MONET HAS BUYER WAITING IN WINGS
Byline: Melanie Kletter / Vicki M. Young
NEW YORK — Could a new buyer revive the Monet Group?
On Friday, Monet said it had entered into an “asset-purchase agreement with a well-funded investment group,” a day after the costume jewelry company filed for Chapter 11 bankruptcy court protection in Delaware.
Monet expects to complete the deal within 60 days, subject to court approval, but gave no further details on who the new investors are. The purchase would place Monet again under new ownership. However, due to the bankruptcy filing, a higher bidder could acquire the firm in a court auction.
Sources said new owners must find a way to capture lost shelf space and reverse the erosion of the Monet brand, something two management teams over the last four years have failed to do. Monet, according to sources, has been hurt by the success of specialty chains like Tiffany and Zale as well as mass merchandisers such as Wal-Mart and Target, who have taken jewelry share from department stores.
“We will continue to operate normally day to day and anticipate emerging as a financially stronger company with sharpened focus under new ownership,” said a spokesman.
According to its petition, the firm listed liabilities of over $100 million, and assets of between $50 million and $100 million.
The company’s filing reflects a range of recent problems, including a lack of fashion-forward product, lost shelf space and an exodus of top executives, according to financial and market sources.
According to another investment adviser in the fashion industry, who’s been approached by top apparel brands looking to add to their accessories lines, “For the last three or four years, companies have asked whether Monet is a viable brand, and I’ve said I don’t think so,” the adviser said on condition of anonymity. “The brand has lost its touch. It doesn’t have the fashionable styling that’s needed in today’s marketplace. The longer a company is in disarray, the more shelf space it loses. It’s not a destination stop at the department store counters anymore.”
Peter Chapman, owner of Bankruptcy Creditors’ Service Inc., a research firm, noted, “They’ve got senior subordinated debt, junior debt. You can’t be in this retail business and be overleveraged.”
Monet’s filing last week is all the more striking considering the recent strength seen in the jewelry industry across all price points. The last year has been one of the best in recent memory for accessories, as economic boom times and fashion-right products have led to robust sales of high-end jewelry, as well as more moderately priced lines.
The filing also represents the decline of a company that has a rich history. Founded in 1929 by two brothers, Monet had been a leading domestic manufacturer of costume jewelry, is a key supplier to department stores, and is one of the most recognizable jewelry brands. The firm employs more than 900 people, ships about 14 million pieces of jewelry a year, and is sold in about 2,300 doors, including 1,600 department stores. Sources estimate that the company’s sales hover at around $125 million.
The privately held firm has three jewelry brands — Monet, Trifari and Marvella — as well as a licensed line of costume jewelry produced for Christian Lacroix. In 1989, Monet was linked with the two other brands, forming the Crystal Brands Jewelry group, a division of Crystal Brands Inc.
In 1998, the firm launched a bridge jewelry collection called Monet Signature, as well as a collection called M2000 that targets more mass players such as J.C. Penney. The company launched a division of handbags and small leather goods, although that was suspended after unfavorable reaction from retailers.
Monet has faced some difficulties in the last several years since it was taken over by new management, and this marks the second time the firm has filed in the last seven years.
After suffering a liquidity crisis and other problems, Crystal Brands entered bankruptcy in the summer of 1994. Later that year, the jewelry division was taken out of Chapter 11 proceedings by a deep-pocketed investment group led by Richard E. Rainwater.
The jewelry division was renamed The Monet Group by the new owners, reflecting the strength of the Monet brand. At that time, Judy Harrison, who signed on while Crystal Brands was in Chapter 11, was kept on by the investment group as president and chief executive officer. Under her tenure, the company cut stockkeeping units and upgraded systems and consolidated its production in one modernized, expanded plant in East Providence, R.I.
However, the moves were not dramatic enough, according to industry sources.
Pinky Vaid, owner of accessory firm Fantasia, which is also one the firm’s largest creditors, said Monet’s problems stem from mismanagement and a lack of focus.
“This bankruptcy is not a surprise,” Vaid said. “They are a very weak company. They have no focus in terms of product.”
Monet has faced significant management turnover lately in its senior ranks. Harrison resigned from the company in May 1997 and was replaced by Robert Mang, a veteran retailer who had been vice chairman at the DFS Group.
Mang resigned a few weeks ago, according to a company spokeswoman.
Kim Anderson-Curry, formerly executive vice president of brand management and worldwide sourcing, left the firm late last year to join an Internet company.
The firm is now believed to be run by Michael Sharp, vice president and chief operating officer, who did not return repeated phone calls.
Vaid noted that the firm has had trouble since it shifted its production overseas. Monet now has moved its production entirely offshore, according to sources.
“When they were manufacturing product themselves there was secrecy to their direction,” he said. “Now they have to rely on overseas production and there is no uniqueness to their fashion.”
Another industry source said the company lost its direction when it was taken over.
“There was not a lot of direction coming from the top,” the source said. “Leadership is important and the person on top should know the product and that wasn’t happening.”
Candace Corlett, partner at WSL Strategic Retail, a retail marketing consulting firm, said, “Our surveys on how America shops indicate that the accessories market seems to have a concentration on [those] between 18 to 34 years. When we look at the jewelry people are buying, it’s usually top-end stuff. Consumers can go to a Zale or Tiffany and buy fine jewelry at under $100.”
She added, “There’s a new segment of affordable jewelry that we didn’t have when Monet was in its heyday. Now you can find affordable jewelry at Wal-Mart, Target and T.J. Maxx. You can buy the real thing at warehouse clubs, mass merchandisers and discount clothing stores. These companies have squeezed out companies such as Monet.”