HARRISON HELMS MONET REVIVAL

Byline: Sidney Rutberg

NEW YORK--With new financing in place, Judy Harrison sounds confident when she talks about a turnaround at Monet Group.
The fashion jewelry manufacturer was plucked from the Chapter 11 proceedings of Crystal Brands in December 1994. The buyer was a deep-pocketed investment group led by Richard E. Rainwater, a legendary investment maven who worked for the Texas billionaire Bass family and went out on his own in the roaring Eighties, and his wife, Darla Moore, something of a legend in her own right as a pioneer of debtor-in-possession lending with Chemical Bank. She found her niche lending money to some of the high-flying companies that landed in bankruptcy.
Harrison signed on as Monet's president and chief executive officer in January 1994, while parent Crystal Brands was in Chapter 11, and was kept on by the investment group after the buyout. She came from Liz Claiborne Inc., where she was president of the handbag and small leather goods division, one of the growth areas of the apparel giant, plagued by a malaise in its core sportswear business.
"Things were going very smoothly there [at Claiborne]," said Harrison in a recent interview at Monet's offices here. "With everything in place, it had really become a relatively easy job. I needed a new challenge. I got calls from Crystal Brands. I knew the brands well and I knew they had great potential, but it came with high risk. I also considered the financial situation of the parent, but they put together a compensation package with the protection I felt I needed."
After taking the helm of the Monet group, "I had to rethink all aspects of the business. One glaring problem was sales costs. Also, the systems were inadequate and the product line had to be reassessed. We had 12,000 sku's. Now it's down to about 1,700."
Before Rainwater and Moore came in with the $65 million buyout, Harrison had already spent nearly a year working on fixing the Monet business. She cut back on unprofitable sales, reducing the top line in 1994 by 10.8 percent to $167 million compared with 1993. But at the same time, she slowed returns and allowances to 16.4 percent of sales from 18.8 percent so that net sales were down only 8.1 percent to $139.5 million.
She reorganized sales into three separate segments, one for each of the brands--Monet, Trifari and Marvella. She also set up a retail service division to make sure the lines were presented properly in the stores.
"The entire process was just completed in April. We ended up with fewer people and upgraded systems to do much of the clerical work. The head count was cut to 223 from 456, but now it's heading up, because we're increasing our coverage, and is around 275."
Harrison consolidated production in one modernized and expanded plant in East Providence and spent about $2.5 million in the process. She closed a second plant and a warehouse. "By better management of inventory, we don't need the warehouse," she said.
In 1994, gross profit as a percent of sales soared to 39.5 percent from 34.3 percent, and she projects a 44.7 percent margin this year. Bottom line, the company has gone from an operating loss of $10.6 million in 1993 to a profit of $6.7 million in 1994. This year, the firm plans for operating profits of $11 million on sales of $173.2 million.
So far, Harrison said, "sales are on plan and expenses and margins are a little ahead of plan."
The Monet brands are distributed only to the major department store groups and that, she admitted, "is a slow growth market."
She said she would like to acquire other businesses to widen distribution or create the company's own brands for sales to specialty stores and middle-market chains such as Target Stores, J.C. Penney Co. and Sears, Roebuck & Co.
"But we don't want to dilute the value of the Monet, Trifari and Marvella brands. We're looking at the home-shopping market, possibly to create a brand for them. I don't ever want to make the mistake of cannibalizing our product."
Harrison understands the retail business, having started her career in the Abraham & Straus executive training program. While earning an MBA in marketing at the University of Wisconsin, she worked on case studies on Famous-Barr. "I liked retailing, thought it would be fun."
She went from A&S to the Emporium in San Francisco, then to John Wanamaker in Philadelphia, but most of her retailing career was spent with the Hecht's division of May Department Stores Co. In 10 years at Hecht's, she rose from buyer to store manager to divisional vice president of cosmetics and finally to senior vice president and general merchandise manager of cosmetics, shoes, accessories and jewelry.
From 1983 to 1990, cosmetics sales at Hecht's reached $100 million from $12 million, according to Harrison. Also, in the 10 years from 1980 to 1990, Hecht's became the leading department store group in the Washington-Baltimore area, as sales rose to $1 billion from $400 million, recalled Harrison, part of the "team" that got it done.
In 1990, Harrison moved upstream in the distribution channel when she joined Yves St. Laurent Parfums as president and ceo. Two years later she was moved to Liz Claiborne to take over its troubled handbag and small leather goods division.
"Profitability had been declining for three years and they were looking for someone with a retail background and good planning skills. In two years, we built the division's sales up by $40 million to $135 million, while profits more than doubled to $34 million from $16 million," Harrison said.
At Monet, she said, she has the dominant fashion jewelry brands in the department store field and, despite the current weak retail environment, she is convinced the company, "now very well financed," will grow and prosper.
"Monet is leading a turnaround in the jewelry industry," she said.
--Fairchild News Service

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