Skip to content

Women More Active Than Ever, And Fashion Shows It

wmateThe women’s activewear business is on an upswing, according to manufacturers and buyers at the Super Show here last week.

Observers cited two reasons: More women are interested in physical fitness, and the fashion and styles available in the market now – particularly those in vibrant colors – have made activewear more popular.

Retailers said they are excited about this development, and many plan to increase their inventories and sales of women’s activewear this year. Suppliers are looking at it as either a growing market or a new one.

Wilson, for example, introduced its first women’s tennis line at the Super Show. Companies that already offer women’s activewear want to increase their involvement.

“Women’s represents 10 percent of our business now, but we believe it has a larger potential,” said Steve Gomez, director of marketing for Nike’s Apparel Division.

Gary Peck, vice president of marketing for the textiles division of Adidas, U.S.A., agreed. Like Nike, women’s represents 10 percent of Adidas’s business, which Peck said is “in sync with what other companies are doing.” He said, “We do see a lot of potential in the women’s business.”

Attendance at this year’s Super Show, which ended Sunday, was more than 85,000, about 8,000 more than in 1989. Show officials said department store representation was very strong.

When asked how strong her department store business was, Marilyn Tam, president of Reebok’s Apparel Division, laughed and said: “We have 35 department store appointments today, alone. We’re beginning to do more business in department stores.”

A manager for Lady Footlocker, who asked not to be identified, said that women’s activewear is “definitely a growing market. The colors are very vibrant now and women are attuned to them and the fashion available.”

Tony Cantini, manager of an Appalachian Athletics store in Harlan, Ky., said the industry is geared toward men’s wear but that women’s is a growing market. “More women are doing fitness programs and running,” he said, “but fashion is helping it, too. They want to look pretty.” Women’s wear is already 20 to 25 percent of the store’s apparel, but he plans to increase that. He did not say by how much.

Tim Shepherd, manager of Honus Wagner Co., Pittsburgh, Pa., said he has just recently opened an area in the store specifically for women’s activewear. Women’s sales, currently done with Hind and Nike, represent only five percent of total sales but, he said, have the potential to capture 15 to 20 percent of the store’s business.

Manufacturers are offering vibrant colors in all areas of athletic wear, and the collections are color-coordinated. Several resources said coral is a hot color for fall. Most are using the bright colors on a background of white or black.

Warmups are made of fleece or various kinds of nylon – Supplex, nylon satin, or IZ nylon. Fashion touches include contrast color cuffs and collars, tie-dyed looks, and discreet logos looking more like unusual designs or crests.

Fred Perry Sportswear has completely revamped its apparel lines. Joy Miller, director of U.S. sales and marketing, explained that the company’s licensing agreement expired Jan. 1, and now everything is being made in the U.K., rather than Hong Kong and Singapore.

The Fred Perry women’s line is all cotton in classic styling. The pieces are coordinated. Distribution is to better resorts, pro shops and other high-end stores.

“The line is not promotional,” Miller said. “We want to keep it clean.”

Nike’s distribution, said Gomez, is primarily through sporting goods stores, but also to some department stores and specialty chains. Nike is projecting $300 million this year in apparel sales, with 10 percent in women’s. Introductions at the show included cycling outerwear with the “pitzip” – a zipper at the armpit that unzips to let in more air – an expanded walking line, and a jacket that folds into a fanny pouch.

Mary Haskell, marketing manager for women’s, Adidas, said that the firm has cut back on its number of stock keeping units in women’s to focus on “what we do best.” The line is narrower, but Adidas also wants to increase its sales.

Although distribution is primarily to sporting goods stores, Adidas wants to expand more into department stores and specialty stores, said Peck.

“Most of the consumers are shopping at the department store level,” he added. “Once you get into that, you can start developing a track record and see more growth in the women’s business.”

Reebok showed some new looks for fall, including what it calls “abrasion invasion” – a dye process that imparts a speckled look on fabrics. The line is over-sized and baggy, and colors, though rich, are darker than the bright colors seen elsewhere at the show.

Tam said it has been received “very well.” She said, “We’re doing an evolution so we don’t look like everyone else.”

Donna McLin, marketing manager for tennis apparel at Wilson, said the company introduced its women’s tennis line because “the trade channels we’re in, pro shops and specialty stores, are 70 percent women’s clothing.”

Categories: Uncategorized.

Underwear Isn’t Just A Blah Category

uijabcWhen underwear was no longer in the cards at Kentucky Textiles, Inc., two activewear lines, called Laps and Sloppy Joes, sprang up within a year of each other as replacements for a longstanding business. Today, the two lines are racking up a combined volume of $30 million a year.

In October 1981, Wayne Shumate, chief executive officer of Kentucky Textiles, of Paris, Ky., sold his interest in Jockey brand men’s underwear back to Jockey International. Since shortly after Kentucky Textiles was founded, in the mid-Forties, it had been producing the underwear.

