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LOS ANGELES — WWD dubbed Sidney Kimmel “A Quiet Giant” in 1988, 18 years after he founded the Jones New York label. Kimmel subsequently served as chief executive officer, chairman and, most recently, non-executive chairman of The Jones Group Inc. He relinquished that role earlier this month when Sycamore Partners bought Jones for about $2.2 billion, thus closing a chapter in fashion history.
This story first appeared in the April 21, 2014 issue of WWD. Subscribe Today.
While Kimmel has been winding down his fashion career the past decade, he’s been gearing up in Hollywood, pursuing a second career as a movie producer. He’s chairman of Sidney Kimmel Entertainment, a Los Angeles company he founded in 2004, and has produced about 40 feature films, including “9 1/2 Weeks” and “Moneyball.”
Rarely one to give interviews, Kimmel has been exceedingly quiet in recent years about the turmoil that went on at Jones as its fortunes slid and it was ultimately sold. Now that the deal has been completed, Kimmel has some things he’d like to say.
WWD sat down with Kimmel, 86, at his 10,000-square-foot Malibu, Calif., home, which was previously owned by Johnny Carson. Kimmel, who has been married to his wife Caroline for 15 years, appears to be enjoying the fruits of his labor, which include his own plane, swimming pool, chef and chauffeur. Sculptures by Alberto Giacometti, Auguste Rodin, Joan Miró and Henry Moore adorn his house and property, which is nestled on the Pacific Ocean, with neighbors such as Julia Roberts, Barbra Streisand and Matthew McConaughey. Kimmel also owns two acres across the street that house a tennis court and gym pavilion.
RELATED STORY: Sidney Kimmel’s Hollywood Connection >>
Under his day-to-day leadership, Jones reached $4.3 billion in revenues, and the company became one of the most admired on Seventh Avenue. Known as a tough negotiator, he made several strategic deals to build Jones, including buying Nine West and Sun Apparel (which then licensed Polo Jeans) and licensing Lauren Ralph Lauren. The company went public in 1991, and the stock rose rapidly, splitting at least four times and making him a very wealthy man. Forbes has estimated his wealth at $1.3 billion. A major philanthropist, Kimmel has thus far donated more than $700 million to charitable causes. His goal is to give all his money away during his lifetime, except to provide for his wife.
Kimmel has established the Sidney Kimmel Comprehensive Cancer Center at Johns Hopkins University; the Kimmel Center for the Performing Arts in Philadelphia, and the Kimmel Scholars Program. Other philanthropic contributions have gone to Stand Up to Cancer; the National Museum of American Jewish History; the Sidney Kimmel Center for Prostate and Urologic Cancers at Memorial Sloan-Kettering Cancer Center; the Kimmel Cancer Center and the Sidney Kimmel Laboratory for Preventive Cardiology at Thomas Jefferson University, and the Rena Rowan Breast Center Fund. Kimmel is also a part owner of the Miami Heat.
Even as he has built a second career in film and philanthropy, Jones remains a topic close to Kimmel’s heart. He doesn’t hide his disenchantment with the way the business has been run the past several years. As the company’s flagship brand, Jones New York, slipped in prestige and volume, Kimmel said he had suggestions on how to stem the decline, but no one was really interested in hearing them. He never met the Sycamore executives, and they never called him to talk about the company.
Here, Kimmel talks about building Jones, what he thinks went wrong at the company and what he would have done differently.
WWD: What do you attribute your success in the fashion business to?
Sidney Kimmel: For one thing, luck and hard work. I used to work a minimum of 10 hours a day, six days a week. I was involved in everything in the beginning. Today it’s a different world. I learned over the earlier years that I had a knack for something that I didn’t know I had. I basically was a merchandiser and editor. That was my biggest asset I developed over the years. I was a product guy. I used to examine cost sheets and figured out what niche. Remember, Jones is a generic name. I could have called it Smith New York. I named it after a friend of mine who let me use his knitting mill when I first got started, and his name was Curtis Jones. He had attempted to do a men’s wear line and it was not doing well, and he called it Jones and put on the bottom “New York.” I took that idea and made it one name, Jones New York. For the first five years, I used to have to correct people because they used to call it Jones of New York. I would say, “This is not Koret of California, this is Jones New York.”
