This story first appeared in the December 11, 2002 issue of WWD. Subscribe Today.
Nygård’s U.S. business really began to take off in 1995 after Bob Adamson joined the company from bankrupt Eddie Hagar Ltd., where he was a senior account executive. Up to that point, Nygård was doing some Tan Jay business with a few accounts.
Adamson, now executive vice president for merchandising and marketing, is responsible for Nygård’s moderate brands in the U.S., including Tan Jay and Alia divisions. Under the Oklahoma City-based executive’s direction, the company is building separates programs for several accounts through private label, branded and proprietary initiatives.
“When we started, we decided who we wanted to align ourselves with, such as Dillard’s, Kohl’s and J.C. Penney. We positioned ourselves as a low-cost provider that can service large retailers,” he said. “The fact that we still have a lot of domestic production [out of Winnipeg] enables us to grow a lot faster, that, combined with systems integration programs developed by Peter Nygård.”
Adamson said the company has a policy to keep five years ahead of the competition in terms of information technology investments, partly by developing its own software systems.
He believes the U.S. market is still relatively untapped, even though it accounts for roughly 50 percent of Nygård’s sales.
“With J.C. Penney, there is tremendous opportunity to grow their private label and branded business,” he said. “We’re also aligning ourselves more closely with Kohl’s, which is growing at the rate of 25 percent a year.”
About 70 percent of Nygård’s U.S. business is in moderate-priced goods and 30 percent in better-priced sales. Adamson said there is a trend toward a younger updated pants business among many of the majors in the U.S.
“Department stores recognize they have not done a good job capturing the female customer who is in their store shopping for their husband and children,” he said. “They normally will shop for themselves at Banana Republic or Chico’s.”
Private label represents about 30 percent of Nygård’s U.S. business and Adamson expects it will reach 50 percent within two to three years. The objective is to take over private label programs from other manufacturers.
“Department stores are doing direct private label, but our cost structure would allow us to compete or beat those prices which would allow those stores to work closer to deliveries.”
— Brian Dunn
As president and chief executive of the high-end division of Nygård, Jim Bennett spends about 35 weeks per year on the road. His regular circuit includes his Toronto office; Winnipeg and Dallas market weeks; New York, where the designing is done; the Orient to source fabrics, and Little Rock, Ark., head office of Dillard’s, Nygård’s biggest account.
“I’m responsible for the profitability for each division — Peter Nygård Signature, Bianca Nygård and the Nygård Collection — and how we plan to position ourselves for the future,” he explained.
But he emphasized there are no ivory towers in the company as he chatted in his Winnipeg office overlooking the distribution center in the back of the building.
Two years ago, the 25-year company veteran added another responsibility — the launch of Nygård’s licensing business, which has grown to 15 categories, including jeans, leather coats, handbags, footwear, eyewear and home furnishings, for which it is a major supplier to The Bay’s Outfitters stores.
“We have such a recognizable name and other major designers and manufacturers were doing a large business in licensing that we decided to join the game,” he said. “I figure licensing could represent 20 percent of our business within the next five years.”
Most of the licensed products are manufactured in Canada, but Japan could soon be added to the mix.
“There’s no limit where we can go and could even get into men’s wear,” he said. “But we treat a licensed product like it is one of our own in terms of quality, value and fit and we have a staff member whose full-time job is quality control.”
Bennett said when Nygård bought its Winnipeg head office in the mid-Seventies, he didn’t know how they were going to fill all the empty space. Today, it has ballooned to 200,000 square feet and is bursting at the seams.
When discussing future growth, Bennett separates the business into two parts, national brands such as Nygård and Tan Jay, and private brands such as Allison Daley, the company’s exclusive brand to Dillard’s. It is the second group that offers the most growth potential as major chains seek out exclusivity.
“We plan to be a $1 billion company within five years and we have the capacity to increase our business with our existing manufacturers who have grown with us and see no need to source other manufacturers,” he said.
