By  on February 3, 1994

NEW YORK -- Christian Dior said this week it is close to naming a new hosiery licensee and expects to keep the brand going in the legwear market without any pause.

Hampshire Group announced last week that it was giving up the license for Christian Dior Hosiery with the completion of spring deliveries.

According to Beatrice Du Pont, vice president for women's licensed products at Christian Dior Inc., the U.S. arm of the French fashion house, negotiations have been in the works with other hosiery manufacturers.

"Christian Dior Hosiery is certainly not going out of business," she said. "It will be business as usual with the line, and we expect an orderly transition. There will be no problems with spring deliveries, and by fall we should be working smoothly with a new licensee."

The packaging and quality of the line, she said, will be consistent with the existing products.

"Hampshire came to us and said that it could no longer keep two plants running as it has in the past," she added. "They were not manufacturing the kind of volume that was necessary to keep up the plant."

As reported, Hampshire plans to close the Belmont, N.C. knitting mill and distribution center where most of the Dior legwear line is manufactured by late March, resulting in the layoffs of 170 Hampshire employees. Dior Hosiery is estimated by industry sources to be a $7 million wholesale business.

According to Ludwig Kuttner, chairman, president and chief executive officer of Hampshire Group and chief executive officer of Hampshire Hosiery, the move reflects the company's decision to focus more on its private label business for the chain, mass merchandise and department store markets.

"Our brand business for department stores was not very important," he said. "In difficult economic times like these, it's important for the company to concentrate on its strengths. Our timing was wrong in developing a branded hosiery business. Pricing in the marketplace from the competition made business extremely difficult."

Hampshire acquired the Dior license with its acquisition of Vision Hosiery in 1991.

"We have a positive, friendly relationship with Christian Dior Inc.," he noted, "and both of us want to keep the business healthy. We are in close cooperation in looking for a new licensee to take up the reins."The Dior-Hampshire developments illustrate one element of the conflict between private label and brand names.

One source familiar with the situation commented that maintaining a designer name is not an easy endeavor for a company that specializes in private label.

"It's more difficult and intense to merchandise and market an upscale product than to deal in high volumes," said the source. "Success stories such as Hanes's relationship with Donna Karan are due to carefully marketing and distributing the pantyhose in a way that distinguishes it from the other Hanes products."

Sid Smith, president of the National Association of Hosiery Manufacturers, declined to comment specifically on Christian Dior Hosiery, but did address the issue of hosiery brand competition within department stores.

"There is very intense competition in all women's hosiery markets," he said, "and with the numbers of companies competing, the only way to gain market share is by taking it away from other brands.

"We've had a stagnant market in the past year, creating an intense environment for all manufacturers. Furthermore, all retailers indicate that they are cutting back in their hosiery departments by narrowing the number of name brands, also fueling competition."

The growth of private label among upscale retailers and department stores, said Smith, is another issue affecting branded hosiery manufacturers. Retailers have seen the customer loyalty to the national brands they sell, and they want to develop the same response to their own products.

"Hypothetically speaking, let's say 60 percent of a store's hosiery sales are in national brands such as L'eggs, Hanes, No Nonsense, Round the Clock and Burlington," explained Smith. "The remaining 40 percent of sales is in private label and designer name brands. If a store succeeds in capturing that remaining 40 percent solely for private label business, it benefits not only by increasing its own margins but also the degree of customer loyalty toward the store."

Designer labels, he added, can be bought at several stores, whereas a private label brand is available only through a specific retailer.

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