Croscill, Inc.

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Croscill, Inc.

261 5th Avenue
New York, New York 10016
U.S.A.
Telephone: (212) 689-7222
Fax: (212) 481-8656
Web site: http://www.croscill.com

Private Company
Incorporated: 1946 as Croscill Curtain Company
Employees: 1,500
Sales: $300 million (2000 est.)
NAIC: 31321 Broadwoven Fabric Mills (pt) ; 313210 Textile Products (Except Apparel) Made in Broadwoven Fabric Mills; 44229 Other Home Furnishings Stores

Family-owned and managed, Croscill, Inc. is the Fifth Avenue corporate parent for Croscill Home, known for its high quality home furnishing products. In addition, the company owns five textile mills in North Carolina, a small number of outlet stores, a distribution system, and a licensing operation. Its Royal Home Fashions unit sells a complete list of Croscill products in its specialty stores as well as through the Internet. Primarily a drapery and curtain designer and manufacturer until the mid-1980s, Croscill was in the vanguard of companies that challenged the supremacy of mills in such areas as bedding and bath products. In the process, it has evolved into one of the top ten textile producers in the United States.

For most of its history, Croscill sold to major department stores, in particular J.C. Penney, which still accounts for 10 percent of annual sales, but in recent years the home furnishings environment has changed dramatically, so that today Croscill sells a great deal of its merchandise through such retailers as Linens’n Things and Bed, Bath & Beyond. Croscill is a pioneer in the total room concept, offering consumers a fully coordinated ensemble of products for the bedroom and bathroom, including non-textile products such as furniture, lamps, and hardware, much of which is provided by licensees. Despite never spending money on a national consumer advertising campaign, Croscill has established an enviable cachet among consumers, who may not be able to pronounce the name of the company but recognize and appreciate its distinctive style. The goal for Croscill is to expand its offering of coordinated home furnishing products one room at a time.

Post-World War II Era Roots

The history of Croscill is very much the story of the Kahn family, who in the years before World War II ran a small curtain manufacturing shop on Ellery Street in the Williamsburg section of Brooklyn, New York. The three children—George, Max, and Sophie—all went on to establish their own businesses: Croscill Curtain Company, Max Kahn Curtains, and Ellery Curtains. George Kahn, trained as a machine mechanic but also possessing strong organizational skills, started Croscill in 1946, deriving the name for his company from a product he called “Croscilla,” which was a reference to the popular Priscilla curtain style. Known as a valance, Croscilla was a separate section of curtain that masked the curtain rod and mounting hardware. The company grew up along with the children of the Baby Boom, as multitudes of Americans moved to the suburbs and indulged in a passion to decorate their new homes. Croscill introduced other innovations, including mix and match kitchen curtains, the Blouson Valance, and an Antique Satin drapery. It also developed a recognizable Croscill look: embellished floral patterns, or what one of the company’s longtime designers called “sweet cottage-type patterns.” In the late 1960s, Croscill applied those patterns to decorative comforters, which allowed coordination with the bed skirt as well as Croscill window treatments. This approach was to evolve many years later into the total room approach.

In the 1970s Croscill was still very much a curtain company, now run by George Kahn’s sons, Mike and Stanley. Window products accounted for 80 percent of annual revenues. A change in the retail environment in the early 1980s forced Croscill to change its approach. Department stores began to eliminate separate curtain and drapery (C&D) departments, opting instead for a general domestics department. Because most of its products had been carried in the old C&D departments, Croscill experienced a decline in sales. Clearly, the company had to find a way to position its window products in the domestics department. It decided to apply its patterns to sheets, a product that was dominated by the major domestic mills. In 1985 Croscill signed a year-long agreement with mill J.P. Stevens to produce and market sheets that coordinated with the company’s best-selling Chestnut Hill pattern. The sheets and Croscill’s other products created a synergistic effect, the sale of one prompting the sale of the others. In effect, sheets became the wedge that helped Croscill gain a position in the new domestic department. After the J.P. Stevens agreement lapsed, Croscill contracted with Canadian mill Dominion Textile but by 1988 the company was introducing bedroom ensembles with sheets produced in its own North Carolina mills. Croscill was selling a lot of sheets, but more importantly it was selling a lot of ensembles.

Total Room Concept Developed in the Late 1980s

Selling ensembles led to Croscill adopting a total room concept. No longer did the company feel limited to just making curtains or bedding; anything in the room now became fair game. By licensing its patterns, Croscill was soon offering table linens, lamps, hat boxes, picture frames, padded hangers, wall coverings, cosmetics trays, and even potpourri. It also made an entry into the bathroom through coordinated shower curtains and towels. The ultimate purpose of the total room strategy was to increase the retailers’ Average Transaction Value, or ATV. Instead of consumers buying a single item, they bought an entire look. Rather than spending $50 they might now spend $500. Croscill also knew the consumer it wanted to target: a married career woman with a home and children, for whom money was less an issue than time. If she liked the look, she was likely to buy the entire room. In effect, Croscill was serving as an interior decorator. To help retailers increase their sales, thereby increasing sales for Croscill, the company began to focus on in-store shops that could present its merchandise in the best light and generate more dollars per square-foot for the retailers. By early 1989 Croscill had almost 100 shops in J.C. Penney stores and was quickly expanding to other department and specialty stores. To showcase its accessories, Croscill provided freestanding wooden fixtures. Already its management was talking about becoming a total home company, branching out one room at a time.

