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Leslie Fay, Li & Fung Strike Deal

NEW YORK — Yet another dramatic chapter is being written in the storied history of the 55-year-old Leslie Fay Co.<br><br>Looking to revitalize itself under its new executive team, Leslie Fay has signed an exclusive sourcing deal with global...

NEW YORK — Yet another dramatic chapter is being written in the storied history of the 55-year-old Leslie Fay Co.

Looking to revitalize itself under its new executive team, Leslie Fay has signed an exclusive sourcing deal with global trading giant Li & Fung (Trading) Ltd., while it prepares for a spring relaunch of its signature sportswear line and a fall 2003 revival of its Outlander label.

With a new chief executive officer at the helm since March, Leslie Fay is plotting a return to the Seventh Avenue spotlight. Over the past few months, ceo W. John Short — aided by president and chief merchandising officer Linda Larsen German and chairman John Pomerantz — has reorganized the newly private company’s operations and divisions, shifted executives and finalized plans to relaunch hibernating brands.

In a group interview at the firm’s offices at 1412 Broadway here, the three executives said retailer’s low inventory levels coupled with the current state of the economy make for an appropriate time to remain cautious, as well as for the rest of the year. But Short assured that the company’s prudence is not permanent. Now is the time to set people up liking the product, he said, and the company will catch up on sales down the road.

Leslie Fay’s volume bottomed out at $125 million after it emerged from a four-year stint in Chapter 11 bankruptcy in 1997. It has grown to an industry estimate of $212 million today, but has a long way to go from an almost $850 million peak during the early Nineties. But Pomerantz and Leslie Fay survived its infamous accounting scandal that rocked the company in 1993, and the affable chairman remains focused on maintaining and rebuilding retail relationships.

As for whether the firm would ever regain its lofty volume, Pomerantz’s reply was, “That would be nice.”

Leslie Fay’s global sourcing structure was another area of the company that took a hard hit from its financial woes. As part of its reorganization plan five years ago, Leslie Fay closed its long-time production facilities in the Wilkes-Barre area of Pennsylvania. It has moved most of its production offshore, but maintains some local manufacturing, which Short said is important in chasing trends.

To reduce cost by taking the sourcing operations out-of-house, Leslie Fay executives told WWD that the company has entered into an exclusive agreement with Hong Kong-based Li & Fung, the $4.2 billion global sourcing and supply chain management company. In the new agreement — which was finalized at the end of June — Li & Fung is now fully responsible for all of Leslie Fay’s fabric and manufacturing sourcing worldwide.

Li & Fung also absorbed Leslie Fay’s Guatemala sourcing office, it’s only remaining sourcing bureau. Short said Li & Fung’s knowledge of the Far East combined with its sound reputation made for an ideal sourcing partnership.

“Cash is best deployed working on product, price value and marketing,” Short said. “By partnering with Li & Fung, we allow ourselves to redirect our funds into the front-end of the business and we significantly enhance our negotiating power with the mills, which will result in full margins for our retailers and for us. Li & Fung has tremendous weight in markets around the world.”

Li & Fung appointed Debora Vinson as division manager for the Leslie Fay account, along with a team of five product managers to work directly with the firm in New York. Additionally, there are about 50 to 60 other people that will work on the Leslie Fay account in its network of 68 sourcing offices in 40 countries. Currently, areas where Leslie Fay teams have been placed include: Hong Kong, The Philippines, Indonesia, Korea and India.

On the Leslie Fay side, Lee Polsky was hired as senior vice president and is the new head of global sourcing. Polsky has been involved in the implementation of Li & Fung as it becomes the company’s exclusive buying agent outside the U.S., which is to be fully implemented this week.

Short said apparel sourced by Li & Fung will start hitting the market in spring 2003 for the Leslie Fay Dress and David Warren brands, as well as knitwear and sweaters for the entire company. Li & Fung will source for the rest of Leslie Fay’s divisions starting in fall 2003.

“Li & Fung will find the best areas in the world to manufacture and strive to minimize lead times,” Short said, adding that another key objective is to focus on design details and embellishment in the product. “We want to make sure that the price-value equation in every item in every line represents great value to the final consumer.”