WWD: As a kid, did you aspire to be in the fashion business, or to be in the movie business?
S.K.: I aspired to make a living. I was born in poverty in South Philadelphia.
WWD: How did you get your start in business?
S.K.: I went to Temple University. I was in the Army twice and worked in the State Department as a cryptographer. I went to take a test, thinking if I had a job in the State Department, I wouldn’t get drafted. I had an aptitude for it. I was trained for deciphering codes. The draft board said, “We’re drafting you.” They offered me a captaincy to go to the front lines in Korea where they were killing people every day. I went back in as a private. I spent two years there and started working. In 1960, I started at The Villager with one sweater. It was a ribbon-front Shetland cardigan. Max Raab [who owned The Villager] said to me, “Before I hire you, I want to see if you can make this sweater.” We had nine good years together, and then Jonathan Logan bought The Villager.
I started Jones in January of 1970. It was a division of W.R. Grace. I agreed to work for John Meyer of Norwich. He had sold his company to W.R. Grace. They had two bad years in a row and didn’t know what to do with it. They hired me to fix John Meyer, and I agreed to work there, with the provision that they would allow me to set up a separate label, which I called Jones New York, with the idea that if they ever sold the business, I’d have first crack at it. Five years later, they came to me and said, “We want out of the apparel business, it’s too risky.” They gave it to us. We had no money. My partner at the time was a guy named Jerry Rubin. We each put in about $6,000.
We were doing about $100 million and pledged all receivables, and we managed to keep it alive.
In 1983, Jerry heard as a sideline I was going to make a movie. He was an accountant and he depended on me. He was an old-time employee of W.R. Grace and he engineered the deal out. Rubin didn’t have the confidence that I could continue to run the company, and he was afraid I would take my eye off the ball and make movies. My first movie, “Blame It on Rio,” was a hit, and I figured I was in the wrong business. Jerry said he wanted $9 million for his half of the [Jones] business. I didn’t have the $9 million, but my factors lent me the $9 million to buy him out. I haven’t seen him since. It was a dream of mine to own my own business.
WWD: Who was the Jones customer in the early days?
S.K.: I had a vision that my customer was a 26-year-old hip girl, who was being kept by a 45-year-old man so she could afford my clothes. In the Seventies, one of my competitors was a company you never hear about anymore, Cacharel Paris. The American companies I felt were not hip, like Jonathan Logan and Leslie Fay.
WWD: Talk about the early days of building the business.
S.K.: When I started the company, I knew that I had to get a niche, so I wouldn’t have a lot of competition. I’d look at certain lines like Cacharel. They were not edgy, but a little bit removed from dumb clothes. As a matter of fact, I took my first ad out in April 1970 in the New York Times Sunday Magazine section. The line I used was “Jones New York, No Wonder Everyone’s Trying to Keep Up With Us.” I hadn’t shipped my first product yet. It was April, and I wasn’t shipping my first line until May or June, and people were calling me up and saying, “Boy, you’ve got chutzpah.”
I learned after three or four seasons we were cutting our clothes a little too close to the body for the American woman. The French woman at that time was way ahead of the American customer. The American woman had an average size of 10 or 12, and in Europe, the average size was a 2 or a 4. So we would ship clothes and we would get calls. I remember the first line that we shipped. I got a call from a buyer at Bonwit Teller at the time, who said, “Your clothes are too tight. I want to reorder 36 pieces, but I want to reorder them all in larger sizes.” It took me two or three years to catch on that I had to ease up on my fit. If you ease up on your fit too much, it becomes dumb, sloppy. I learned how to ease up a little bit, and our sales doubled. I was attracting more customers. I was offering a slightly more generous fit. I was appealing to a mother and a daughter.
CHASING THE CAREER WOMAN
WWD: Did you ride the wave of the growth of the working woman?
S.K.: That’s who I was catering to. The girl who was going to work. If a woman has good taste, she can go into Target and come out looking pretty cool. But a lot of women don’t have good taste. They depend on the label. That’s why the success of the designer label. Most designers don’t make their money in the designer garment, they make it in worldwide licenses, for beauty, shoes.
