By and  on July 22, 2010

Nitin Kasliwal is out to be a global force in the fashion business.

The vice chairman and managing director of SKNL is determined to create a worldwide apparel and retail powerhouse and he’s using HMX Group as his launching point in the U.S.

The publicly held S. Kumars Nationwide Ltd., which has been in business since 1948, is one of India’s leading apparel and textile companies with projected annual sales of $1.4 billion this year. Its slogan is “Clothiers to the Nation Today, the World Tomorrow,” and Kasliwal has taken that mandate to heart.

In his first interview since acquiring a 90 percent stake in the former Hartmarx Corp. last August, taking its operations out of bankruptcy, Kasliwal said that, in the past 11 months, the newly formed HMX has undergone an “amazing transformation. I always knew there was massive potential there, but my hat is really off to the team.”

He credited Doug Williams, chief executive officer of HMX, and the group he assembled after coming on board last year as the catalysts of the turnaround.

Williams, a former group president at Polo Ralph Lauren Corp., said he joined HMX because he believed in Kasliwal’s vision. “This is not a private equity deal. When I met Nitin, he told me he wanted to build a global powerhouse in the apparel business and this [HMX] was just a leg of the stool.”

Kasliwal saw HMX as “an ideal way for us to get into the U.S., which is the largest consuming market in the world.” He viewed the company as “a jewel that had lost its shine but, with polishing, will become a crown jewel. It has phenomenal potential.”

Over the next five years, he said, he expects to grow HMX into a “multibillion-dollar enterprise with various categories of product — not at the discount level but from the middle upward.”

Williams added: “What we’re doing is building a platform to create a multibillion-dollar company through organic growth and acquisitions.”

The first steps were to reorganize the company and revamp the product offering. In the past, the company spent $5 million a year on rent for its Chicago headquarters and four different offices in Manhattan. Last week, the consolidated company unveiled a new showroom-gallery at 125 Park Avenue in New York City and its staff in Chicago will soon relocate into HMX’s factory in that city, saving $3 million a year.

Back-office duties for all the brands, previously separate, have been consolidated as well in Rochester, N.Y., where the Hickey Freeman factory is located.

With most of the debt load and assorted creditor claims still attached to the old Hartmarx, which remains under bankruptcy court administration, SKNL and Emerisque Brands U.K. Ltd. bought only the assets of the bankrupt firm for $128.4 million last year. With lower overhead, stronger business conditions and a clear separation of the old and new operations, Kasliwal said that HMX is now profitable.

“We will have an EBITDA[earnings before interest, taxes, depreciation and amortization] profit this year,” he said, and “will be a very profitable business going forward.”

The primary focus for the company is seven core brands: Hickey Freeman, Hart Schaffner Marx, Bobby Jones, Coppley, Exclusively Misook, Simply Blue (Christopher Blue Denim and Worn) and Monarchy. Austin Reed is also viewed as a strong contributor to the company’s bottom line.

Williams said that, for fall, orders are up more than 40 percent over a year ago when retailers were uncertain about the future of the company. “Last June, July and August,” he said, “things were in total disarray. But now, we’ve built a solid foundation, we’re executing and delivering on time.”

He expects orders to continue to strengthen as retailers see the complete product revamp spearheaded by creative director Joseph Abboud. The designer said he looked to the heritage of the brands and interpreted that in a modern way. When the company was moving out of its headquarters in Chicago, dozens of vintage paintings believed to be by Maxfield Parrish surfaced. They showed the collections in all their glory and are now hanging throughout the company’s New York offices.

“It’s a multimillion-dollar art collection and that was my inspiration,” Abboud said. “With all due respect, I didn’t want to be encumbered by the last seven to 10 years. There was too much shoulder, too much chest. It had become commodity goods.”

Instead, Abboud has modernized the silhouettes, injected a dose of fashion into the offerings and created entire lifestyle collections for each label. Hickey Freeman is the quintessential “American luxury brand,” he said, “and rivals many Italian companies.” Hart Schaffner Marx is a “spirited American brand” and one of the biggest businesses for the company. “It’s where I can push madras and have some fun with it.”

