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NEW YORK — There’s a new Jones Apparel Group, which is undergoing a dramatic change of leadership, while enhancing its recent strategy of being a multi-channel brand conglomerate.
Leading the evolution in its corporate philosophy and business model is the company’s new chief executive officer, Peter Boneparth, who succeeded founder Sidney Kimmel as ceo in May.
Boneparth said Jones will continue a “fairly intense” diversification strategy, one that will cut across distribution channels and product categories. The company is interested in brands, he stressed, that can transcend product segments, and its plan for the long haul is to layer in appropriate acquisitions with the goal of achieving a double-digit growth rate.
“If you really look at the history of the company, it did a transforming event when it bought Nine West and got into the footwear business in ’99,” Boneparth said. “Sidney Kimmel had the vision to recognize that the long-term success of a publicly traded apparel company was going to be based on diversification and balance. It was no question that you had to have as many eggs in as many different baskets as possible.
“We’re not trying to be a moderate company and we’re not trying to be a better company or a footwear company. We’re trying to be a balanced company. When you look at the landscape out there, which is constantly consolidating, you have to have as many arrows in your quiver as possible, to hit as many different stores with as many different products to ensure success.
“Let’s face it, the long-term likelihood of success for a single brand company is really fairly limited,” noted Boneparth. “It’s very hard to grow one brand forever at double-digit growth rates, and it’s almost impossible in a declining or consolidating retail environment.”
Exceeding $4 billion in annual revenue today, Jones Apparel Group is four times larger than it was just seven years ago. Its vast stable of 28 brands span all distribution channels. They include: Jones New York, Lauren by Ralph Lauren, Polo Jeans Company, Ralph by Ralph Lauren, Todd Oldham and Rena Rowan in better; Joneswear, Evan-Picone, Norton McNaughton, Miss Erika, Energie, Nine & Co., Gloria Vanderbilt and LEI in moderate; and Nine West, Easy Spirit, Enzo Angiolini, Bandolino, Esprit and Napier in footwear and accessories.
For the first quarter ended April 6, income fell 26.5 percent to $70.7 million from the year-ago quarter. Revenue in the quarter was up 4.6 percent to $1.13 billion.
Boneparth said Jones is “opportunistic, liquid” and “looks at a lot” of possible acquisitions. On the acquisition front, he said there’s competition, but much less than what one might expect.
“The characteristics of this industry are there are lots of sellers and very few buyers,” he said. “Maybe one or two other people are the acquirers of choice at this point. We’re not interested in buying labels, we’re interested in buying brands.”
He hinted that men’s apparel might be an avenue that Jones might pursue, as well as budget selling to retailers like Target and Wal-Mart.
“Historically, we have shied away from that [budget retailers] business given the profit challenges. But given the footsteps going through that channel in America today, if you ask me five years from now if we’ll be involved in that business in a meaningful way, it would be inevitable that we would have to go there,” said Boneparth, adding that the company continues to believe there’s more opportunities in the shoes, accessories and jewelry businesses.
Following Jackwyn Nemerov’s resignation as president in March, Boneparth was named to succeed Kimmel, who founded the company in 1970, as ceo, while he succeeded Nemerov as president. Kimmel is still the chairman of Jones.
In that time, Boneparth has brought a team spirit to the company and is focused on redirecting some of the authority and decision-making responsibility back down to the players.
“It’s very hard to manage a business this large, this diverse, in moderate [women’s apparel], shoes, retail, better apparel, with having one or two people make all the decisions at the top,” said Boneparth, smartly dressed in a business casual ensemble of a blue oxford shirt, dotted yellow tie and relaxed twill pants on a July morning at Jones’ Manhattan offices.
“The management style before I got here was very centrally controlled, and so it was perceived that every decision was made at the very highest level,” he said. “So it was hard for an outsider like myself to understand who really got the work done, who was running these divisions and what the talent level was. So we’re pushing some of that authority and decision making responsibility back down to the division level, really to empower these people to do more and run their businesses.”
Perhaps because of a change in management style, the 43-year-old former lawyer and investment banker said he thinks there’s an energy level at Jones that hasn’t been present in a while and he wants that momentum to continue.
“Clearly, there has been a very big sea change,” he said. “My own philosophy is you try to be as responsive as possible to people, and you’ll gain a lot more credibility by talking to people. They understand when you can’t say something. What they don’t understand is when you haven’t made the effort. [Before,] I don’t think the company didn’t want to make the effort, I just think in some cases it was a misperception of what the best thing to do was.”
Todd Slater, retail and apparel analyst with Lazard Freres, said Boneparth is a strong addition to Jones, bringing a different and much needed point-of-view.
“He’s an outsider who has had enough time on the inside to be of value,” Slater said. “He sees the industry more objectively than other insiders do. He’s also a consensus builder and people like working for and with him. He’s not bound by traditional apparel operating styles, which is good, because the apparel world is dramatically different than when Sidney created the company. Sidney was right for Jones in the Seventies, Eighties and Nineties, and Peter is the right kind of manager for the 00s.”
