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Fruit of the Loom
Though the agreement was reached in late 2001, the acquisition was finalized in early 2002. Berkshire purchased the company out of bankruptcy.
Business Model
One of the most recognizable brands in the world, Fruit of the Loom manufactures basic apparel, primarily underwear and t-shirts. Its competitive advantage lies in its low-cost manufacturing and massive brand equity.
Berkshire Acquisition
📈 2002 Performance: The Turnaround
In its first partial year under Berkshire (commencing May 2002), Fruit of the Loom delivered a spectacular turnaround.
- Financial Result: Generated $232 million in pre-tax profit.
- John Holland: Buffett credited the success entirely to CEO John Holland's return. Holland revitalized the company's manufacturing and morale after its bankruptcy.
- Gadsden Success: Buffett highlighted the excellence of the Gadsden facility as a key driver of the company's cost advantage and quality.
Quotes
- "John Holland is a man we know and admire... He has the 'Fruit' in his blood." — 2001 Letter
- "Whatever we paid for the company, it wasn't enough." — 2002 Letter (paraphrased)
- References: 2001 Letter, 2002 Letter, 2002 Meeting
- Index: index
📚 Historical Mentions & Citations (2)
Click a reference document below to expand and read the exact paragraph(s) containing this concept in the archive.
📜2001 LetterExcerpt Available▼
2001 LetterExcerpt Available
Our star-studded group grew in 2001. First, we completed the purchases of two businesses that we had agreed to buy in 2000 — Shaw and Johns Manville. Then we acquired two others, MiTek and XTRA, and contracted to buy two more: Larson-Juhl, an acquisition that has just closed, and Fruit of the Loom, which will close shortly if creditors approve our offer. All of these businesses are led by smart, seasoned and trustworthy CEOs.
As I write this letter, creditors are considering an offer we have made for Fruit of the Loom. The company entered bankruptcy a few years back, a victim both of too much debt and poor management. And, a good many years before that, I had some Fruit of the Loom experience of my own.
📜2002 LetterExcerpt Available▼
2002 LetterExcerpt Available
We added some sluggers to our lineup last year. Two acquisitions pending at yearend 2001 were completed: Albecca (which operates under the name Larson-Juhl), the U.S. leader in custom-made picture frames; and Fruit of the Loom, the producer of about 33.3% of the men’s and boy’s underwear sold in the U.S. and of other apparel as well.
On Saturday, at the Omaha airport, we will have the usual array of aircraft from NetJets® available for your inspection. Just ask a representative at the Civic about viewing any of these planes. If you buy what we consider an appropriate number of items during the weekend, you may well need your own plane to take them home. Furthermore, if you buy a fraction of a plane, I’ll personally see that you get a three-pack of briefs from Fruit of the Loom.