C.W. (Cliff) Shumate, Kentucky Textile’s vice president of sales and Wayne Shumate’s son, said a breakup and change in the Jockey organization prompted his father to sell back his 35 percent stake as a partner in the company. Until then, Kentucky Textiles owned the contract to produce Jockey men’s underwear. But it still makes all of Warnaco’s Speedo racing and fashion swimwear – which it has been doing for 18 years – as well as the packaging for Johnson & Johnson first aid kits.

Laps was meant to augment these existing contracts and to pick up where Jockey left off. Cliff Shumate called Laps “a melding of its knitwear and Speedo businesses.” The line made its debut in fall 1984 and was followed a year later by Sloppy Joes.

Though Laps has been around longer than Sloppy Joes, the latter does a volume of $20 million, twice the sales of Laps.

During a recent market week visit here, Cliff Shumate explained the disparity between volumes for the two lines: “We were able to develop our own niche with Sloppy Joes by selling the line to beauty and health care industry channels such as retail tanning, nail care, and hair salons, nursing homes and retirement communities. In most cases, we are able to deal directly with the managers.”

Laps, on the other hand, has been slower to build through more conventional department store channels, where 40 percent of its volume is derived. Sixty percent of sales, however, are through specialty stores.

“With Sloppy Joes we don’t have to jump through hoops like we do with department stores; there’s been a quicker response,” Cliff Shumate continued. “When dealing with department stores, you’re up against this 200-year-old machine, which often doesn’t react quickly to doing things, says it doesn’t have the open-to-buy dollars for new resources or isn’t considering new lines. It’s a tougher sell and less control.”

By selling Sloppy Joes to its coterie of unorthodox retailers, Shumate said, there is little competition. The label is on a versatile line going from sweats to more dressed up mix-and-match knit separates with an emphasis on skirts.

Many of the items sold at these salons and other centers are novelty, impulse buys, he added.

Despite his critical view of department store bureaucracy, Shumate does find support for this Laps line from some prominent chains, such as Mercantile Stores Co., Inc., and Belk Department Stores, as well as several Frederick Atkins accounts.

While both lines are moderately priced, Laps differs from Sloppy Joes in that it is geared more toward the spectator activewear market. “We’re not out to compete with the Nikes and Reeboks of the world,” Cliff Shumate said. “Walking to the grocery store is about as athletic as it gets.”

For fall, Bev Vance, vice president of merchandising, described the Laps line as more streamlined and simplified than that of fall 1989. It features three colors – teal, fuchsia and blue – plus variations with black in horizontal stripe and pindot stripe patterns.

Fall’s Sloppy Joes offerings have a similar color story but are dressier, with looks like A-line skirts and straight 34-inch skirts. “But the line is done without falling outside the sweat suit mentality,” Cliff Shumate stressed. “We don’t want to lose our focus on that.”

Wholesale prices for fall in Laps, which is made in misses’ and large sizes, range from $7 for a sleeveless turtleneck to $17 for a cardigan in a crinkle knit fabric. Sloppy Joes has similar prices, opening with a dickey or bandeau tuve and topping out with a novelty pants set.

Both lines are made at the firm’s own vertical facility in Paris, Ky., a suburb of Lexington. “Everything is done there with the exception of making yarn, and that’s because we don’t have our own spinning plant,” Cliff Shumate said.

He said a quarter of Kentucky Textile’s workforce of 800 has been with the firm at least 15 years. “There is a lot of experience and knowledge to draw from,” Cliff Shumate pointed out. “The merchandising and marketing teams are young and the seasoned veterans back us up. It makes for a nice mix.”

Categories: Uncategorized.

Marketing Management: A Story In Failure

mktmtMarketing Management Group, a marketing consultant company specializing in SA companies, will soon be able to back up its advice with cash.

The company, which has been providing top management with marketing and investment strategies for three-and-a-half years, will, by the summer, be able to back up its advice with cash infusions of up to $400,000 through a newly created company, Seventh Avenue Capital, Inc.

Seventh Avenue is a federally licensed Small Business Investment Corp. formed last September to further assist Marketing Management in helping successful small and medium-size companies reach the next plateau.

Seventh Avenue will provide the financing to SA concerns and the money will be guaranteed by the Small Business Administration.

The company defines small and medium-size companies as those with sales of $5 to $30 million. Start-ups will not be considered for the SBIC financing under Seventh Avenue’s current plan.

Andrew Jassin, the founder and director of Marketing Management, 11 West 40th St., says Seventh Avenue has had an “incredible” reception in the financial industry. “In only a month, we are 25 percent funded and should be fully capitalized and ready to do business in three months,” he said.

At that time, Seventh Avenue will solicit or be approached by apparel concerns, which will then fill out applications for the SBIC program and, if accepted by both the government and Seventh Avenue, gain the needed financing.

The money is guaranteed by the federal government.