As president and chief executive officer of Nygård’s moderately priced Tan Jay and Alia division, Denis LaPointe spends much of his 20 weeks a year on the road in New York at the company’s design and showroom offices and to attend market weeks for the division’s separates and coordinates. He also travels to Mexico to oversee factories.“We use two major Mexican facilities on a consistent basis and two others during peak periods,” said the 29-year company employee. “We have key production and engineering people working in those factories to improve efficiencies and quality control.”The factories are plugged into Nygård’s information technology systems and are logged on to the company’s systems to book production.“We send them all our cutting orders and spec sheets electronically,” he said. “During peak periods, the Mexican facilities are pumping out 450,000 units a month, primarily career and casual pants. We treat Mexico like our own plants.”Mexico accounts for roughly 20 percent of all Nygård production, with the Far East accounting for 60 percent. The rest is done in Winnipeg at two plants.LaPointe expects the biggest growth will come from existing accounts, as each one is looking for more fashionable and more modern assortments. He said the biggest pressure for company accounts is to grow their separates business to compete against the likes of Wal-Mart Stores without increasing prices.“We’re targeting the consumer 35 to 55 who doesn’t have the income to buy big brand names,” he said. “Our opening [retail] price point for pants and skirts is $20 and the highest price point is $68 to $78 for novelty sweaters and jackets. But the bulk of our products are in the $25 to $35 range.”Returning to growth, LaPointe noted that Charlotte, N.C.-based Belk Inc., which has been carrying Alia for six years, will be selling an exclusive brand next fall developed by Nygård. The line will primarily feature pants and skirts as well as tops and shells priced between $20 and $38.While the New York office is responsible for design, trends, color direction for the division, all separate brands and technical aspects and pre-production is handled in Winnipeg.
— Brian Dunn
With only 12 years of service, Dan Iampietro is a relative newcomer to Nygård, which he joined from a company no longer in business where he was vice-president of merchandising.As executive vice president of Nygård fashions, he’s mainly responsible for the production of the Nygård and Bianca Nygård collections, working with the merchandising and design teams. As a result, he travels to the New York design center from his Toronto office on a regular basis and to Europe twice a year to source fabric and “interpret —not copy — new looks.” He also scouts fabric and print shows and works directly with the mills.“We try to limit ourselves to the best mills, but tend to look at all mills,” he said. “We buy from all over the world, but a lot of fabric comes from the Far East. And the key fabric, triacetate, all comes from Japan. Our fashion is for career women and also what they would wear on weekends. Our opening to better bridge fashion is a lot softer than in the past, especially our jackets and the spring line will feature a lot of silks and silk blends.”Like for Tan Jay and Alia, designing is done in New York and the pattern making and fabric testing is done in Winnipeg, where the samples are also made. All sales and marketing for the entire company are handled by a staff of 35 out of Toronto.“We feel we have the right product at the right price and we know who the competition is and we have enough retail stores that can act as labs, where we can put in an item and see how it sells,” he said. “And if a product doesn’t sell we’ll find out why and not just throw it out.”The key sales and marketing people share their input with the design and merchandising teams as the department stores ask for more exclusivity.“We do some private label, but would rather promote the Nygård name,” he said.With the disappearance of Eaton’s, Simpson’s and Woodward’s from the Canadian landscape, Nygård is concentrating on developing the U.S. market.“As Canadian accounts are looking for exclusive lines, so is the U.S.,” he said, “And we are very competitive in terms of pricing and styling to do well there.”
Ken Grondin said he feels he dodged a bullet when he joined Nygård 18 months ago as chief financial officer from Arthur Anderson — which is history thanks to the Enron fiasco.But it wasn’t a fluke hiring since he was already familiar with the company as its auditor with the former accounting firm.As the finance guy, Grondin is responsible for financial controls, reporting and executing financial strategy for the company. At the treasury level, he manages the investment currency portfolios and all the financial aspects of the company’s business plans.His treasury and financial services team consists of about 25 people in addition to the financial teams in each Nygård division.“Basically, I’m the balance sheet manager.”What attracted him to the company was that it operated as a team more than any other company he had seen.“It’s nice to take ownership of a problem and see it all the way through,” he said. “There’s nothing more frustrating than to still to be working on a problem six to eight months down the road. The teamwork and urgency applied to any given problem or project is unique. The company will dedicate all resources necessary to complete the job quickly.”To double the company’s sales to $1 billion within the next five years, Grondin said it will require a combination of organic growth and to increase market share by leveraging the products it already has.“We could also consider acquisitions, but they would have to be strategic,” he said. “We would also finance any acquisitions internally and never be overextended.”
Like many of his counterparts in other divisions, vice president of national accounts Rick Wanzel is a traveling man, spending about 20 weeks a year at Nygård’s Winnipeg head office and zig-zagging across Canada to check out The Bay and Sears Canada department stores, his principle areas of responsibility. But when he returns to his Toronto office, he’s also involved in product development along with other sales and marketing personnel.“It’s part of the process Peter [Nygård] developed,” he said. “Quite often sales and marketing in other companies are usually on another floor or in another building, but here we’re all together.”Wanzel said one of the important components of strategic alliances is the ability to offer customers differentiation.“In today’s market, wherever there’s a sale is where you park your car,” he said. “Department stores need a lift to revitalize their lines and we offer a solution for all our customers.” He said one of the reasons Nygård opened dedicated stores was to replace lost business such as the bankrupt Woodward chain in Western Canada in the mid-Eighties and more recently Simpson’s and Eaton’s. However, some of that business is being replaced by Les Ailes de la Mode, a growing Montreal-based chain with four stores in Quebec and one in Ontario.Despite its size, Nygård can react quickly to customers’ changing tastes, because it has the same relationships with the textile mills and manufacturers as it does with its retail clients, Wanzel said.“I’ve been here 26 years, but it’s like working for about six different companies because it keeps evolving,” he said. “We have to keep changing.”