WWD: We’ve seen a lot of companies grow up with their customer, and then they fail to attract younger customers.
S.K.: The trick as a merchandiser is to stay one step ahead of the game. I made adjustments every year based on what sold and what didn’t sell. And it got to the point where I realized that I developed an aptitude for how to edit clothes. I wasn’t a designer, but I could tell generally what could sell and what didn’t sell. I knew what colors to stay away from. Certain colors were always marked down, like brown and green. Maybe today it’s different. Sixty percent of our sales were black and another 20 percent were white, and then we’d have some seasonal fashion colors.
WWD: Did you find that not having a recognizable designer name was a detriment? Nowadays, so many better sportswear brands are named after designers — Michael Michael Kors, Lauren Ralph Lauren, Calvin Klein, Vince Camuto.
S.K.: Jones was not an asset name. Jones was a generic name. It worked for me for 40 years. When I started, I had an advantage that no longer exists: I had 3,200 mom-and-pop shops around the country. Freestanding stores, sole proprietorships. I had a road force of 30-odd people. One of my saddest days was when I realized stores were shrinking and being eaten up by other people, and I had to fire 32 of my close, wonderful guys. People would come into New York and buy that way.
BREAKING OUT OF THE PACK
WWD: Did you build your business on mom-and-pops, or department stores in those days?
S.K.: A combination. I had a few early admirers. Guys like Marvin Traub, Frank Doroff, Michael Gould, the late Kal Ruttenstein. I had no idea how successful I was going to be. It was very competitive. In my building alone, 1411 Broadway, we counted at least 30 competitors in my niche, which we called better sportswear. My main competitors were Liz Claiborne definitely, Kellwood to a lesser degree because they were lower price, Maggy London, there were a lot of little guys. I was a little guy, too, but I broke through the pack. I believe that by watching my costs I was able to work on a tighter margin and offer a better-quality garment than my competitors for the most part. At that time, I was manufacturing all in the States. We controlled about 41 factories in the U.S. My biggest thrust in the early days was double-knits. My competitors would make double-knits that were dumb, boxy clothes. We cut them in a way that was much more hip. We did very edgy little tweaks to our clothes. My original designer was Rena Rowan [with whom he had a long-term relationship]. Later on I had designers like Natalie Perr and Robin Howe, who’s married to Andy Grossman.
WWD: Any difficult periods?
S.K.: In 1987, I ran into a snag and things weren’t going well, and Jones had hit a lull. We were having problems with Gloria Vanderbilt, Evan-Picone, Jones Sport and Giraffe. I had a Black Friday. We had 3,000 employees, and one Friday I had to fire 1,000 of them to survive. That was in 1987. We spread ourselves too thin, too many labels. At that time, I had about 18 brands. But in 1991, four years later, I went public. After I reduced the company by one-third, I found out I was doing better with fewer employees.
WWD: What were you looking to achieve by going public?
S.K.: I was looking to take some money out of the company. I remember the day I went public, Merrill Lynch handed me a check of $43 million, just for starters. I remember thinking back when I was a kid, “If I ever had a job for $25,000, I would be blessed.”
WWD: What labels did you acquire over the years?
S.K.: I acquired Anne Klein, Kasper came along with that deal. Gloria Vanderbilt. One day I got a call from a buyer from Bloomingdale’s named Leonard Rosenberg, who was married to Colombe Nicholas, who ran Dior. I licensed Dior for a few years. Bernard Arnault [ceo of LVMH Moët Hennessy Louis Vuitton] came over to the States and we walked over to the store together, and he looked at my Dior product in the store and said, “This is not like mine.” I said, “Your jacket is $2,000 and mine is $200.” He wanted to get out of the license.
Another day Leonard Rosenberg called me and said, “You ought to see a woman on 56th Street called Norma Kamali.” Leonard said, “This girl has talent,” and I met her and we engaged in a deal. I started the Norma Kamali label with one fabric, sweatshirts. She was using sweatshirts and big shoulder pads. I did 56 styles of one gray sweatshirt fabric. Within two years, I built it into a strong business of $30 million. She was uncontrollable. If I could have controlled her, I could have built her into a billion-dollar business. In development, she would never show me what she was doing until a week before she was opening a season. She never gave me a chance to cost the garments out. One season, I walked into her room and it was all black. The whole line was black. She only believed in black that season. I couldn’t control her at all. We finally had to part ways.