Jassin, who started the worldwide licensing/manufacturing organization for Karl Lagerfeld with Bidermann Industries and who was president and chief operating officer at theRegatta Sport/Jones Apparel Group from 1979 to 1985, hopes Seventh Avenue fills the void created by the recent consolidations of factors and lenders’ restrictive capital requirements of factors, banks and venture capitalists.

Seventh Avenue is a separate company from Marketing Management but will share management. Jassin said it is the first of about 300 such federally-licensed SBIC’s in the country to deal strictly with SA.

Under the licensing agreement with the Small Business Administration, Seventh Avenue will get its money at preferential rates, which in turn can be funneled to growing apparel and apparel-related companies. The SBA also sets guidelines for use of SBIC funds.

“Many times, apparel companies have the start-up financing and know how to grow their company from the ground up to a $5 million or $10 million-a-year company, but they find themselves short of capital or marketing ideas to carry their company to the next plateau,” Jassin said in a recent interview. “That’s where MMG and Seventh Avenue come in.”

Three-quarters of Marketing Management’s clients are companies seeking marketing, staffing or investment advice to get them back on the road toward continued growth, Jassin said. Now these companies can come away with advice and some financing to help them implement those ideas, he said.

The remaining clients, he said, are financially ailing companies who need immediate help, “sort of economic triage” to turn them around.

St. Louis-based Elder Manufacturing, Inc., a 74-year-old, $22 million-a-year manufacturer of children’s apparel, was an early Marketing Management client that owed millions to area banks which were about to step in and shut it down.

Jassin said Marketing Management stepped in, negotiated a 90-day stand-still agreement with the banks, then took a close look at the company’s financial situation, including its trademark value and future worth.

“Within the three-month period, we put together a book on the company and through our contacts in the industry, found a buyer suitable for Elder management,” Jassin recalled.

Elder makes boys’ and girls’ apparel under the Tom Sawyer, Becky Thatcher, Huck Finn and California Splash labels. It had been up for sale for eight months without attracting a buyer before Marketing Management was retained.

Joe Mercurio, vice president and director of design and licensing at Elder, said Marketing Management’s work in putting the September 1988 purchase together was “very good to excellent.”

Marketing Management has also set up Pacific Liaison Group, a wholly-owned subsidiary, to tap into available investment money in the Far East, or to provide its clients with the licensing and marketing opportunities offered by offshore companies.

For example, last May, Pacific Liaison was retained by Pan Overseas International Corp., a Taiwanese trading and investment company with interests in U.S. apparel and shoe companies, and Robert Lien, a principal, to turn around a Los Angeles-based men’s wear manufacturer.

The manufacturer, which had been running six-figure losses, had all the “typical” signs of trouble, Jassin said, such as inflated variable expenses.

“Most growing companies run into trouble gauging how high these variable costs should be.” he said. “Costs like redundant staffing, travel and entertainment expenses, sample expenses, cost of goods sold and warehousing costs are usually too high and the first to be cut.”

Putting the scalpel to Pan Overseas worked, Jassin said, and the six-figure losses turned into marginal profits at the beginning of 1990 and will be “six-figure gains by June,” according to Jassin.

Jassin said Marketing Management can succeed where other marketing and lending institutions fail, and get the respect of the banks and other lending institutions, because of the years of experience the company’s team brings.

Although there are other fix-it consulting companies in business assisting apparel companies, Marketing Management hopes to stand out because it is not tied to any one bank, factoring company or other professional service.

“We’re sort of freelancers, not tied to anyone’s services and therefore can provide our clients with the best services, at the most competitive rates, from those available,” he said.

Also at Marketing Management as a partner and managing director is Allan Ellinger, who was president of BASCO All-American Sportswear until May 1989, and was also president of Alan Flusser, Inc., and the Bill Robinson division of Bidermann Industries, and David Goldberg, the founder and former president of World Trade Credit Services, Inc., a consulting company. Goldberg also was president of J.P. Maguire & Co., Inc., a factor, and the general manager of the Factoring division of Chase Manhattan Bank, N.A. Both factoring firms have since been merged out of existence.

Despite many successes, not all of Marketing Management’s clients survive.

Jassin said he was retained by counsel to the David Cameron family several years ago to perform “economic triage” on the struggling young designer’s company.

After looking at the books, Jassin recommended that Cameron license a women’s dress line. “Cameron didn’t want to license out anything at that point, saying he wanted to remain a ‘true designing company,'” Jassin said.

Soon afterward, Cameron filed bankruptcy and is now in California and believed to be working in the movie industry.

Categories: Uncategorized.

VAT As An Idea Survives, If Barely

vatiTalk about establishing a Value Added Tax continues to circulate in the corridors of Washington, but the idea still gets a thumbs down from the administration.

John Taylor, one of the three members of the president’s Council of Economic Advisors, has a lot of positive things to say about creation of a VAT, a revenue-raising machine long anathema to administration conservatives – but it’s all conceptual. As a practical matter, Taylor negates the idea.

