KREISLER SHOWS COURT LAUREN UNIT’S NET, LOSS
Byline: Rich Wilner
NEW YORK — Fighting for his severance pay from Bidermann Industries USA, Stuart L. Kreisler, the former head of its Ralph Lauren Womenswear division, gives an inside look in court papers at the operation’s profits and losses.
Kreisler argues that he turned around the money-losing Womenswear operation beginning in 1993, saving Bidermann millions, and is entitled to his $1.75 million severance package from Bidermann, currently in Chapter 11.
Kreisler, who was hired back by Bidermann to lead the Lauren operation in April 1993, said Ralph Lauren Womenswear had total operating losses of $23.6 million from 1990 to 1992 and a $3.1 million operating loss in the first half of 1993 before he righted the company.
Due to moves he made in the second half of 1993, Kreisler said, Bidermann’s Ralph Lauren Womenswear unit was able to report a $1.8 million operating profit for all of 1993.
In 1994, the unit had operating profits of $11.5 million, Kreisler said in the court papers, followed by operating profits of $7 million in the first nine months of 1995. Kreisler said turning red ink into profits was important to Bidermann because any deal with the designer to purchase the business was tied to a multiple of the unit’s profits.
As reported, Bidermann agreed last August to sell the unit to Polo Ralph Lauren for about $43.6 million. The unit had sales of $120 million in 1994. Kreisler’s job was terminated in October, once the deal closed. Bidermann, which filed Chapter 11 in July, has already moved in bankruptcy court here to deny Kreisler the severance package. Bidermann contends that Kreisler’s claim should be considered “at best” as unsecured for breach of contract, while Kreisler argues that it is administrative in nature and should be paid in full at once. Unsecured claims are payable upon confirmation and payment can be sharply less than the claim.
Kreisler, who headed Ralph Lauren Womenswear from 1973 through 1988, said the business reported annual profits of $12 million to $20 million during those years.
The executive said that in addition to returning the Bidermann’s Ralph Lauren Womenswear unit to profitability beginning in 1993, full-price sales during his recent tenure there increased to 57 percent from 50 percent, gross margin of shipped product increased to 37.3 percent from 32 percent, returns dropped to 2.2 percent from 4.5 percent and inventory turns grew to 3.6 times from 2.8 times.
“In fact, as a result of my efforts, [Ralph Lauren Womenswear] distributed excess cash flow directly to the Bidermann Group in the aggregate amount of $24 million in 1993 and 1994 and $3.2 million during the first eight months of 1995,” Kreisler said in court papers.
“It would be simply unfair and inequitable for me to be denied the compensation that I bargained for,” Kreisler added.
A hearing on Bidermann’s attempt to dismiss Kreisler’s severance claim is set for Dec. 20. A Bidermann spokesman did not return requests for comment on Kreisler’s figures.
— Fairchild News Service