THE HIGHS AND LOWS OF LAUREN RALPH LAUREN
WWD: Whose idea was it to do a lower-price line, Lauren Ralph Lauren, which became a blockbuster?
S.K.: It was Ralph’s idea to do Lauren Ralph Lauren. He called me one day and said, “Can you come over? I want to talk to you about something.” And when he told me, he said he wanted to start this new lower-price women’s line, I asked him what he’d be happy with, and he said, “You deliver me $50 million and I’ll be happy.” We gave him, at the end of the relationship, I believe it was $550 million, and he was getting 7 percent, and he was getting $36 million just lending his name.
We built a business in a hurry with him, and one day he realized that I was making more money out of the label than he was. He called me up and said we have to stop this business. I had no problem with Ralph. All he had to do was pay me out of my contract. We settled. Initially he wanted to double the royalty to 14 percent, and I said, “Are you kidding?” I would have stayed with him at 14 percent, and all I had to do was raise the product a couple of bucks and I would have covered it. But a week or two later, he realized that he really wanted his label back.
WWD: Jacki Nemerov had been president and chief operating officer of Jones, and ceo and president of women’s better apparel group before joining Ralph Lauren Corp. Tell me about her.
S.K.: Terrific woman. The mistake was not making her my successor. I was persuaded to bring in Peter Boneparth, a very articulate, good-looking guy who wasn’t a people person and made a lot of mistakes. I pleaded with Wes [Card] to take the job. The only good move Peter ever made [as ceo] was buying Barneys. We paid $397.3 million and sold it for $942.3 million.
WWD: How did losing the Lauren Ralph Lauren license affect the company?
S.K.: First of all, we lost about $550 million of revenue, and profits. That hurt badly. It gave us an opportunity to start our own new label, which we called Jones Signature. We picked up some of that volume. I had a very good relationship with Ralph. I always admired him and we always got along well. I recognized why he wanted to take his label back. He hired Jacki because I refused to make her ceo. People on my board persuaded me to bring in Peter. We’re a public company and I wasn’t sure she could do the job. I saw Jacki several years later, and I said, “Jacki, I made a big mistake.” She would have been running the company today. Ralph was entitled to be sued. He broke the contract. He ended up paying us $300 million or $350 million. Believe me, Ralph wouldn’t pay that money if he thought that was right.
WWD: Did you personally spend a lot of time overseas?
S.K.: Not all the time. By that time I was running a $3 billion business. I was involved with every aspect of the business. I was busy all day long. I’d walk out of my office, and three people would grab me, “Do you have five minutes, do you have two minutes?” It’s not like the film business, where you can take a meeting and say, “I’ll get back to you in two weeks.” We were growing, I had 49 or 51 straight quarters of profits. We went public in May of 1991, by 2001, that’s where the stock grew, our company grew and we finally hit the $5 billion mark in 2005. We dipped as low as $3.3 billion and now we’re at $3.7 billion.
WWD: Do you think the company took its eye off the ball when it bought Nine West?
S.K.: That was one of my better moves. I doubled my business overnight. I took a lot of heat when I bought Nine West. Everybody, including most of the people on my board, was against my doing it (and didn’t think I would know how to run a footwear business), but I felt like I had to branch out. I knew how to fix Nine West. They had run into some problems. They had started to spread themselves too thin and had stores everywhere in the world. They were ready to retire. Vince [Camuto] came back strong. We bought Nine West in 1999 for $1.8 billion. I took heat for it. The stock dropped one day from $29 down to $20.
LOSING THE CEO ROLE
WWD: Why did you decide to give up your position as ceo?
S.K.: In 2002, I was on vacation in February in my Palm Beach house and I got an urgent call from several people from Jones who wanted to come down the next morning. Fine, come on down. “Basically it was an ambush. Three or four people had decided to push me out and push Peter Boneparth in as the new ceo. These were people inside Jones. They thought it was time for me to move on. I looked at my wife, and I said, “They want me to go, I will go.” I had already built the collections for 2002 and half of 2003. They ganged up on me. Frankly, I was enjoying my life with my wife. I was unhappy until I was 69 or 70 years old. I got married at 69 and it was a whole new life for me. I was riding the crest. Peter wanted to be in the number-one spot and wanted to make more money. It was February. I said I will think about it, and I’ll call you next week. I said I’m willing to go on May 22. I will not stand for reelection for ceo and I will remain as chairman.