A VAT would boost the nation’s perilously low savings rate, which forces the government to finance the national debt abroad and buoys interest rates, according to Taylor. Contrary to those who say this tax would sock it to the poor, Taylor contends mechanisms could be created to make it less regressive.

For the economist, late of Stanford and Princeton universities, imposition of a VAT is no more than an academic proposition.

Taylor, who throughout his academic career has made many speeches on economic topics, has emerged as the day-to-day spokesman for the three-member council, espousing the administration’s monetary and fiscal policies. Michael Boskin, the chairman, generally reserves his comments for congressional testimony.

In an interview, Taylor discussed the issues concerning a VAT. “Perhaps if we were starting our tax system from scratch, creating a VAT is something I would consider seriously since one of its advantages is that it encourages savings because it really is more of a tax on consumption,” he said. “Perhaps if we hadn’t already had tax reform [in 1986] a VAT would be something to think about.”

Several members of Congress, most notably Sen. Ernest F. Hollings (D, S.C.), have expressed great interest in creating a VAT-based taxing system, where a tax is added at each level of a product’s handling or manufacture. Many Western European nations and Canada have created VATs, whose enormous tax revenues are used to pay for government-sponsored health care programs.

“Right now, though, we really need stability in the tax law more than anything else,” Taylor said. “We should stick with the current tax system we have and provide ways to stimulate savings more directly, such as by creating a Family Savings Plan.” Proposed by President Bush, the plan would encourage people to save money by allowing them to contribute to a fund from which they could withdraw their money tax-free after a given number of years.

Taylor, who also was a consultant to the Federal Reserve Board and the Congressional Budget Office before joining the three-member council last June, said the problems of regressiveness of a VAT – hitting low income people the hardest – could be worked out through tax exemptions. “I don’t think that these mechanical things are the important reason to be against a VAT at this point. Basically we have a good tax system,” but one he said that should be revamped to boost consumer savings.

“Through the 1986 Tax Reform Act we broadened the tax base and lowered marginal tax rates – an important thing for economic efficiency, and risk-taking. We also tended to increase taxes on savings in some areas,” Taylor said, “so now, we want to offset some of the discouraging things the government does about savings.”

(The U.S. personal savings rate is currently 5.4 percent, compared with a 3.2 percent in 1987 and a post-war average of 7.2 percent. Japanese consumers’ personal savings rate is about 15 percent.) The Bush savings plan, which has yet to go anywhere in Congress, is also attractive since, over the long run, it loses no federal revenues, while Individual Retirement Accounts would cause an immediate and continuing drain on the Treasury.

“With the savings plan, we basically are moving in the direction of reducing the tax on savings with all the advantages of a VAT, while still keeping our tax system intact,” the economist said.

Taylor, who also was an editor at an economics magazine where he specialized in macroeconomics and international economics, said the anti-trust scrutiny of mergers “is about right.” He said he did not believe the bankruptcy filings of Federated Department Stores and Allied Stores indicates leveraged-buyout-connected mergers should receive special federal oversight. In fact, the economist said, such failures and that of Drexel, Burnham, Lambert, the junk bond specialist that provided the wherewithal for mega-billion-dollar LBOs, are no reason for concern.

While some economists have warned that companies built on hundreds of billions of dollars of LBO-induced debt could be a house of cards just waiting to topple, taking the economy with them, Taylor avers these buyouts are good.

“The LBO activity for the most part has been healthy, [producing] a restructuring of firms. While there always will be certain companies that over-extend themselves, overall throughout the economy, if you look at debt-equity ratios, there is not a historically high level of debt,” he said.

Taylor added that he does not believe the recent string of well-publicized bankruptcy filings by some of the best-known retail firms will produce any domino effect on the economy, throwing it into recession. In fact, he said the economy’s vital signs are good, with inflation held in check and real GNP growth forecast at a 2.6 percent in 1990 over 1989 levels.

The economist maintained that Bush’s proposal to reduce the capital gains tax – rewarding those who keep gains with lower taxes – could alter the investment strategies of U.S. business, including those that drove LBOs during the 1980s. Through enactment of these lower tax rates “you are getting at this bias against equity finance, as well as the bias toward shorter term profits,” he said.

Taylor also argued that no new major actions need to be taken by the industrialized Group of Seven nations that, in effect would improve the U.S. trade deficit. “One of the big reasons that our trade deficit has been reduced in the past few years is that our budget deficit has come down, from 6 percent of Gross National Product (in the mid-1980s) to 3 percent today. If we then are able to get our budget deficit down to 1 percent of GNP by 1991, as required by the Gramm-Rudman law,” he said, “I’m sure a reduction in the trade deficit will follow.”

Categories: Uncategorized.

Designers Keep An Eye On Rates

dgkaeoBankers serving the apparel industry think that knowledge of the industry is the customer’s top priority in choosing a bank, and the banks serving the industry contend they have that knowledge.

