PERISCOPE SURFACES WITH A BRAND STRATEGY
Byline: Anne D’Innocenzio
NEW YORK — The executive team behind Periscope is aiming to keep the company on firm ground following a stormy year.
Two weeks ago, Periscope, a wholly owned subsidy of Giant Group Ltd., completed an agreement with Century Business Credit Corp. for Century to continue to advance funds to the business under a factoring agreement.
As reported, the firm was in default of its factoring agreement, and Giant said there were no assurances that Century would continue to provide advances to Periscope.
This followed the firing last month of Periscope’s president and chief executive officer, Glenn Sands, amid allegations of accounting irregularities, and the installation of Scott Pianin, formerly chief operating officer, as its president. Giant also appointed Ralph Stone, ceo of Stone Investment Banking, as interim ceo.
Steve Schatzberg, executive vice president of the misses’ woven division, and Ross McConnell, executive vice president of juniors, remain members of the executive team.
Giant, which bought Periscope in December 1998, said it wrote off its Periscope investment as a result of significant operating losses for 1999, and because more working capital would be needed to keep Periscope operating, according to Giant’s 10K filing.
Giant lost $46.3 million in 1999, including a $28 million write-off of its investment in Periscope. Sales at Periscope, which makes primarily private label products, reached $76.6 million last year.
Giant has hired attorneys to seek possible remedies against Sands’s alleged wrongdoing, but Periscope executives insist that such legal woes haven’t hurt the company.
“We were able to keep it going,” said Schatzberg. “We have strong relationships with the stores. We have been fortunate.”
With the new infusion of capital, the executive team wants to expand sales to $90 million to $100 million this year. Its biggest accounts are May Co., Federated Department Stores, Belk Stores and Dillard’s.
In the next couple of months, Periscope plans to acquire and obtain licenses for other bands. Over the next three years, company executives foresee sales expanding to between $150 million and $175 million.
About 35 to 40 percent of the business is in branded sportswear under the labels PS3983, a junior line that just made its debut in November, and In Focus, a misses’ collection. The remainder is private label.
Company executives want to increase the branded mix to 60 percent of the total. About 50 percent of the business is in misses’, and juniors and kids’ make up the rest. Periscope’s junior business, which offers faux leather pants and denim, is growing fast, and this year should generate volume of $25 million.
The In Focus line is primarily dresses and twill and cotton pants. Jumpers wholesale from $17 to $18.
As for expanding into new categories, Pianin said “we want to stay focused” on moderate-priced junior and misses’ sportswear.
Pianin added that the biggest challenge in moderate is competing with private label.
“We are competing head to head with stores,” he said. “That is our challenge — to offer value.”