DENIM DISH

ROHDE TO LEE? Some key executive changes are expected to be announced Friday at The Lee Co., the Merriam, Kan.-based denim manufacturer.
According to industry reports, Ellen Rohde, who has been president of MarithA & Francois Girbaud NA since November 1993, will move to Lee to take a top marketing post. Both brands are divisions of VF Corp. She will relocate from Greensboro, N.C., to Kansas.
Rohde would report to Timothy Lambeth, president of Lee. She will be responsible for unifying the sales and marketing of the Lee and Riders brands.
Reportedly, no successor will be named for Rohde. Instead, Girbaud will restructure and Rohde's job responsibilities will be redistributed.
Girbaud has been VF's weakest denim brand for several years and was cited by the company this week as one reason the corporation's second-quarter denim margins were soft, as reported Wednesday.
Rohde, reached at Girbaud's New York office, declined comment on the report, as did a spokeswoman for VF.

GUESS GETS A LIFT: In raising Guess Inc.'s debt ratings last week, Moody's Investor Service cited the company's successful licensing programs and its focus on its core denim business.
"Despite the difficult retail environment, there is tremendous stability with cash flow and earnings with this company," Filippe M. Goossens, a high-yield analyst at Moody's, said.
As reported, the senior subordinated debt ratings on about $130 million of debt were raised to Baa3 from B1.
Since the exit of Georges Marciano as chief executive officer and head designer in August 1993, Guess has licensed out all its lines except its men's and women's denim products.
Moody's believes Guess's concentration on its core lines has enabled it to continue to charge a premium for its denim products "despite the abundance of jeans available at cheaper prices."
While pointing out that consumer acceptance of higher prices for its products largely reflects a strong marketing campaign, Moody's said Guess has benefited from "not charging a tremendous premium" for its products, unlike some of the denim lines introduced by sportswear companies.
In addition, Moody's said Guess has benefited from its decision to stay in the upscale department stores and specialty store channels rather than sell to lower-priced distribution channels.
"Unlike some other high-end denim brands in the 1980s, Guess has avoided selling its products to the mass merchandisers in order to build sales volume, thereby preserving its niche," Moody's said.
Goossens noted that many brands moved to this volume-based approach, specifically citing Jordache. Jordache, he said, now "has to compete against private label brands."
The decision not to move to the lower distribution channels triggered the $220 million buyout of Georges Marciano's 40 percent stake. He had stated his intention to take Guess's products more down-market, Moody's pointed out.
With the buyout of Georges Marciano's shares, Guess is now owned by his three brothers: Maurice Marciano, chairman and ceo; Paul Marciano, president and chief operating officer, and Armand Marciano, senior executive vice president.
Moody's noted that although gross margins have declined due to Guess's shift to licensing programs, operating margins have improved and have been in excess of 22 percent for three years, partly due to good cost control. Moody's also expects royalty income to increase with new licensees.
Growth opportunities for Guess include more international expansion as well as the continued rollout of company-owned full-price stores. Moody's expects Guess to open 12 such stores this year, bringing the total to 67 by Dec. 31.
Moody's said Guess's credit protection remains healthy, with strong cash flow resulting in interest coverage at the end of 1994 exceeding 10 times. However, Moody's said, it "remains concerned about the company's dependence on one product line, denim, and on the consumer's continued willingness to pay a premium for the company's products, and its reliance on three Marciano family members who form a major part of its senior management team." Moody's also pointed out that it expects "debt levels to remain high, given its penchant for distributing much of its cash to shareholders, and for generously compensating its senior management."
In 1994, Maurice Marciano was paid a base salary of $2 million and a bonus of $1.95 million, Paul Marciano earned $3.8 million and Armand Marciano $2.4 million. The figures represented substantial pay cuts for the latter two.RIDERS NEWS: Riders is adding some new licensing categories. The mass market denim brand, a division of The Lee Co., has signed Hermal, Jaclyn and Amherst Hosiery. The three groups will ship for fall/holiday 1995.
Hermal, a division of Oak Hill Sportswear, will manufacture women's and girls' basic and fashion leather belts to wholesale from $4.50 to $8.50. Jaclyn will make women's and girls' basic and fashion handbags and backpacks, in vinyl, leather and fabric, wholesaling from $7 to $20, and Amherst Hosiery will make basic and fashion cotton socks to wholesale from $1.50 to $2.75. Riders would not make first-year sales projections for the new categories.

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