This is followed by quality of service, speedy information, continuity of lending personnel, promptness and accuracy of execution, consistency in making credit decisions and the availability of state-of-the-art systems for letters of credit and cash management.

Surprisingly, most bankers put the rates charged on loans lower down on the apparel industry’s list of services provided.

Says Marian G. Wingens, senior vice president at NatWest, U.S.A., “Rates are not as important as you might be led to believe. If you’re way off the market it could make a difference, but I don’t think that a quarter of a point is crucial in a banking relationship. You can always buy business, but you can’t keep it unless you provide quality service.”

Adds Lawrence Bober, vice chairman and head of the credit committee of First New York Bank for Business, “Price is not a critical issue, in my humble opinion. It’s all the other things. I seldom hear a customer say it doesn’t want the loan because the bank around the corner is offering a quarter of a point less.”

Lissa L. Baum, regional manager in charge of apparel and textile lending at Chemical Bank, with about 11 years in soft goods banking, agrees.

“The most important is service. Knowledgeable attentive banking. Money is important, but you can get that at any bank. It’s the quality of service that makes the difference. With knowledge and understanding of the industry, a banker can add value. A banker can help open doors for a customer by helping with contacts-licensing or designers. These are the intangibles that a bank can provide for a customer, this type of networking.

“Everybody’s money is green, and it’s very competitive out there. Maybe some are a little cheaper, but that’s not crucial. The most important thing is understanding the customer’s needs and providing contacts and continuity. They don’t want to be dealing with a different account officer every six months. The average account officer at Chemical has been there for fourteen years.” In apparel and textiles especially, the level of knowledge is very important, Baum notes. “The apparel business is cyclical, and these firms need bankers who understand bad times as well as good times.”

At Chase Manhattan, Donald J. Gibson, vice president and division executive in charge of apparel-textile lending, says that for many customers, rates come first. “But there are some willing to pay a little more for better quality service, particularly for letters of credit, which are the lifeblood for importers. They want speedy service on LC’s, and they want the ability to quickly determine what they have out and what they have open. They want good information, and they want it fast.” Joseph Adamko, executive vice president of Manufacturers Hanover Trust Co., with more than 30 years in apparel industry banking, puts loyalty and industry knowledge on the top of his list. Adamko thinks that the important thing to the customer is to “get the money.” Rates, he says, “rank about number three in importance.”

He says the most important thing a bank can do for a customer is “give loyal support, know the customer’s business and the customer’s industry, so you can work out a plan and support it.

“All business people want to grow and prosper, and you can do it faster by leveraging, that is by borrowing money. The banker should sit down with the customer, go over projections, advise the customer and when you decide to support the plan, give prompt quality service. The customer also wants to know that you’ll be there next year and the year after that, too.”

Operating efficiency is also important to customers, say bankers. “They want to be sure that approvals come through on time and that information is timely and accurate. This is the age of information, and customers want information fast,” Adamko concludes.

Another veteran apparel lending officer, Marvin Rabinowitz, executive vice president of Republic National Bank & Trust Co., says the business has changed over the 22 years he’s been in banking.

“It used to be money but not anymore. Now the customer wants a banker that understands the business, peak borrowing requirements and understands and tries to convey what the customer needs to respond to a borrowing request.

“The customer wants to know that the bank has other customers in the same business. They also want backup in such other services such as merchant banking, long-term financing and cash management.”

What customers want in a nutshell, says James G. Lawrence, president and chief executive officer of Merchants Bank of New York, is a bank that understands their business and responds quickly. “They want quick decisions and a bank that knows what their needs are. Rates are secondary. I think relationships come first.”

Chase Manhattan’s Gibson agrees that knowing the industry is on top of the list.

“Customers want a bank that understands their business. They also want a bank that will provide state of the art service in cash management and trade finance. They’re looking for value-added like alternative financing options, private placements, ESOPs, tax-advantaged alternatives. Obviously rate is important. I should have said state-of-the art low-cost service.

“In addition to understanding their business, the customers want a bank that is consistent in its decisions. Continuity is also important. It’s disruptive to have to educate new executives to handle old customers. Lower turnover makes it easier for a bank to be consistent.”

Henry M. Kaplan, senior vice president at Bank Leumi Trust Co. of New York with more than 25 years experience in soft goods banking, also stresses continuity of lending personnel.

“So many new accounts come to us with stories about rapid turnover at other banks,” Kaplan says. “‘They’ve changed my account officers three times this year. I don’t know who I’m dealing with.’ This is the kind of complaint I often hear. Customers don’t like having to deal with new lending officers again and again.”

NatWest’s Wingens, who heads up the Astor Plaza office for middle-market lending, thinks the customer wants to know what to expect at a bank.

“Consistency and quick turnaround when needed on loan requests: That’s what I think is number one for our customers. They want to know that policies don’t change from one day to the next. It’s also very important that the bank understands the customer’s business and industry.

