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Bachrach Back in Growth Mode

With a committed new owner determined to return the chain to its former glory, things are beginning to look up for Bachrach Clothing Inc.

NEW YORK — It’s been a rocky couple of years for Bachrach Clothing Inc., the Decatur, Ill.–based men’s specialty store chain. But with a committed new owner determined to return the chain to its former glory, things are beginning to look up

Nearly one year ago to the day, Brian Lipman, a former supplier to Bachrach, put together the financing to purchase the 46-unit chain out of bankruptcy for $12 million.

Over the past 12 months, Lipman, president and CEO, has reduced the size of the chain to 30 stores, downsized its Illinois headquarters, relaunched its catalog and rehired or retained some of the company’s most respected long-standing employees—decisions that were necessary to stabilize the business.

With those hard moves behind him and the business expected to turn a profit this year, Lipman is ready to expand.

“My vision is to get Bachrach back to the way it was before all the merchandising and directional changes,” he said in an interview at his garment district offices in New York. “They still have the most-loyal customers, they have great locations, and the personnel in the stores and the Decatur headquarters are terrific—they would die for this company. That’s the strength I’m going to build on.”

His strategy is to grow Bachrach into a 100- to 150-unit national chain, and Lipman is already putting those plans into motion. By the end of this year the company will be back up to 42 units, a number that will increase to 49 by April of next year. Leases have been signed for Roosevelt Field on Long Island, Newport Center in Jersey City, N.J., and the Palisades Center in West Nyack, N.Y. The Garden State Plaza mall in Paramus, N.J., is in discussions, and Albany and Buffalo, N.Y., are in the cards for later this year, along with Austin, Texas, and two units in Indiana.

An immigrant from South Africa, Lipman has a long history in the retail and men’s apparel industry. Before moving to the States in 1985, he owned a chain of men’s stores in his home country, which he sold after he relocated here. Lipman settled in Los Angeles and opened two large children’s department stores in California called Kids Collection. “They were really spectacular stores,” he said. “They were children’s stores for the stars.”

About 17 years ago he sold those stores and jumped back into the men’s business, opening up Sandy Bay Clothing, which imported suits from South Africa. That business operated for eight years until Lipman and his partners had a disagreement about the direction of the company. “I wanted to go after the majors,” he recalled, “and they wanted specialty stores.” So they parted ways and Lipman started Benora Clothing, a manufacturer and distributor of tailored clothing

It was here that Lipman and Bachrach first crossed paths, because Benora was a key supplier to the chain. The company also sold Men’s Wearhouse, K&G, Value City and other large retail chains.

“Bachrach was at the height of its success,” he said. “They had 83 stores and a premier catalog, and the family was still involved.” Bachrach was founded in 1877 and was controlled by the Bachrachs until they sold the business to Sun Capital Partners Inc. in February of 2005.

Three years ago Lipman made a deal to sell Benora to Neema Clothing, he related, and signed a three-year contract to remain on board, move to New York and run the business.

Bachrach remained one of Benora’s largest accounts, and Lipman watched as the company began to struggle. Ed Bachrach, grandson of founder Henry Bachrach, retired; the company “retreated” and downsized to 49 stores; and there was a significant change in merchandise and direction, Lipman recalled. After being sold to Sun Capital, a leverage buyout firm based in Boca Raton, Fla., that also has investments in Mervyns and Anchor Blue, the situation worsened. Sun Capital brought in a CEO that Lipman said had no experience in the men’s industry and she hired an entirely new team that changed direction yet again.

“They had aspirations of building a 100- to 200-store chain, but they moved away from the core Bachrach business,” he said. “They also changed the whole look of the catalog, which was always different than the stores. They decided it should be the same and they ended up in Chapter 11.”

Benora was one of Bachrach’s largest creditors, and so Lipman went to creditors meetings to see what the future held. “I realized that there was a shift in the men’s industry and the business has been consolidated down to about five major players,” he said. “These retailers are doing their own sourcing and there’s no need for a wholesaler doing private label, unless you’re a major player like Peerless. I saw it as clear as day and I knew that the model I built at Benora wasn’t going to be successful anymore. I knew the future lies in vertical retailers such as Jos. A. Bank or Banana Republic.”