— Brian Dunn
Len Nicolas holds up a software box signed by Microsoft’s Bill Gates to illustrate how advanced the company is in information technology. Nygård beat 15 other competitors in a contest called Ready Set Dot.Net held in Anaheim, Calif. in mid-November and co-sponsored by software developers Epicor and Microsoft. The contest was for anyone using Epicor software in conjunction with Microsoft’s Dot.Net technology. Nicolas, Nygård’s chief operating and technology officer, predicted beforehand that his firm would win.“There are only so many companies that do their own software development and we’re that much further ahead and our applications are more companywide,” he said in an interview in his Winnipeg office.Nygård’s winning entry was for its Electronic Purchase Order program, an electronic order book that ties together what the company calls its four pillars of business: selling, buying, the control of money and product development.EPO replaced PO97, an earlier application that couldn’t do any systems integration.“EPO connects to our financial systems and it won’t require an invoice,” Nicolas said. “We’ll pay on receipts and on advanced shipping notices. EPO will also replace paper-based filing.” The selling is done through Retail Fashion Expert, a virtual showroom displaying the entire product line with product information where accounts can order online once by submitting orders directly to the manufacturing system.In fact, the spring 2003 look book will be the last printed on paper, Nicolas said. All displays and orders will be done on the RFX’s digital look book, beginning in fall 2003. It is currently being used by about 300 independent accounts.Calling up a computer screen, Nicolas points to some accounts in green and the others in red. The green means their orders came into the system before 3 p.m. and they will be shipped by 4 p.m. The red orders arrived past the 3 p.m. deadline or are on credit hold and if cleared, will go out the next day at 9 a.m.The company’s Internet Commerce for Suppliers program is a Web-based application, which provides Nygård’s manufacturers accurate product specifications and bills of material at the cut and style level.Under the system, manufacturers connect to Nygård’s Web site and download all relevant information needed for the two parties to work together. The manufacturers are also required to scan the garments as they are loaded into containers, giving Nygård accurate information about the shipments. The system also allows Nygård longer lead times.“Some people call me a supply chain manager,” Nicolas said. “We use RFX to sell product while ICS is a buying tool.”Several years ago, when companies were leaning towards electronic data interchange, Nygård held back because it considered EDI too expensive and too complicated. Instead, it began writing its own programs.“It had to be inexpensive for makers, had to be in real time and have more content than just ordering quantity,” Nicolas said.Keeping a tight lid on the money is done through Financial Control System, an Internet application managing and controlling the purchases and quality of goods and services. It also manages the payroll, travel and the bottom line with budgeting.The fourth pillar of the system is Product Development Management, which calculates the cost of a garment before it goes into production and has added millions of dollars to the bottom line by accurately projecting gross margins.
One of the perks of working at Nygård is a profit-sharing plan for senior executives and bonuses and incentives for everyone else who works at the company. “Everyone is incentive-driven,” said Art Pemberton, president and chief executive officer of Nygård Co., the dedicated store division of the company. “While the salespeople have their own personal performance [goals] to meet, salaried staff receive bonuses based on the performance of the company and on their own performance, which is reviewed every six months.”As employees move into senior management positions, their incentives get bigger, although Pemberton wouldn’t discuss specifics at the private company, owned by Peter Nygård.The profit sharing is referred to as the “Golden Handcuffs” by company founder and chairman Nygård, as it locks in key talent for extended periods.“I remember looking over the head table of nine people at a recent function and they had a combined service of 163 years at the company,” Pemberton remarked. “I think the average executive committee member has 20 years of service. I’m relatively new with just 14 years at the company.”For example, Ernie Chaves, director of logistics, has been with Nygård for 26 years, while Len Nicolas, chief operating officer of Nygård Services, has 21 years of service. Pat Chapdelaine, vice president of operations at Tan Jay and Alia, has been with the company for 34 years, almost as long as Nygård himself.“We don’t bring too may people in from the outside, but tend to promote from within,” said Pemberton. “When I was first interviewed by the company 14 years ago, what I liked was the lack of politics. The attitude is let’s get it done and move on to other projects.”The profit sharing is split among nine employees who are either board members or senior management. But the staff bonuses can also be generous. For some people, bonuses are often greater than their salary.