“They want reliable operations, good service and they want to know where to go and whom to call if there’s a problem. They also want the bank to be there for them when they call. Apparel makers also look for a strong letter of credit department. They want to be able to open up LC’s quickly without many mistakes.”

Lawrence Bober, vice chairman of First New York Bank for Business and chairman of the credit committee, who was with Manufacturers Hanover Trust Co. for 48 years dealing with apparel and textile companies, puts borrowers in two categories with differing needs and wants.

“The smaller companies that must be evaluated for credit purposes want a constructive banker. If the bank is amenable to making a loan, it’s easy. But if the bank is not amenable the customer wants to know why and what can be done to make it right. The banker should make it clear what the customer should do in order to get the loan.”

The company with no problem with credit is looking for good service – clear and accurate deposit statements, cash management, wire services and letters of credit – and wants it done with due haste. “They don’t want a $250,000 letter of credit to come out at $25,000,” Bober says. All borrowers want quick response and object to frequent turnover of personnel, he says, adding that “they all want bankers who understand their business.”

Categories: Uncategorized.

Apparel Manufacturers Have A Tough Time Finding Financing

amcKnowledge of the industry is high on apparel manufacturers‘ lists of what they require from their banks, but that knowledge is not always easy to find, they said.

In checking with financial executives of major apparel firms on what they were looking for in a bank, the most popular answers were:

* Knowledge of the apparel industry.

* Deep pockets and financial flexibility.

* Quick and responsive service.

* Long-standing relationships.

* Competitive rates.

Anthony M. Pisano, chief financial officer of Bernard Chaus, Inc., said his first concern is finding a bank that “understands the general risks and rewards of the industry.”

Paul Polishan, senior vice president, finance, and chief financial officer of Leslie Fay, said the two leveraged buyouts which Leslie Fay went through “really taught us a lot about the banks we deal with.” He said the bottom line is that a bank must understand your business.

However, Polishan added, “Apparel is not an easy business to understand and a lot of bankers don’t.”

“I would hate to find out too late that you’re dealing with a bank that didn’t understand your business.”

One example that is unique of the apparel industry is markdowns, Polishan pointed out. “Markdowns could depress profits. If a bank doesn’t understand an off quarter, it could cause problems.”

Pamela Hootkin, vice president, treasurer and secretary, of Phillips-Van Heusen, likes a bank that “takes pains to understand the company.”

Hootkin said she looks for a bank that will become a “business partner and understand the ups and downs.” She added that hopefully this sort of relationship will create “confidence in company management.”

This confidence, said Hootkin, is especially important today, given the turmoil and uncertainty in the retail community.

Jerry Johnson, VF Corp. chief financial officer, said if banks knew what they were doing in dealing with apparel firms there would not be a need for factors who do understand the industry.

Johnson said banks that understand the industry will eventually retain business. “Its not a race, its an elimination tournament.” In a time when banks “look more alike than they do different,” a relationship with a bank that comprehends a firm’s ins and outs can provide the competitive edge.

Johnson also noted that it is difficult to maintain relationships with banks. “There is nothing more frustrating than having some 25-year-old MBA walking into your office, rolling up his sleeves and saying, `let me tell you what I’m going to do for you.'”

Other cfo’s also seek long-term relationships.

Sam Miller, chief financial officer of Liz Claiborne, Inc., said “all our banking relationships are long-standing.”

In another view from Leslie Fay, Herman Gordon, senior vice president and general counsel, said he looks for a close relationship with people at the bank “so that you are dealing with an individual rather than an institution.”

Gordon said that all of Leslie Fay’s banking relationships are long-standing and the advantage in that is working with a bank that knows “what you’re all about. (There is) no need to prove your track record year to year.”

Polishan said it is “very important to have a relationship with the people you’re borrowing from.” He said that he lunches with his bankers every so often so that way “in good times and bad, you understand each others problems.”

While long-standing relationships are desirable, Pisano said that because of the “velocity of turnover” and “tremendous competition,” relationships are no longer possible. “Years ago, a guy was at a bank for 20 years, now when you call you find out he left three months ago.”

Miller noted the bottom line is that a bank must be responsive and not to take an account for granted, no matter how long a working rapport has existed. This sentiment was echoed by others.

Miller said he expects a bank to provide an “adequate level of service. Service is a very high priority.” Also, “quick turnarounds and responsiveness to our needs” are important.

For Polishan, a major concern is that the bank be responsive to the needs of the company. He added “flexibility and creativeness in repetitiveservices, such as letters of credit are also important.”

Stephen Ruzow, chief operating officer and president of Donna Karan, said “given the obvious, which is a good rate and adequate credit line,” a company such as Donna Karan, with a large amount of overseas business, wants a bank that handles letters of credit efficiently.

Special programs for employees is also something many cfo’s might look at if and when they are shopping for a new bank.