But Boneparth isn’t a complete outsider. Five years ago, the New York native became president and chief operating officer of McNaughton Apparel Group and later became that company’s chief executive officer. Jones purchased McNaughton in April 2001, which significantly upped its presence in the moderate sportswear arena.
Interestingly, Boneparth first met Kimmel while he was still an investment banker about seven years ago. That meeting apparently left a big impression on Kimmel.
“Sidney and I, and Wes Card [chief financial officer] had met, and I think we had a very good discussion,” Boneparth recalled. “As Wes likes to say ‘Sidney remembered that discussion’ and when they saw that I had moved to McNaughton, I think Wes brought Sidney an idea like ‘Hey, remember that guy Boneparth? Well, he did this in moderate, and we want to be in moderate, and so forth.’”
Fast-forward to the present, and Boneparth is poised and ready for the challenge of leading one of the preeminent apparel firms into the future.
To get acquainted with his new role, he’s spent the last few months trying to meet with all the company’s division heads, retail partners and investment community, in addition to traveling to every distribution center. Just back from Hong Kong, Boneparth said he can’t describe a typical day because he travels so much, and each day is different from the last — the variety, he said, is something he enjoys.
“You try to touch as many people as possible to make sure they understand what I am about as much as possible,” said Boneparth, who lives in the New York area with his wife Heather, also a former investment banker, and three children: Caroline, 14, Pammy, 12 and Neil, 8. His family is his life outside of work, and his hobbies include coaching youth soccer teams and getting in the occasional round of golf.
“Ultimately, you want them to trust you and you want them to know you’re on the same page,” he said. “As a ceo, you represent not only the stockholders, but your employees. You’re really their advocate, and if they feel I’m their advocate, which I feel strongly about, it ultimately helps the success of the other constituencies, the stockholders.”
There’s no question the business skills Boneparth acquired from the three years spent as a lawyer and 10 years on Wall Street helped prepare him for his role today. Fashion apparel companies, like any capitalist endeavor, require managers that understand the complicated issues of accounting and acquisitions — long gone is the apparel cottage industry that permeated the Forties through the Seventies before importing and big brands came to the forefront.
“This industry, like any other industry, tends to be very Darwinian: It evolves, and the strong tend to survive,” Boneparth said. “It’s a business, and my job is to make it a business, but it’s also to make sure we have the best merchants and design team. When you don’t, it doesn’t matter how good you are with numbers, it’s always about the product.
“It’s a complicated process, and it means that organizations are much more complicated and require much more management skill,” said Boneparth. “The best organizations, Jones and Liz [Claiborne Inc.] win because at the same time they’re able to attract and retain the best design and merchandising teams. It all has to work together.”
As do the people that make up the team. During the interview, it became apparent that Boneparth doesn’t like to blow his own horn. Rather, he wants the world to know about the people behind Jones Apparel Group, the 13,000 or so employees that comprise the behemoth organization. “Cheerleading” the company is something he did a lot while at McNaughton, and he said he plans to continue that spirit at Jones.
“It’s incredibly important that my success is predicated almost exclusively on the people that work with me, I really believe that,” he said. “It’s like the quarterback of a football team. They’re neither solely responsible for putting you in the Super Bowl, and they’re not responsible when you go 0-11 either,” added Boneparth. “But you’re there and you’re the quarterback, and you tend to get a disproportionate amount of the credit or blame. The reality is, if you have a great team, you’re going to win more often than lose.”
But being a ceo of a leading public company today comes with great challenges, especially during a time when corporate scandals have rocked the business world — placing microscopic scrutiny upon management integrity and ethical behavior.
Boneparth has not been immune to this scrutiny. Not long after being promoted to president of Jones, there was media attention regarding his compensation package. Specifically, that he would receive $2 million in signing bonuses spread over two years and options this year on three million shares — on top of his salary of $1.5 million, which rises to $2.5 million in 2004. While not disputing the salary reported, Boneparth denied the other amounts reported, saying the signing bonuses were falsely represented.
“It’s like anything: If you know you’re honest and have integrity, you sleep at night. And I don’t have any problems sleeping at night. Do I like the scrutiny and the intrusion into my personal life? No, but it’s part of the job, and you cannot possibly sign up for this duty and feel you’re not open season,” he said.
“If you look at some of the largest abuses, you understand why this happens because it’s truly criminal behavior. But when it all settles, people will come back to the perception that people who run companies in the United States are honest, decent people,” Boneparth said. “There have been a few, very big, bad eggs that colored the landscape unfortunately.”
He didn’t grow up in the garment center, but Boneparth did grow up in the retail business, which he said gave him a high degree of sensitivity with regard to sales and moving products out the door. His father had a furniture business, where Boneparth got his first job at an early age working on the delivery trucks and selling furniture.
“You have to deal with customers, figure out how to sell them and figure out how to deliver the goods,” he said. “My father grew up with this mentality, as a retailer does, he had a little black book that said ‘Beat Yesterday.’ That’s what they think, and that’s what it’s about.”