The agreement with Li & Fung and the announcement last week to sell Trio New York are the first major marks that Short has made on the company since he began working there in March. In keeping with its current plan to remain cautious and streamline operations, Leslie Fay announced after a board meeting Thursday the decision to sell Trio, the ready-to-wear line it acquired only eight months ago, as reported.

Short said Trio — a nine-year-old company designed by husband-and-wife team Steven and Judy Garfield — has too similar of a market to David Warren and the licensed Liz Claiborne Dresses and Evening lines. In an interview last week, Short said Trio was not a strategic fit in terms of remapping.

“When you look at the power of the Liz Claiborne and David Warren names, Liz is the top of the heap and David Warren is a strong second,” Short said. “Trio is a faraway third in our stable of brands.”

Short questioned whether or not a company starts to cannibalize itself by having too much investment in the same distribution channel, but cited no plans to sell other areas of the business. He also said the company is always on the lookout for new brands, as long as they don’t overlap with other labels in Leslie Fay’s current group.

In another result of the cautious attitude at Leslie Fay, the company’s planned relaunch of the Outlander label for fall 2003 still has a green light, though the project has been postponed for one year. Outlander, which Short said was a $50 million brand in the early Nineties, was known for its novelty knitwear. But Short said it’s necessary to focus on squaring away the core business before relaunching other labels. Short said he hopes Outlander will offer a more diversified portfolio of brands through the line’s sportswear and knitwear.

Further, Short said labels that carry high brand recognition with consumers and retailers — such as the dormant Breckenridge and Personal Sportswear labels — are projects that he would like to see relaunched in the future, though executives at the company have made similar claims since 2000.

Leslie Fay Sportswear, however, which has not been produced for the past three years, will relaunch at the beginning of August during market week here with a new spring 2003 collection.

The sportswear line has been designed alongside Leslie Fay Dress, in terms of fabric and color themes, in an overall goal to weave Leslie Fay Dress and Sportswear into a more unified brand. Leslie Fay Dress is headed by Cate Bandel, who has held the post of president for the past year.

Frank Spina, a former Maggie London executive, joined Leslie Fay on July 1 as design director of the dress division. Spina will report to Bandel, as well as collaborate with the designer of Leslie Fay Sportswear — a vacant position that the company said it’s looking to fill.

Spina is also coordinating design with the company’s shoe and handbag licensees, with the goal of updating the style to match that of the overall Leslie Fay image.

Pat Kinney was hired in June as president of the entire sportswear group, which includes Joan Leslie, Haberdashery and Leslie Fay Sportswear. It will also include Outlander when it launches. Lynn Olsen was hired last month as the director of merchandising for the sportswear group.

“The Leslie Fay customer is really 55 years old and above,” said Larsen. “We want to bring clarity to the brand and tie sportswear [and the main collection] with an aesthetic that is unified. We don’t want to walk away from our customer, but we need to adjust the product to be from 44 to 59 years old.”

Larsen, who’s primary goal is to oversee product development, said there will be changes to the clothes starting in spring 2003 in terms of a more youthful fit and by being more trend oriented.

“The product will be appropriate,” she said. “We’re implementing these changes subtly, in ways that aren’t scary to the consumer. Change will be obvious and what we really tried to do is honor the existing consumer and not disappoint her, yet bring the line subtlety forward to a more updated and youthful look.”

Annette Mathieu was promoted to president of David Warren Dress, where she was previously the head of merchandising for the division.

Brands under the Leslie Fay umbrella will also see what Short calls an “image audit” and will receive new labels and hang tags, starting with the Leslie Fay brands this spring. Jennifer Crawford was hired in June as director of marketing and creative services to oversee the new image at retail. Changes to the other brands will be rolled out as soon they are finalized, though Larsen did not disclose dates or descriptions of the changes. Image-oriented Web sites for each brand, with information about retail partners and store locations, are also planned, but dates are yet to be determined.

As for which brand under its umbrella had the most potential, the executives pointed to Cynthia Steffe, the contemporary sportswear line acquired by Leslie Fay in 2000.

Leslie Fay, founded by Pomerantz’s father, Fred, in 1947, was one of the first to go public, and has since been taken private and public several times over the years. As for taking the company public once again, Short said there are no current plans. However, he said the company’s primary investor, Three Cities Research, has a track record of investing with companies that eventually go public and that a stock offering of some sort is a possibility down the road.