“It’s a fringe benefit,” said Miller. “We are always looking to help our employees.” He noted that one of the banks Claiborne deals with offers low-price loans and, occasionally, special sales on certificates of deposit. Other popular plans include direct deposit of payroll checks and the ability to cash checks.

Miller said that some banks market these options more aggressively than others. However, most of the cfos said this was not a decision-making factor.

Categories: Uncategorized.

Future Designers Know Their Best Tools

fdtsThe designers of the future will sit in front of a computer terminal that will reproduce in full color and in three dimensions whatever ideas jump into their heads.

If they don’t like the design, the touch of a button can change the color or texture of the fabric, change the shape or size of a collar on a blouse or lower the neckline.

Once a line or a number of lines is created on the computer, a manufacturer can call in the top retail accounts, run through every item, get their reaction and then decide what to scrub and what to put into production.

When the decision is made on what to produce and how many, the computer can take over a good part of the cutting function and help out with the sewing.

This is the world of CAD-CAM, computer-aided design and computer-aided manufacturing. While the cost of some of this equipment can run into big numbers, as in most technology, prices have a way of coming down rapidly.

On the design side, the emerging technology is three-dimensional designs, according to Emanuel Weinstraub of Emanuel Weintraub Associates, management consultants in Fort Leen N.J. “You can design a blouse or a dress and see how it drapes in living color.” He adds that this is not in widespread use yet.

Currently, the equipment in most widespread use is the computer-aided pattern maker and grader, but the computer-driven cutter is gaining in popularity. Computer design equipment and elaborate computer-driven systems for sewing rooms are just beginning to show up. The sewing room equipment generally involves a series of tracks on which precut pieces are transported to the proper station to be sewn and moved on to the next phase.

According to Stephen Sprinkle, a principal with Deloitte & Touche in charge of apparel consulting services, electronic pattern making, grading, scaling and marking equipment is now “virtually essential.”

It permits higher yields out of fabric, and is easily justifiable on a cost basis. The system in most widespread use produces a piece of paper and marks the fabric, but the fabric is cut manually. Sprinkle, who is based in Atlanta, said that a survey he conducted of 94 domestic apparel manufacturers showed that 61 percent had this type of equipment.

Weintraub adds “the price of the equipment has dropped sharply, and everyone should have it. Pattern making is available and proven. It’s old stuff.”

Sprinkle says that pattern-making equipment costs have dropped dramatically in recent years, from a range of about $80,000 to $120,000 five years ago to present costs of $20,000 to $30,000.

A sales executive at Gerber Garment Technology, Inc., who asked that his name not be used, said that marking and grading equipment goes for about $40,000. Payback time depends on volume, but generally the equipment pays for itself in about two years, he noted.

The latest advancement in fabric-cutting is the electronic cutter. A computer memory guides the knife that cuts the fabric. The cost of this is pretty high and can only be justified by high-volume producing.

According to Sprinkle, a computer-guided cutter does the work of the human cutter and does it mere precisely. This gets even more out of any given piece of fabric than the old system, which in the end still depends on the skill of the cutter.

“These electronic cutting systems used to cost about a half million per unit, but you can buy them now for $250,000.”

More people are now cost-justifying this system, according to Sprinkle. Electronic cutters are about midway through development and are taking over more and more.

“You cut a gorilla to cut through the layers of cloth that the electronic cutter can easily handle. Electronic cutting is taking over from manual control,” Sprinkle notes. His survey showed that 30.9 percent of the manufacturers responding said they had electronic cutters and 11.3 percent planned to buy them.

Weintraub notes that with computer-driven cutting equipment, “a computer-driven knife can get into nooks and crannies that a human operator could never manage.”

“You get maximum fabric utilization and can cut more intricate shapes. You could cut a corkscrew design.”

The Gerber executive said pieces of computerized systems have dropped considerably in recent years. They now run from $125,000 up to about $300,000, with most selling for about $250,000.

The cutters can handle anywhere from 50 to 300 layers of fabric, depending on the fabric and the equipment, according to Gerber’s representative.

“The payback is in higher fabric utilization, labor savings, speed and turnaround time. How soon the machine pays for itself depends on the manufacturer’s volume. As a rule of thumb, a manufacturer would need an annual volume of at least $10 million before this type of equipment makes economic sense.”

In the computer-aided design area, the payback is difficult to quantify, according to Sprinkle. “It would be a revenue-enhancer rather than a cost-saver,” he says.

However, Weintraub notes that electronic equipment used for designing can take from the design the technical specifications needed to produce it.

“This not only saves labor but speeds up the production process.”

While more apparel manufacturers are taking advantage of technological advances, Weintraub says that Europeans are more receptive than their U.S. counterparts.

“European manufacturers seem far more willing to invest in technology that will improve labor utilization, enhance quality and simplify management. U.S. apparel management isn’t usually thinking that way,” observes Weintraub.

Categories: Uncategorized.