At the creditors meeting, Lipman realized that while he was contemplating launching a vertical retail chain, one already existed that just needed some TLC. “I asked the court if I could look at it. I approached two or three friends and raised the money to buy the business,” he said.

The original plan was to close the Decatur headquarters and move everything to New York, but once Lipman realized that the facility there was state-of-the-art, he reconsidered. A Chicago office, however, was shuttered, eliminating 57 positions, and Decatur was downsized to 100 from 150. But the call center, back-office operations and information systems remained in Decatur.

Knowing that merchandise is key, Lipman tracked down Greg Braswell, Bachrach’s former chief merchant, who had left during the turmoil. “I called him, told him I’m buying the company and asked him to come back as GMM, because no one knew the Bachrach customer better than him. It took him 12 seconds to decide.” Next up was Chris Arnold, head of marketing, whom Lipman convinced to stay on board and relocate to New York. Steve Lucas, head of stores, was also retained. “It was the team from its heyday,” Lipman said.

With the personnel in place, the next move was to relaunch the catalog. Lipman made the bold move of shutting the book down for seven months to revamp the offerings. “It had become so bland,” Lipman said. “ So we relaunched in April with all new merchandise and the response was off the charts. Sales were three times what we had planned.”

That, coupled with the sales from the stores, is expected to bring Bachrach into the black this year. He’s projecting sales of $60 million.

Because Bachrach manufactures 80 percent of its merchandise, Lipman said the “margin alone is enough to make the company profitable. We know how to source and how to import, so it enhances our margins. In fact, margins have improved 15 to 18 percent since we took over.”

He said the company was purchased for cash, has zero debt and a revolving line of credit with Wells Fargo, which provides the “checks and balances” for the business. “There’s additional financing available if we need it, but we haven’t needed it.”

To further increase sales, store growth is a priority. In the past, Bachrach units were located in malls, but Lipman said the focus going forward will be on lifestyle centers and “good street locations. Men are not crazy about shopping in malls.”

The new stores are also “more open and friendly,” Lipman said, noting that the design is “a notch above Jos. A. Bank or Men’s Wearhouse.”

The merchandise is also different. “We have much more of a European flavor,” he said. Price points are moderate to better and have been tweaked since Lipman took over. Suits used to retail for $398 and $498, but now they open at $298 and go up to $998. “The top end uses fabrics from Zegna and we make them in a Zegna-approved factory. The label is also co-branded. It’s not a Zegna suit, but they’re Zegna piece goods.”

In casualwear, Bachrach introduced two denim-related brands: Studio 308 and Blueline. The latter sells jeans for $68, while the former is the premium offering, averaging $128. Diesel is the top of the line at $168 to $178.

Lipman has also moved away from price promotions. “When [Sun Capital] took over the company, it became a weekly menu of what they were giving away. We can’t compete with Macy’s. This is a drug we had to get off.&rdquo

So instead of drawing customers on price, Bachrach works to offer “more colors, twists on basics, and added value like cashmere separates. We’re a specialty chain, not a department store.”

Lipman knows that building Bachrach into a national player will take hard work, but he’s up to the task.

The company had not spent “one penny on marketing,” Lipman said, but starting in September, Bachrach will launch a television advertising campaign, starting in Chicago and rolling out after that. It has also become a co-sponsor of the Dreyer & Reinbold Racing team on the IndyCar Series circuit. In each city where an Indy race is being held, drivers visit the Bachrach store and raise money for a local children’s hospital. Bachrach has also developed a line of T-shirts and caps for the team with the proceeds also going to the charity.

These efforts should help the Bachrach name become known outside its home market of the Midwest, Lipman believes.

“We have to be aggressive until we’re running on all cylinders,” he said. “The competition is so fierce, and you’re either one of the players or you’re not.”