By and  on February 28, 1994

NEW YORK -- The big-name tailored brands used to be the backbone of the fashion jewelry business.

But after several rough seasons and recent moves by two major players -- a Chapter 11 by one and downsizing by another -- questions about the future of the big brand are being raised with increasing frequency.

Reflecting mounting financial problems and consolidation, Crystal Brands Inc., whose jewelry operations epitomize the big corporate approach to the tailored business, filed Chapter 11 in late January. At the same time, the company said it would consider selling off its jewelry operations, which consist of the Monet, Trifari and Marvella brands and account for an estimated annual volume of $175 million.

This month, Napier, another of the industry's most established brand names with an estimated volume of about $50 million, embarked on a downsizing and restructuring program. While these operations are looking vigorously for solutions, industry observers are asking whether there's any place left for firms grinding out basics under large corporate structures -- or whether the tenor of the times demands a strictly entrepreneurial approach with a constantly changing array of product.

"There's no question that these are major shakeups for our industry," said Erwin Pearl, owner of a fashion jewelry company bearing his name. "But in this business, where you must be able to capitalize on trends at a moment's notice, a company that's too numbers-oriented and too cumbersome to react quickly is going to get left behind eventually."

"None of this comes as a surprise," said Carolee Friedlander, owner of fashion jewelry firm Carolee Designs. "The tailored part of the marketplace has been ailing for the last four or five years, and companies that have built their bases there have become so management-driven, rather than customer-driven, that I think they might have lost sight of this and weren't able to react in time."

Others felt that there is still a place for these firms, although the roles they play in the future may be smaller than they've been in the past.

"Branded jewelry business has always been the backbone of this industry, and although it's not what it was 15 years ago, it's still important," said Pat Galliers, vice president of accessories for Federated Merchandising, Federated Department Stores, Cincinnati. "I don't see that changing."Patricia Stensrud, president and chief executive officer of Victoria Creations, noted that "the larger companies still do have their places in the business, because as long as there are large retail conglomerates, there will need to be companies with the capabilities to distribute to and service them."

While Victoria Creations concentrates largely on licensed designer lines, including Karl Lagerfeld and Givenchy, it has seen its share of problems. In its most recent half, the six months ended Dec. 31, it posted a loss of $1.9 million, against a loss of $1.5 million a year ago. Sales were $20.7 million, against $21.5 million a year earlier. The firm reported sales to department stores gained in the most recent quarter but this was offset by low international volume and a drop in sales of out-of-season inventory because of better management.

Lou Valenti, president of the women's division of Swank Inc., which also has designer lines with Anne Klein and Anne Klein II, had this take on the situation: "It's making companies like mine look at how we're positioned in the marketplace, what we need to do to avoid getting into the same position and how to capitalize on what is working well."

Some noted the problems at Crystal Brands and Napier could make retailers slightly uneasy when it comes to fashion jewelry as a whole.

"It might make retailers who have made major investments in one of those companies a little reluctant to devote the same amounts of money and space to others," said David Sukonik, senior vice president of sales and marketing for 1928 Jewelry Co., based in Burbank, Calif.

Meanwhile, executives at both Crystal Brands and Napier say they are determined to bounce back.

Napier has cut 15 employees from its field sales operations, according to Keith Cook, chief operating officer. It is also planning on offering early retirement packages to some of its senior staff, although Cook wouldn't elaborate as to how many positions this will eliminate.

Napier, which is based in Meriden, Conn., with a showroom here, employs 1,000 people.

Cook said the main point of the restructuring is to cut back on overhead and concentrate on what it needs to do most -- change the orientation of its merchandise."What we're stressing is making changes in the product line in order to get out of the tailored jewelry trap," he said.

Crystal Brands is steering a similar course. Although the firm already went through a restructuring last April that consolidated its three brands into one company, president and chief executive officer Judy Harrison said the firm's real focus needs to be on the jewelry itself. As reported, Harrison came in to head the Crystal Brands jewelry group this month. She was president of the handbag and small leather goods division of Liz Claiborne.

"We need to go back to doing what worked when business was good -- concentrating on fashion and quality," Harrison said. "We also have to be self-critical and see what led to the financial situation we're in.

"I think the fashion jewelry business has become too service- and commodity-driven, too operational," she added. "Rather than stressing service and in-store support as much as the product itself, we need to put the product first and use the other things as supporting factors."

To Read the Full Article
SUBSCRIBE NOW

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus