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HSM Enters Next Chapter

Nearly a year after transitioning to new ownership, Hart Schaffner Marx now has a new home.

NEW YORK — Nearly a year after transitioning to new ownership, Hart Schaffner Marx now has a new home.

This story first appeared in the December 5, 2013 issue of WWD.  Subscribe Today.

The venerable tailored clothing brand, which is owned by Authentic Brands Group and licensed to W Diamond Group, left its offices at 125 Park Avenue here last week and is now headquartered above the Hickey Freeman store at 543 Madison Avenue, at 55th Street.

Doug Williams, former chief executive officer of HMX Group, HSM’s former owner, and ceo of W Diamond, holds the license for Hart Schaffner Marx and retains ownership of its factory in Chicago. He also owns the Hickey store and, as a result, spearheaded the move to the new space.

 

The new location houses the corporate offices of W Diamond along with the HSM and Hickey Freeman sportswear teams and the misook.com business. The license for Misook, an upscale women’s knitwear brand owned by Authentic Brands, was transferred to Dallas-based Ming Wang a few weeks ago. Distribution, marketing and sales for Hart Schaffner Marx tailored clothing are being handled by Peerless Clothing International, one of the country’s largest tailored clothing manufacturers, and is based out of Peerless’ offices at 641 Lexington Avenue.

There are about 35 employees at the new space and the company also has 600 employees in Chicago, the bulk of whom are in the factory, but also in back-office roles. 

“We officially left 125 Park Avenue on Nov. 27,” Williams said in an interview at his new office surrounded by remnants of the old one, including the vintage Maxfield Parrish paintings that had hung at the previous location. “When we completed the Hickey Freeman transaction, that [tailored] team moved over to Samuelsohn and we had two empty floors over the store. The landlord at 125 Park Avenue had a new tenant, so we repurposed everything here.”

In late October, Grano Retail Holdings, parent company of Montreal-based Samuelsohn, finalized its acquisition of all the tangible assets of the Hickey Freeman brand, including its factory in Rochester, from W Diamond Group. But the new owners had no interest in the retail store, Williams said.

Hickey also operates five outlet stores. Williams said three of the units — in Kittery, Maine; Manchester, Vt., and Central Valley, N.Y. — have leases that are expiring at the end of the year and will be closed.

Samuelsohn will operate the factory store at the manufacturing facility in Rochester, along with the one remaining outlet in Syracuse.

As the operator of the New York City store, Williams said he will “acquire tailored clothing from Hickey Freeman; we do the sportswear and we will buy the accessories from the licensees.” He’s also planning a major renovation of the two-level space in February, right after the Super Bowl, which will be in the New York area. The renovation will be undertaken in phases and is expected to be completed within two months.

Williams also revealed that it’s likely W Diamond will transfer the license for HSM tailored clothing to Peerless in the near future. Peerless already holds the license for the lower-end Hickey by Hickey Freeman line.

“We entered into an agreement with Peerless that they would work on the front end,” he said, “and handle the design, sourcing, sales and customer service. They take the orders from the retailers, we manufacture and ship it and then pay a commission to Peerless.” He said Peerless’ size and scope has helped HSM negotiate better prices on fabrics and the partnership has been successful, with bookings for spring up more than 20 percent.

 

He attributed that in part to the planned exit of the Joseph Abboud-label product from the wholesale market. The Men’s Wearhouse Inc. purchased JA Apparel Corp., owner of the Abboud brand, and is making it exclusive to its stores next year, opening up opportunities for other brands with a similar sensibility. Dillard’s is HSM’s biggest customer, and Nordstrom, which was a big seller of Joseph Abboud, is also beefing up its orders with HSM for next year to fill the void. Williams said HSM opens at $695 but most of its suits sell for $795 to $895.

“The next step could be that Peerless gets the license and will enter into a long-term licensing deal with the factory, which will continue to be owned and operated by W Diamond,” he said. He said the earliest that deal would be consummated would be for fall 2014, but that might not happen until spring 2015. He stressed that any deal would have to include a lengthy commitment to the Chicago factory, a deal Authentic Brands made when purchasing the intellectual property of HMX last December.

Williams has also been talking to unrelated brands interested in domestic manufacturing and expects to complete some deals to increase production at the factory, which currently produces about 200,000 garments a year. “We’re expecting to ramp that up to 300,000 by finding appropriate third parties who want product made in the USA.”

The HSM sportswear will also be improved. Richard Cohen, the former Ermenegildo Zegna and Saks Fifth Avenue executive, is consulting with W Diamond and is expected to help implement changes in the sportswear assortment next year.

Williams is also working with Authentic Brands scouting out international opportunities for Misook as well as Hickey, HSM and Bobby Jones, another former HMX label.

“We’re really happy with the future as the HSM licensee and manufacturer,” he said. When the company changed hands in December 2012, there was $30 million in debt, a number that will be down to less than $10 million by the end of the year. Williams said that the $8 million in unsecured debt from “critical vendors” will be 100 percent repaid by the end of January.

“It hasn’t been without pain, but we’re [pleased]. It’s been an amazing year,” he said.