SIRENA SHRINKS TO A PRECIOUS FEW
Byline: Kristi Ellis
LOS ANGELES — Sirena Apparel Group, the swimwear company bent on reinventing itself, has abandoned its plans and downsized in the wake of bankruptcy and reorganization.
In a disclosure statement and business plan filed in bankruptcy court on Friday, Sirena put its Jezebel/Renee of Hollywood intimate apparel division on the block and discontinued all but three labels: Sirena swimwear, the Liz Claiborne And Elisabeth plus-size swimwear licenses, and Wearabouts, a coverup line, according to Brian Zientek, who became chief executive officer in February.
In an interview on Tuesday, Zientek said he expects creditor and court approval of the plan in the next 60 days.
Sirena started its downward spiral last June with the dismissals of Maurice (Corky) Newman as ceo and chairman, and Richard Gerhardt as chief financial officer amid reports that the company had issued misleading financial statements. No charges were ever filed against either executive.
At the time, Sirena said it would restate financial results for the first three quarters of its fiscal year ended June 30, 1999. The company filed for Chapter 11 bankruptcy protection on June 25 of last year.
As part of the reorganization, Sirena will no longer be publicly traded, according to Zientek. The firm will be owned by its debtors upon court approval of the reorganization plan.
Sirena last traded at $2 a share in over-the-counter trading, before it was halted on June 8.
Sirena incorrectly reported that for the nine months ended March 31, 1999, profits ran up 27.2 percent to $2.7million, or 52 cents a share, from $2.2 million, or 46 cents. Sales climbed 20.9 percent to $41.9 million from $34.7 million.
Last June, the company said that it would restate financial results for the first three quarters but as a result of the bankruptcy filing, no audited statements were issued in 1999, according to Zientek.
The restated results were to contain a “material” charge to include inventory write-downs and write-offs of deferred expenses as well as $700,00 related to Loehmann’s, one of Sirena’s accounts. Loehmann’s filed for Chapter 11 in May.
He noted that they are currently in the process of determining financial results for the fiscal year, which ended on June 30, 1999.
“We don’t know what the losses were that year except that they were big,” Zientek said.
Zientek said Sirena will end its fiscal year on June 30 with a volume of $32 million. He also projected sales for fiscal year 2001 of $32 million to $34 million. At its peak in 1998, Sirena posted a volume of $51 million, Zientek said.
As part of the reorganization of the company, Sirena has put Jezebel up for sale and is negotiating with at least three interested parties, he said. Sirena acquired Jezebel in February 1998 as an entry into intimate apparel and a means to diversify its core swimwear business.
At the time, Newman had big plans for intimate apparel. When Sirena purchased Jezebel, he claimed that the firm’s intimate apparel division, which also included the license for Anne Klein intimate apparel, would generate $60 million over three years.
At its peak, Jezebel had a volume of $10 million, but at the time of the bankruptcy filing the division posted about $7 million in sales, Zientek said.
“Intimate apparel required different marketing and sales teams and it was a different seasonality,” said Zientek. “I don’t think it was productive for us to lose our focus that way.”
The other key strategy is the discontinuation of several labels, including the license for Anne Klein intimate apparel, swimwear (which will be distributed through June) and sleepwear; Rose Marie Reid, a popular-priced line the company relaunched in 1998; the Hang Ten license for junior and kid’s swimwear; HotWaters, a junior’s line; Concepts by Sirena, a contemporary label; Look & Sea, a misses’ and children’s swimwear label, and Sirena Kids. Zientek said that the firm’s growth areas are in the three remaining labels.
“Liz has done well, but a particular surprise has been Elisabeth (a plus-size line) and we are going to blow it up and make it a full brand,” he said.
Liz Claiborne has extended its licenses through 2001, he added. Doug Arbetman remains president of the company and oversees merchandising.
Sirena has also requested a credit facility from Foothill Capital of $25 million to $27 million annually, as part of the reorganization plan.
The plan, pending approval from creditors’ committees and the court, would allow debtors to acquire stock in the company as opposed to a cash payout.