The merchandise is now the weapon for HMX to use to reach its goal of creating a business rooted in the U.S. but that will reach internationally as well.

“We’ve already had initial meetings abroad,” Kasliwal said, and within three to six months, Hickey Freeman, Hart Schaffner Marx and Bobby Jones will be exported.

Kasliwal believes the brands will flourish because of their quintessential American heritage. “Right now, Polo Ralph Lauren is the only U.S. powerhouse brand in the world,” he said. And although he doesn’t expect Hickey Freeman to reach Polo’s level anytime soon, he is hoping it can be the second largest American label by 2015.

Williams said, currently, Hickey Freeman is distributed in Japan and Hart Schaffner Marx is distributed in China through partnership deals, and he’s talking to companies in those countries as well as in South Korea and Europe about further international growth. “We feel we have an opportunity to export American style on a global basis,” he said.

Closer to home, HMX will add a handful of retail stores to support the brands, including 15 to 20 Hickey Freeman freestanding boutiques. Right now, there is a Hickey Freeman unit on Madison Avenue, which Williams said is running 40 percent ahead of last year, while Oak Street in Chicago is up 35 percent and Market Street in San Francisco is ahead 30 percent. He attributes the stores’ success to subtle “tweaks” in the design for the current season. “And what we’re doing now [for spring] will really rock the stores,” he added.

He said the company is actively seeking space in Washington’s Georgetown neighborhood as the next location for Hickey Freeman, and the plan is to open select stores internationally as well. “Now that we have the product ammunition, we have to be very strategic in the real estate locations we find. We have the patience to find the right spots and the impatience to get it done,” Williams said.

He believes Hart Schaffner Marx and Bobby Jones are also ripe for select retail locations. “We have the right product now to do that,” he said.

Williams said the former management had been “chasing the Italian [men’s wear brands.] But Hickey Freeman is not Italian. We have a responsibility to the heritage but it still needs to be relevant today.”

One differentiating factor is that Hickey Freeman is made in America and Kasliwal denied market rumors that SKNL was seeking to cut costs and move production overseas. Williams said the factories in Chicago and Rochester are running at full capacity, while the one in Hamilton, Ontario, Canada is at 70 percent.

“Made in America is fundamental to this business,” Kasliwal said. “It’s a serious issue for us. It’s not the fact of pleasing the unions or the workforce, Hickey Freeman is an American icon and it would be foolish for it not to be made in America.”

Additionally, with Hickey selling at the luxury level, manufacturing the brand in the U.S. is essential to command the price.

“As long as we can continue to sell at the price we’re selling at, this is an extremely profitable business for us,” he said.

Kasliwal also addressed the ongoing enmity between SKNL and Emerisque involving fee disputes and consultancy services that arose from their shareholders’ agreement, which is now the subject of an overseas lawsuit. When bankrupt Hartmarx needed an exit strategy in 2009, it was London-based financial investment firm Emerisque that initially bid for the men’s apparel firm. Emerisque brought in SKNL, which ultimately won out as the strategic business purchaser. Kasliwal did not deny the dispute but stressed that it is “irrelevant” to HMX and has “no bearing on the operation” of the business.

One thing that is expected to have an impact on the business, however, is the new fall ad campaign. The company hired Annie Leibovitz to shoot the new campaign for Hickey Freeman. The images were shot in Los Angeles and feature Alexander Skarsgård of “True Blood” as the model. The campaign was overseen by ad man David Lipman and will break in the September issues of Vanity Fair, GQ, Details, Esquire’s Big Black Book, Interview, V Man and Menswear.

All in all, big changes for the former sleepy Hartmarx Corp.

Williams said Kasliwal is the rare executive who is able to “identify talent and give them the resources and the latitude they need to run the business.” And SKNL has been willing to provide the means it takes to revitalize a venerable brand. “If it wasn’t for their support, I don’t believe these brands would be thriving as they are today,” he said.

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