CAD And Fashion Design Partner Together Well


Computer-aided design continues to gain momentum in fashion circles – from fiber producers to mills to apparel manufacturers – as more and more designers try out the technology to assess its potential.

There are many pros and cons.

“You can get better design with computers,” said Leon Hecht, president of The Cloth Co., a print converter. “You can design faster, which allows you to do more. And designs come out better related to engraving, which allows for faster engraving, thus speeding up the entire converting process.”

Hecht uses the Canon Laser 500, and other systems outside the company, for special visual techniques.

“Computers have had an irrevocable effect on all our lives,” observed Tom Platt, president and part owner along with his wife, Linda, of Tom and Linda Platt, Inc., designer dress company.

“Our job as designers is to recognize the world in which we live. We’re using computers in our accounting and production departments,” said Platt, but the firm has yet to use CAD systems for patternmaking or for style-designing.

“Computer design is very suitable for companies that produce classic clothing,” he added. “Their styles don’t change as drastically from season to season as they do in the high fashion end of the business. We’re constantly striving to make clothing in new ways and to see fabrics differently – to approach styling in a manner never seen before.

“I believe computers are limited because their total realm of experience depends solely on what’s been fed into them. The computer is suitable mainly for variations of style with slight modifications of classic styles which it can understand.”

Randolph Duke, designer-president of Randolph Duke, had this to say: “I like the technical achievement of computers as far as grading, marking, pattern work and all technical aspects of manufacturing are concerned. But I haven’t quite grasped the idea yet of having a computer design the collection.”

Alex Machin, owner of Splash, an art studio specializing in artwork for prints for junior, women’s and men’s apparel, said: “Computer-aided equipment works beautifully for sweater bodies and their presentations. But sportswear and tops and bottom manufacturers come back to us to do the final design. That’s because the printout is often unsatisfactory as far as color goes. But it is an inexpensive way of getting a total look for the whole line before it goes into production.”

Machin has used CAD systems before and still uses one at home – an IBM Paint Box – “but the colors are not correct,” he says. “They never come out as bright or as rich as painting. That’s why the apparel market prefers painted artwork.”

Ellen Green, vice president of merchandising at Andrex Industries, said, “Our fabric knitting business is very specialized for each customer and the computer helps us a lot. A customer will come in and see a concept, for example, a scarf idea which can be interpreted into a skirt or a jacket fabric.”

Anne Chase, Andrex’s stylist, added, “We use SciTex. It was one of the first computers developed for knits and is still the most versatile and easy-to-use system. Almost everything we do is done with the computer – from a small jacquard to a large patchwork.”

Computers give better designs, she added. “They’re fast and you can make changes easier. You can see a design on the computer screen before it goes into fabric form. It saves you a tremendous amount of development time.”

Green noted that in the Sixties, a designer would have to stand at the knitting machine to make corrections in the fabric and had to wait while the wheels and drums were remade.

“Sometimes, she had to punch discs to change a pattern and this took several days depending on how difficult the pattern was. Now, it’s possible to make changes prior to knitting a fabric.”

She also credits the computer for helping creative juices flow.

“As merchandisers and stylists, we’ve become more aggressive in our thinking because it’s easy to try new things. You can see the pattern and get instant gratification. One idea leads to the next, and you don’t lose your train of thought.”

But executives and designers noted CAD systems had some drawbacks:

“Outages and power failures can wipe out a memory bank so you have to make sure you have backup tapes,” said Chase. “We are losing designers with knowledge of knitting technology because some fabric designers and stylists feel all you have to do is draw on a computer.”

Platt said, “Regarding the creative process of apparel designing, a computer will never be able to make the decisions or put the creative energy into a project which can only come from human input.”

“The computer is less spontaneous, less earthy, less tactile,” said Duke.

“I’m very optimistic about the future and very open-minded about technological development,” said Platt. “Many of the technological developments in fabric come as a result of the computer and that works to my advantage as a designer.”

Hecht felt the computer is “a great tool for further artistic expression.”

He said The Cloth Co. will continue working with both CAD technology and the brush because both are “tools for designing.”

“You don’t throw away the knife because you have scissors or throw away the pencil because you have the brush,” he said.

“As a tool, the computer can save time and is as good as the designer who programs it,” said Duke. “I will continue working with the brush but I do think the computer will aid the industry. I love to sketch too much to give up my pencil or brush. There are certain locations like a cab or an airplane where the computer just isn’t convenient.”

“I would love to have more colors to control so that you could actually see all your colors on the screen,” said Chase.

Green sounded a similar note. “Now, you can put in six colors and see them on the screen. They’re primary colors plus black and white and you can modify them a little. But you can’t put in a khaki or a rose-pink, you have to stay with the primary range.”

Machin summed it up this way: “As soon as the industry comes up with a better printer and a faster printer, we’ll all be using CAD. It probably will take another five to 10 years because the quality of the paper that printers use is not adequate and the speed is too slow.”

Categories: Uncategorized.