WWD: Why did you even stay as chairman?
S.K.: Because I’m the founder and this was my baby. To this day. This morning [April 2] I signed my letter of resignation, required for the shareholders meeting Monday. It’s kind of funny I’m signing my letter of resignation from a company I built and gave my blood to all these years. After I gave up the ceo job in May 2002, as chairman, I didn’t have any day-to-day duties and just had to attend board meetings. Peter never asked me a question and never looked me in the eye. He brought his own team in. Norton McNaughton died on the vine. He wanted to run the whole show.
I was doing a few movies on the weekend. I got married to Caroline in 1999. Peter was named ceo in 2002. I was free to do what I wanted. I would give my opinion at board meetings, but it went in deaf ears. Wes once in a while would ask my opinion about something. By and large, they wanted to do their own thing.
I used to constantly tell the board, when we started to see the handwriting on the wall with the new competition, the Uniqlos, H&Ms, there are around four of them, the big boxes, that go directly from manufacturer to retail. I used to tell Wes [Card], “You need to reengineer the product. You’ve got to find a fabric that, instead of paying $12 a yard, find one that looks the same for $9 a yard.” To this day, they’d try to pleat something, it wasn’t pleatable. They were looking to sell. They weren’t willing to raise the price. We used to make billions of garments and shoes every year. If you raised every garment half-a-dollar wholesale, $1 retail, you’d bring in another $40 million worth of product a year.
WWD: As chairman, did you suggest that they needed a person in a top merchandising role?
S.K.: Nobody listened to me. They didn’t have someone to replace me. They replaced me as ceo, but they didn’t replace the merchandiser role. When I started I was the production man, I was doing the costs, I was buying the buttons and the shoulder pads. It’s a different world today. A lot of stuff happened over the years. Over the last 10 years, you walk down Fifth Avenue, and there are all these big boxes…Joe Fresh, H&M and Zara. They consumed a lot of the consumers’ dollars. They grabbed up all the air in the room. There’s less and less room for manufacturers like me, wholesalers.
WWD: How did all the consolidation of the department stores impact business?
S.K.: Now you’ve got Macy’s, period.
WWD: What do you think of the way the company has been run the last few years?
S.K.: Richard [Dickson, president and ceo of branded businesses at Jones] made a mistake — he brought in Stefani Greenfield [chief creative officer of The Jones Group Inc.], who thought because she ran a specialty store, Scoop, she could merchandise a collection. It’s so different. It was a mistake. Wes wasn’t a product guy. He did a lot of good things for the company. He was very good at organization in terms of plants. When to close a distribution plant and when to open a distribution plant. I think he was a very good cfo, and as a ceo he lacked the nuances and understanding of the apparel business. He had to rely solely on others.
I love Richard as a person. For a while I thought he was going to turn this around. But he relied on other people. Everybody relied on the next one down to do the job. Nobody wanted to work the kind of hours I used to work. Richard came up three or four times and talked to me. It was only words, he never showed me what he was doing. He told me he was going to resurrect the Anne Klein label.
WWD: People would often ask, “Why aren’t Sidney or Wes doing anything about all the turmoil at the company?”
S.K.: I got so disgusted at the board meetings. I stopped at least three or four little acquisitions. They had already made acquisitions that I didn’t think were prudent. They acquired 50 percent of Rachel Roy. They opened up Robert Rodriguez. I was against every one of those things. They acquired Brian Atwood. I was successful at buying two or three. When you’re rising, you can afford to gamble on two or three acquisitions and maybe you come up with the new star. But when you’re on a decline, that’s not the time to add another $30 million of volume to your company; it doesn’t move the needle.
Wes didn’t know what to do. And he depended on Richard. Richard, who came from a toy company, thought he knew what to do. When I met Stefani, I had a long conversation with her and asked about her background. It’s one thing to be a buyer for your store and pick hot items, it’s another thing to manufacture collections. It’s day and night. She’s very impressive when you first meet her. After the first year, she was going in the wrong direction.
