David Perdue proudly points to his executive experience running major corporations as evidence that he’s best positioned to tackle the nation’s debt.
The former CEO of Dollar General and Reebok touts his business acumen while campaigning for Georgia’s Republican Senate nomination and hopes to follow his cousin, former Georgia Gov. Sonny Perdue, into politics. Voters will choose between Perdue and Rep. Jack Kingston in a runoff election July 22. The race has gained national attention as Republicans seek control of the Senate.
“I know what it takes to develop economic growth globally, and there are not that many people in Washington who know how to do that,” Perdue said when announcing his campaign.
A closer look reveals a successful business executive comfortable with taking risks but who is not immune to criticism from investors and analysts. And that’s created an opening for Kingston to attack.
“Just as my record as a member of Congress is being scrutinized, I think someone’s business experience is relevant,” Kingston said during a pre-primary debate.
Sara Lee Corp. gave Perdue, 64, his first major corporate job as senior vice president of Asia operations. During that time, the company added manufacturing and contracts in Asia, while in the U.S., a restructuring included dozens of plant closings and thousands of layoffs. The year Perdue left, Sara Lee announced plans to close at least four plants in Georgia.
After a stint with apparel company, Haggar Inc., Perdue moved to Reebok International in 1998 as a senior vice president. Within three years he had worked his way up to CEO of Reebok Brand. Financial analysts credited Perdue with helping revive the footwear company and improve its finances.
By July 2002, Perdue’s success made him an attractive candidate to lead Pillowtex Corp, a North Carolina-based textile company that had just come out of Chapter 11 bankruptcy. But instead of turning around, the company lost $27 million in seven months after emerging from bankruptcy protection. Pillowtex would end up closing four months after Perdue left. Some 7,650 people lost their jobs across the country, and the closing marked North Carolina’s largest single job loss at the time.
“While Mr. Perdue spent four successful years at Reebok before Pillowtex and has an extensive background in consumer products and consulting, his eight months at Pillowtex were marked by a further deterioration in (financial) fundamentals and a plummeting stock,” financial analyst Patrick McKeever told The Tennessean in April 2003.
Perdue has called what happened at Pillowtex tragic.
“My parents raised me to be the kind of leader that runs toward the burning building to try to help instead of running away from it and sitting on the curb and criticizing those that are trying to make a difference,” Perdue said.
Michael R. Harmon, who served as Pillowtex’s chief financial officer with Perdue, said a pension liability of at least $50 million didn’t surface until after Perdue came to the company. Once Perdue and Harmon told the banks who owned Pillowtex about the pension fund problems, the banks decided to sell, Harmon said.
“That was definitely not what David signed up for,” said Harmon. “He was brought in to grow the company, to turn it around, and he had a pretty good track record of that at Reebok. And the circumstances were just totally different from what he was told by the board and the bank.”
Joining Dollar General as its CEO in April 2003 allowed Purdue to put Pillowtex behind him, and his time leading the company has served as the cornerstone of his bid for Georgia’s open U.S. Senate seat. Within a year of Perdue’s arrival, the company’s stock price doubled. Sales rose, new stores opened and concerns over an SEC investigation eased. The board of directors extended his contract.
But in late 2006, challenges surfaced. Rising gas prices cut into customers’ spending. Profits declined and stock prices dropped. Rumors of a buyout swirled, and the company announced plans to close 400 stores. A private equity firm purchased Dollar General in 2007 and assumed its debts in a $7.65 billion deal.
Perdue stepped down. While the company had grown under his leadership to about 8,200 stores with $8.5 billion in sales, some financial analysts and stockholders had complained of an aggressive growth strategy that ignored inventory problems and hurt the bottom line.
Perdue left Dollar General as a multimillionaire. Federal tax returns show he received nearly $42 million in income between 2007 and 2008.
But his wealth has also become a campaign issue. He’s poured $3.1 million of his own money into the race, which has helped him keep pace with Kingston, but he’s also been portrayed as an “out-of-touch elitist.”
“My friend is telling everyone ‘I can fix the problems in Washington,’ yet as CEO of Pillowtex, he bankrupted the company and received a million dollars on the way out,” said Kingston, 59, referring to Perdue during a debate before the primary.
Perdue continues to draw on his business experience as he campaigns, although his frustration over the attacks sometimes surfaces.
“You think you’ve had a good career until you see it through the eyes of other people,” Perdue said with a smile during a campaign stop in May.
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