SOKOL GOES CORPORATE: NAMED OPERATING CHIEF, PRESIDENT OF PEGASUS
Byline: Eric Wilson
NEW YORK — While speculation might be intensifying about financial constraints or a major restructuring in the works at Pegasus Apparel Group, the company made two big moves on Thursday — bumping up divisional president Susan Sokol to president and chief operating officer and confirming a joint venture is in the works with the principals of Kay Unger to form a secondary line for eveningwear designer Pamela Dennis.
Sokol’s promotion, after six months on the job as president of Pamela Dennis, marks a transition from her role at the helm of several wholesale businesses, including DKNY women’s collection and Calvin Klein’s women’s business, to the corporate team of the year-old Pegasus, which now owns five businesses.
She will be responsible for day-to-day operations of Pegasus, as well as targeting potential acquisitions, and will work directly with Stephen L. Ruzow, chairman and chief executive officer of Pegasus.
The complexity of running five diverse businesses, Ruzow said, “is really overwhelming. Susan has shown that her skills at running the day-to-day operations of a business are phenomenal.
“We need those skills in each one of our operating companies,” Ruzow said. “We were missing someone with the experience and the ability to execute at a level I don’t really want to be involved in.”
Sokol’s challenge will be to shore up the operations of what are basically nascent apparel businesses — Pamela Dennis, Miguel Adrover and Daryl K — all acquired by Pegasus within the past year. Adrover’s company is essentially a startup, while Daryl K, a more established sportswear brand, has lost two presidents since designer Daryl Kerrigan sold her business to Pegasus in April.
The departures from Daryl K of two former Donna Karan executives, George Ackerman, who joined CK Apparel Corp. as president and chief operating officer, and Mary Wang, who worked closely with Ruzow before leaving to join Coach as president of its wholesale business, as well as the cancellation of Pamela Dennis’s fall runway show this week had fueled speculation that Pegasus might be experiencing financial difficulties. While aware of the rumors, Pegasus officials denied their veracity, saying the company is on track and currently debt-free.
“This investment is playing out exactly according to our three-year plan,” Ruzow said. “We are even ahead of our projection. We said we were going to lose money in year one, break even in two and make a profit in year three.”
Ruzow also said the company has recently signed a letter of intent to acquire another American sportswear company, which he would not disclose. If a deal goes through, possibly in the second quarter, it would mark the sixth acquisition since Pegasus was formed in February. The company also owns accessories firms Judith Leiber and Angela Amiri.
Ruzow also confirmed Pegasus has reached an agreement in principle with Rob Feinberg and Rich Honig, the owners of the Kay Unger eveningwear business, to form a company through a joint venture that would produce a line of eveningwear priced significantly lower than Dennis’s signature collection. The new line would retail from $800 to $1,100 in an aim to make her label accessible to a broader range of customers.
Feinberg, president of Kay Unger, said the companies had reached an agreement to create Dennis’s secondary collection, but could not provide further details. Its planned retail price range is considered to be a new frontier in eveningwear, priced higher than bridge but still more accessibly than most big name designer resources.
The deal is seen as an opportunity to turn the cachet of Dennis’s name and association with celebrity dressing into a sizeable retail business.
Ruzow and Sokol characterized the deal as a joint venture and not a license, through which both companies would profit. Kay Unger, which operates as a division of the Phoebe Co., has grown into one of the strongest evening businesses cited at retail, with an estimated wholesale volume of $35 million and a good reputation for its production, quality and fit. Kay Unger’s product, which is carried at stores like Saks Fifth Avenue and Neiman Marcus, typically retails from $250 to $500.
Meanwhile, Dennis’s signature business, despite some setbacks since the acquisition, has grown significantly, Sokol said. Sales of the spring 2001 collection doubled those of the previous year, she said.
“A lot of that increase has to do with the reshaping of the company,” she said. “We have a better balance in the mix of product, by working with Pam directly on the merchandising. There was an opportunity there that was not being addressed within her collection, by balancing the opening price point, changing the product mix so there is more of an emphasis on cocktail dresses than there has been in the past, and more cocktail suits versus separates.”
Sokol has also concentrated on staffing and operations, as well as Dennis’s delivery of her signature collection. Executives at Pegasus are hoping to have the lower-priced line in stores by the end of the year, possibly in time for the resort retail season.
“This opens the product to a much wider audience,” Sokol said. “We believe Pamela Dennis has a great name and brand recognition, and that the introduction of a lower-priced collection will really be well received by our retail partners.”
In her new position, Sokol is expected to similarly work with the management of each division on merchandising, proper management of gross margins and identifying growth opportunities.
“Susan is very good at looking at the big picture and the day-to-day operations, being sure that we’re on calendar with deliveries and on budget,” Ruzow said. “This will also free me up to work more on acquisitions and building the international part of our business, which is near and dear to my heart. I haven’t been able to look at other companies because I have been tied up in the day-to-day operations of our companies.”
Since its early round of acquisitions, with the exception of Leiber’s more mature accessories business, Ruzow said he has focused on setting up the infrastructures for each division to be able to produce and ship merchandise on time. He and Sokol believe they have made significant progress with each of the apparel divisions.
At Adrover, the designer’s well-received spring collection has been picked up by Barneys New York; Saks Fifth Avenue, which held a reception for the designer on Thursday night; Neiman Marcus and several specialty stores. While his fall collection was greeted with lukewarm reviews, Ruzow said stores have been positive during showroom appointments this week.
Daryl K opened its K-189 men’s and women’s collections this week and was scheduled to show its women’s collection on Thursday night. The company plans to eventually name a new president for that business, but not until the end of the year, Ruzow said.
Despite their confidence in the steps they have taken in the past 11 months, it still seems like Ruzow can’t get a break, especially following the disastrous sheep incident at Adrover’s show on Sunday night. Ruzow had to jump from his seat at the show to rescue a model who found the live animal she intended to walk down the runway was hesitant to take more than a few steps.
“It’s living at home with me now,” Ruzow said. “I walk it every morning.”