They kept that [the turmoil] from me. I didn’t have an office. I used to work five days a year. Five board meetings. I didn’t have any clout anymore. I was only one vote. By that time, I was only one vote out of 12. When I was ceo, I controlled all the other members. They brought in a bunch of board members. They didn’t know the business.
I used to plead with the board members, “You got to go in at higher gross margins. You go in at 41 percent, Ralph Lauren goes in at 63 percent. You can’t do what Ralph Lauren does because he gets designer prices for his product. We couldn’t do that because we didn’t have the benefit of that designer label. I used to tell them also, it’s better to make a profit on $3 billion than to lose money on $4 billion.
I would have reengineered the lines [and brought the price down] to compete with the large box stores. When you manufacture your garments, and sell Bloomingdale’s and they have to take their markup, you end up not being able to compete with the people who sell direct. So that’s a challenge. H&M and Zara are putting stuff at retail that cost me more than that to make it before I even sold it to Bloomingdale’s.
WWD: Do you think Jones missed out on international opportunities?
S.K.: Nobody was interested in Jones [overseas]. They were interested in designer labels. The only ones doing well overseas are the shoes, Nine West, Kurt Geiger and Stuart Weitzman.
WWD: Were there any business opportunities that crossed your desk that you turned down and regretted?
S.K.: Michael Kors, when he was doing $5 million a year, came in to talk to me, and I regret not signing him up. I don’t have any regrets, I’m such a lucky guy.
WWD: Do you still feel emotionally attached to Jones?
S.K.: I wouldn’t be able to sleep at night if I did. I had to become less emotional about the whole thing. I saw the thing sliding. The guy who’s buying the company never even called me. When you print that, he’ll call me the next day. But I’ll be, “Leave me alone, it’s too late.”
WWD: Have you been in a department store lately and looked at the Jones department?
S.K.: No, I don’t want to see them anymore. I would go in there and get sick from what I saw.
WWD: Do you go into the stores? Where do you shop? And what companies do you admire?
S.K.: I buy my shirts from Charvet in Paris, I buy my suits in an Italian tailor in Paris, once in a while I go into John Varvatos and buy an item. I like Tom Ford very much. Most of my stuff I buy on Madison Avenue. I buy most of my suits at Tom Ford.
I admire Ralph, of course. I admire Michael Kors, although his big thrust is building accessories. Armani, of course. I think Tom Ford is one of the better ones. If I was still in business today, I’d persuade Tom to let me do his lower-price women’s line.
THE FUTURE OF JONES
WWD: Are you happy with the Sycamore people? And what do you think of selling the company for $15 a share? What do you think they’ll do with the company?
S.K.: I never met them. I was hoping we could get more than $15 a share. Not because of me, but because of the other shareholders. I had virtually sold all of my stock. I’ve now sold 99 percent of my stock. It was the best price we could get. I voted yes. Because if we didn’t get $15, two years later, we would have gotten $10. If I felt it was going in the right direction.…It meant nothing to me financially. It was my baby. You don’t want to see it die on the vine.
Wes is walking away with a big parachute. So is Richard. I own less than 100,000 shares.
I think they’ll hold on to Jones and Nine West. I think their eye is on growing Stuart Weitzman [Weitzman became an independent company earlier this month when chairman Stuart Weitzman and ceo Wayne Kulkin became partners with Sycamore], which has been a very good acquisition for us. Stuart [Weitzman] is a great merchandiser and knows how to make a shoe. I hope they hold onto the Jones business. I hope it doesn’t go the way of Liz Claiborne. I would hate it [if it landed in J.C. Penney], but who knows what Sycamore has in mind for it?
WWD: What do you think your legacy will be when it comes to Jones?
S.K.: They’ll probably forget all about me. It’s one of those labels that’s around and then gone. I don’t know what will happen with Jones. I don’t know what Sycamore will do with Jones.
WWD: When you retired as ceo, were there regrets or were you happy to be done?
S.K.: I was happy to spend more time with my wife, put it that way. It’s not easy to build a $5 billion business from scratch. It took a lot of hard work.