Though Alba-Waldensian’s healthcare division at the end of the decade remained smaller than its womenswear division, the former continued to expand. In 1999 the company’s Health Products Division was granted an exclusive three-year contract with a company called Novation, which offered medical supplies to such clients as VHA Inc. and the University Health System Consortium. Within the terms of the contract, Alba-Waldensian became the single supplier for all of Novation’s footwear products; a deal which Alba-Waldensian predicted would bring in over $12 million in profits.

Beginning in the mid-1970s Alba-Waldensian began a trajectory of continued growth and expansion which has caused the company to be a leader in two very different fields. Though its path has not been without financial flaws, the end of the 1990s has shown Alba-Waldensian to be a continually powerful presence in the niche industries of intimate apparel and medical supplies.