JAY JACOBS MAPS PLANS FOR REVIVAL
Byline: Rich Wilner and Robert Spector
NEW YORK — Jay Jacobs Inc., a victim of the troubled junior business and poor store locations, hopes to emerge from bankruptcy proceedings in the fall with fewer items but broader appeal.
That’s the near-term future for the Seattle based, 179-store women’s and men’s specialty chain, according to Rex Steffey, president and chief executive officer. He has the dual job of guiding the company’s reorganization in Chapter 11, and revamping its merchandising.
“There is a fundamental shift in the American consumer’s approach to buying clothes,” said Steffey, in a recent interview. “I’m not convinced you can just do a better job of buying hotter styles for the junior customer and that’s the end of it. This is an industry issue. All of us can’t be this wrong at the same time.” Other junior chains have faltered, most notably Merry-Go-Round, which is also in Chapter 11 bankruptcy. To survive, Steffey believes, Jay Jacobs must broaden its appeal.
In 1992, he did similar duty as president and chief operating officer at Paul Harris, an Indianapolis-based women’s chain that was reorganized under Chapter 11. After the company emerged from Chapter 11, Steffey joined Jay Jacobs in September. Recently, he hired three Harris executives who helped him in that reorganization. Bill Lawrence was named Jacobs’ senior vice president and chief financial officer, succeeding Leo Rosenberger, who held the post temporarily and has returned to consulting. Brian McNamara was named senior vice president and general merchandise manager, succeeding Yeanna Woo, who has those titles in the budget apparel area. Anne Samenfink has become buyer of woven bottoms and coats; employees who handled those areas now report to her.
Steffey’s merchandising strategy is to stock fewer items, sell thousands of each and appeal to a broader audience.
While the old Jay Jacobs targeted the junior customer, the new Jay Jacobs also aims for a somewhat older customer with a “younger attitude,” said Steffey, who noted the retailer would not abandon its younger customer base. He also sees the chain launching a product development program.
The retailer’s ultimate goal is to carry 50 to 70 percent private label. Currently it carries less than 10 percent in private label.
Consumers will begin to see a change in vendor mix in March.
“That won’t be a complete transition, by any stretch of the imagination,” Steffey said. “With the key-item focus, there will be fewer vendors, but the ones we have will be more important to us.” A recent visit to a Seattle-area store showed dresses from All That Jazz, Knapp Studio, Concepts and Roberta; jackets and suitings from Francine Browner, Nina K and Rina Rossi, and jeans from Zena and Calvin Klein.
On the reorganization side, Steffey said the chain has been talking with creditors about a possible cash, notes and stock payout, but exact numbers have not been discussed.
Steffey was able to pay creditors more than 100 cents on the dollar when he was head of Paul Harris Stores. “I can’t guarantee that much of a payout here, but I feel the creditors are confident I will do everything to get them as much as possible,” he added.
The executive said he expected Jay Jacobs to post a loss in the fourth quarter and year ending Feb. 25, run in the red through the first half, but turn profitable in the second half. The chain filed for Chapter 11 reorganization last May and quickly closed 80 unprofitable stores. Steffey said there were still a few more stores that would be closed as leases expire, but that the chain would open five to 10 units in 1995.
At its peak, the company had 288 stores in 11 states, in the West, Midwest, Southwest and Southeast. The chain is down to 184 units, which operate under four formats: women’s, men’s, men’s and women’s and budget. Units range from 1,500 to 4,500 square feet; 75 percent of the chain’s volume is in women’s sales; 25 percent, in men’s.
The budget stores operate under the name Fashion Direction.
Asked about similarities between Paul Harris and Jay Jacobs, Steffey said, “Each got into trouble by losing their customer franchise. Paul Harris lost its franchise by the national movement away from career merchandise. They were too slow to adapt. Each expanded rapidly and wound up getting into real estate that, frankly, they shouldn’t have been in.”
Jay Jacobs, like Paul Harris, is a publicly traded company. Its stock is controlled by its founder, Jay J. Jacobs, who is 81.
“In Chapter 11, you are fighting for the survival of the company,” Steffey said. “We have to prove to somebody that we deserve to be in business. What’s the niche? What’s the purpose you serve? If you can’t answer those questions during the Chapter 11 process, then coming out of it only delays the inevitable. Everything we do has to answer the question: Will this help us survive and get out of Chapter 11? There can’t be any sacred cows or undiscussable topics.” — Fairchild News Service