Byline: Mark Tosh

NEW YORK — Despite signs of a slowdown in the outlet industry, the new owners of Jonathan Logan want to roll out the chain and broaden the label’s distribution through licensing deals.
Logan was once a big brand player in department stores, but its popularity waned, and the label is primarily sold through factory outlets.
Believing that the Jonathan Logan label is still widely recognized, Canaan Partners, a venture capital group based in Rowayton, Conn., acquired the leases of 31 Jonathan Logan outlets from United Merchants and Manufacturers Inc. in January. The amount of the transaction was never disclosed. The venture capital firm’s other investments include Young World Stores Group children’s wear chain and Pet Food Giant, a pet-supply superstore.
According to Michael Modica, a principal at Canaan Partners, Jonathan Logan has “a significant amount of growth potential.” Modica was named chairman of Jonathan Logan following the acquisition.
About 90 percent of the staff of Logan has remained with the company since the acquisition, including Tom Hagmaier, president. About 10 Jonathan Logan stores were not part of the deal and have closed.
The Logan outlets, concentrated in the eastern half of the United States, are expected to generate sales of between $20 million and $25 million this year, compared with “slightly less than that last year,” Modica said.
The growth is seen at a time when women’s apparel gains in outlets have slowed and, according to some data, fallen behind the growth rates of other retail sectors such as national chains, discounters and department stores.
Women’s apparel purchases at outlet centers rose only 4.9 percent in 1994, a dramatic dropoff from the 19.3 and 13.9 percent gains of 1993 and 1992, respectively, according to data from the NPD Consumer Purchase Panel, a research firm in Port Washington, N.Y.
Among other retail sectors last year, NPD estimated total women’s apparel sales increased 13.5 percent at off-price stores, 9 percent at discount stores and 7.2 percent at department stores.
Still, Modica said he is keen on the long-term viability of outlet centers.
“If you look at the data, it’s been the one real growth area within retailing for the past three or four years,” he said. “Until somebody thinks of a better idea, I don’t know of a better way to deliver value to consumers than at a factory outlet center.”
Modica said Canaan Partners will fund a “handful” of new stores this year and a more aggressive number in 1996. He would not specify the numbers.
New ownership also wants to expand the business by licensing the Logan name to manufacturers with proven access to the mid-market department store channel of distribution, he said.
According to United Merchants’ annual report, about 60 percent of the women’s apparel items sold in the firm’s outlet stores carried the Logan label in 1994.
The Logan stores average about 4,500 square feet and offer sportswear, career, casual and activewear from about 80 vendors, including Claude Vernet and Urban Oasis. Hagmaier said the Logan stores have been profitable since shortly after he joined the retailer five years ago.
“It was kind of always a sleeping dog that never had a chance to reach any level of potential,” Hagmaier said. “Anytime little bits and pieces of cash came in, we would always utilize it and show a profit.”
Uzi Ruskin, chairman of United Merchants, said if the new ownership believes Jonathan Logan “was underdeveloped, that’s up to them.” He added, “I don’t want to comment about it.”
United Merchants owns 79 percent of Victoria Creations, a costume jewelry manufacturer.
Canaan Partners will open its first new Logan unit in May at The Crossings outlet center in Tannersville, Pa., a resort town in the Poconos, and is considering locations from Missouri to Michigan and in the Pacific Northwest.
Opening additional stores should be “relatively easy” because, as part of the deal, the new ownership acquired fixturing for 10 to 12 stores, Modica said. He and Hagmaier will attend next month’s real-estate convention in Orlando to consider other locations.
“We want to get comfortable with what we currently have, but we expect to be very aggressively expanding once we get everybody rowing in the same direction,” Hagmaier said. “The idea is growth.”