ARIS IN COURT BUT NOT IN PLAY
Byline: Vicki M. Young
NEW YORK — Aris Industries chief executive officer Arnold Simon says he isn’t about to be pushed around — or acquired — by a large apparel conglomerate.
But all or part of Aris — defending itself against a Sara Lee trademark infringement lawsuit over its Wonder Pant, designed to shape and uplift a woman’s hips and derriere — might be available if a suitor came up with the right price, Simon told WWD Tuesday.
Simon confirmed market speculation that he’d had talks with Kellwood Co. regarding a possible acquisition of the firm. Simon declined to comment on specifics, while a spokeswoman for Kellwood reiterated the company’s position that it only comments about acquisitions once a deal has been signed or consummated. She added that Kellwood has a standing acquisition committee in place that “looks at hundreds of companies over a year’s time and receives numerous solicitations from companies looking to be acquired.”
Kellwood in the past said it was interested in building its junior and men’s wear businesses. Hal J. Upbin, chairman, president and chief executive, said in March of this year that Kellwood is aiming to expand the branded portion of its men’s wear business to 75 percent of sales from just 7 percent over the next three to five years. At the time, men’s wear accounted for 15 percent of revenues at the St. Louis-based firm, which primarily makes women’s apparel. The XOXO junior brand and Members Only men’s wear brand are owned, produced and marketed by Aris.
“I don’t think anyone has enough money right now,” Simon said of possible buyers for his company. He added that he was “entertaining the possibility of either putting new money into the company or finding a partner.”
Meanwhile, Aris is defending itself against a legal attack by Sara Lee Corp. and Canadelle Ltd. Partnership. The lawsuit, filed in Manhattan federal court in August, alleges that Aris’s Wonder Pant “is intended to and is likely to cause confusion, mistake or deception.”
Canadelle, a Canadian firm affiliated with Sara Lee, owns the Wonderbra and Wonderbody trademarks, and has been using them in connection with the sale of women’s apparel since 1935, the lawsuit said. The trademark is licensed to Sara Lee for use in the U.S.
The lawsuit added that the “Wonderbra,” through Sara Lee’s Bali Co. division, has widely promoted and used the trademark in connection with a “particular type of figure-enhancing innerwear and outerwear product that is designed to shape and accentuate a woman’s body.”
To remedy what it perceives as a below-the-belt assault, Sara Lee is seeking an injunction to bar Aris from using the alleged infringing name, destruction of the offending product and an accounting of profits.
Such infringement type lawsuits aren’t new ground for Sara Lee. The firm last year filed a similar lawsuit in North Carolina against Ce Soir and its Fashion Forms operation over a competing cleavage-enhancing bra called The Water Bra.
Simon on Tuesday called the lawsuit “retarded.” The Wonder Pant technology will be used for trousers, he noted, not underpants.
“There are 1,358 combinations of ‘Wonder’ something. This is typical of a big company suing smaller companies and harassing them. There is a big difference between a pair of pants and a bra,” he continued.
According to Simon, Aris has received some orders for the product, which is being readied for spring 2001 shipments. “The company is in the process of perfecting the different fabrications being planned. We will have substantial business for spring,” the ceo said.
To be sure, one could also wonder about Aris’s future.
Simon was quick to debunk scuttlebutt stemming from financial and market sources who characterized Aris as slow in making payments to suppliers and Simon as being under pressure to sell the firm.
“We’re paying our bills,” he asserted. “Our bank, CIT, is working with us and is very supportive. We started showing profits [in] July and have cut our selling, general and administrative costs substantially.”
Officials at CIT, which provided Aris with a revolving credit facility of up to $65 million, declined comment.
When Kellwood’s name surfaced as a potential buyer in late September, the whispered amount being negotiated was $50 million, according to sources. Simon declined comment on what part of the business was being negotiated. He added that the number was “inaccurate” because Aris has annual volume of around $240 million.
By any measure, Aris’s earnings are a less weighty proposition.
According to a Securities and Exchange Commission filing, Aris widened its loss in the second quarter ended June 30 to $5.5 million from $3.1 million a year ago. Sales skyrocketed 74.5 percent to $44.2 million from $25.3 million, primarily due to its acquisition of the XOXO junior brand in August 1999. XOXO generated sales of $21.4 million, just less than half the total, in the quarter.
Those numbers will get better, Simon said. They will need to if more generous offers for the company are to be forthcoming. The SEC filing said that CIT amended its credit facility in April, waiving compliance with certain covenant requirements for 1999. In exchange, Simon agreed to provide a personal guarantee on $3 million of indebtedness outstanding under the financing agreement. On June 20, Aris had a working capital deficit of $6.9 million.
In addition to XOXO and Members Only, Aris manufactures the Baby Phat line under license. The company’s sole Perry Ellis licensed product these days is for loungewear, according to Simon. The company no longer has the license to produce the Fubu boys’ sportswear line. The recently launched Brooks Bros. golfwear line is doing well, Simon added, and the Cynthia Rowley sportswear line is set for introduction in 2001.
“Our women’s brands are doing well. While Aris originally was a men’s wear company, men’s wear has never been our forte. I’m known for buying companies, and then building them up to sell. The only reason why I bought Aris is because it was public,” Simon disclosed, adding that it’s much easier to buy a public company than it is trying to take a private company public.
The ceo said that right now he will continue focusing on its women’s business. “XOXO is 50 percent ahead of plan at Federated,” he said. Simon also disclosed that he has plans to take the XOXO “design and concept” into the missy segment of the women’s business, but under a different label.
Still, Simon isn’t about to rule out a sale of the company.
“Anything’s possible,” he said. “Everything I have is for sale at the right price, whether the whole company or its parts. Our company is a great opportunity because it is growing so much.”