CHORUS LINE REGROUPS
Byline: Kristi Ellis
LOS ANGELES — Battered by cash-flow problems and a weak junior dress market, Chorus Line Corp. has cut its overhead by one-third, closed two divisions, named a new president and initiated a major restructuring program to boost the bottom line.
The 25-year-old dress firm, founded by Barry Sacks, Mark Steinman and Jay Balaban, was recently acquired by Levine Leichtman Capital Partners Inc., a venture capital firm in Los Angeles, which purchased a stake in the firm six years ago. Levine Leichtman purchased the remaining outstanding shares from Sacks earlier this month.
As part of the restructuring, Chorus Line has named Herman Roup as chief executive officer and president of the company. Roup, who was most recently vice president of Western operations for textile firm H. Warshow & Sons, took the helm in March.
Roup noted that Levine Leichtman has begun the turnaround of the well-known dress company, which in addition to its signature line makes such labels as All That Jazz and Molly Malloy, by converting all $24 million in loans and making a cash infusion of $3 million.
“We have saved the company by being clinical,” said Roup. “It hasn’t been a slash-and-burn philosophy.”
He said the company posted a 1999 volume of $130 million, below projections of $150 million. As a result of the restructuring, Roup expects volume this year to range between $100 million and $120 million.
“We prefer to look at the bottom line while everyone else looks at the top line,” said Roup.
At its peak in 1995, Chorus Line employed 750 people, posted volume of about $250 million and operated six divisions, including misses’ dresses, junior dresses, kids, sportswear, plus sizes and Tickets, a denim dress division.
But a poorly performing junior dress division, cash flow problems and distribution problems from its Mexican plant, forced it into a tailspin in the late Nineties.
Under the leadership of Andrew Cohen. who was president and ceo from 1996 to 1999, the company tried to stave off a decline by bringing in new design teams and management.
It also launched Heartbeat, a new social occasion division, and Allen B, a moderate dress, suits and separates division in a joint venture with Allen B. Schwartz, owner and design director of contemporary sportswear firm ABS.
The two new divisions never met expectations, according to Roup.
Chorus Line has closed Heartbeat, which was launched last August and was expected to hit $10 million in sales in the first year. It has also discontinued Allen B, which was launched in September 1998 and was expected to reach $200 million in volume in the first 36 months.
“Heartbeat was a beautiful collection but it didn’t fit into our segment of the market,” said Roup, adding that Allen B was discontinued before he took over in March.
Having scaled down, Chorus Line now operates four divisions: All That Jazz, a junior dresses and sportswear line; Molly Malloy misses’ dresses; All That Jazz Woman plus sizes, and All That Jazz Kids.
Chorus line has downsized as part of the overall reduction. The company, located in a 210,000-square-foot facility in Vernon, Calif., employs about 390 people, Roup said, adding that approximately 90 people were laid off at the end of February.
It has also restructured its distribution in Mexico and increased production from 23,000 units a week to 84,000 units a week. The company does about 50 percent of its production in Mexico, Roup said.
“Production in Mexico takes time, but we have managed to turn the bottleneck around and increase the flow,” Roup said. “We are just simplifying and getting back to basics.”