The Croscill look was also evolving, due in large part to the influence of design director Terry Dikomeit. She started out in the 1950s as a colorist for United Merchants, then became familiar with numerous designs and trends through her work at Ex-Cell Home Fashions, Hollander Home Fashions, and CHF. After joining Croscill in the mid-1980s, Dikomeit moved the company beyond its traditional floral styling to more contemporary looks, including some masculine designs. Croscill also added some designer collections to its base of patterns. Moreover, to reinforce the company’s new direction, Croscill changed the look of its packaging and created a new logo to go with a new name, Croscill Home Fashions, after a brief spell as Croscill Home Furnishings. To help preserve the association of the Croscill name with quality, the company’s wares sold through mass merchants were packaged under a new label, Ambiance.

Although the vast majority of Croscill’s marketing effort was devoted to its point of purchase presentations and brochures, it also spent some money in 1989 on consumer advertising, mostly with regional magazines. More importantly, Croscill had a sterling reputation with retailers who were more than happy to support the company’s product expansion. Annual sales grew from $48 million in 1985 to $90 million in 1989. To ensure continuity in the running of the business, an executive committee of 16 individuals was formed, and Mike Kahn’s son, David, was being groomed to one day take over the business. The only persistent problem Croscill had was in large part a result of its success. Warehousing and delivery systems had difficulty keeping pace with manufacturing. The company bought a new computer system and created a Quick-Ship program, as well as adding 200,000 square feet of warehouse space.

In 1993 the management of Croscill began to shift to a third generation of the Kahn family. David took over as president, while Mike Kahn assumed the chief executive officer role, while remaining as co-chairman of the board with his brother, Stanley Kahn. In his new role, David oversaw sales and product development. He had joined Croscill in 1982, becoming vice-president of marketing in 1987. His brother, Douglas, also began working for the family business in 1993 after ten years working as an investment banker. He would be based in North Carolina, taking over Royal Home Fashions, the company’s manufacturing subsidiary. The brothers worked well together, their abilities complementing one another, and Croscill continued its steady growth.

Growing the Bath Business: Early 1990s

In the early 1990s Croscill stepped up its bath business in an effort to create the total room synergy that the company already enjoyed in the bedroom. It added such products as bath ceramics, benches, shower curtain hooks and fabric-covered rings, and benches, as well as adding to its towel offerings. Because accessories were becoming a major portion of sales, Croscill continued to expand its offerings, especially in non-textile products, including waste baskets, decorative drapery hardware, lamps, framed mirrors, wall art, and wallpaper. Rather than depend on licensees, the company increasingly looked to either manufacture accessories or subcontract them. In order to capture more of the high-end portion of the mass market business, while again preserving Croscill as a brand name associated with quality merchandise, the company created the Chapel Hill line. Essentially it offered the total room concept to the value-oriented customer. Croscill also opened its first factory outlet store in 1995, although it was not a business that management was especially keen on growing. It simply allowed the company to cut some of the losses it might incur from overruns and irregulars, which were minimal because of the attention Croscill paid to quality manufacturing.

Company Perspectives:

Our customers repeatedly tell us, “It’s like getting a decorator’s custom look.” That is why at Croscill we say, “It’s in the Details!”

Some retailers expressed concern that the company’s expansion into so many different products had resulted in Croscill neglecting its original curtain and drapery business. In 1996 the company offered a comprehensive selection of curtains and drapes, as well as decorative window hardware, which was enjoying explosive growth. The other criticism Croscill faced was a perennial one: delivery capabilities catching up with manufacturing growth. In 1999 the company added its first distribution center in the West, located in Reno, Nevada. It also added a new facility in North Carolina, but just a year later Croscill was again playing catch-up. It purchased land in order to build yet another distribution center.

Delivery problems, however, were in many ways a testament to Croscill’s continued pattern of growth. Revenues reached $218 million in 1998, $250 million in 1999, and over $300 million in 2000. With the gross sales of licensed products included, the Croscill name and its mass market labels were generating well in excess of $500 million in business each year. To maintain the momentum, management focused on building the company into a lifestyle brand, supported by three major segments: bedding, window, and bath products. It shortened its operating name to Croscill Home. It spent $4 million in 1999 alone in fixtures for its in-store shops, which now numbered more than 500. It also developed a brochure to promote the Croscill lifestyle image, to be inserted in most product packages. Coordination between bed and bath products continued to grow, with bath becoming increasingly more important to the bottom line. In 2001 Croscill Window Fashions debuted its most impressive line in 15 years, its range of fabrics greatly improved through new relationships with vendors in China, India, and Korea. Not only could Croscill customers purchase curtains for the bedroom and bathroom, they could also buy them for the living room, as the company continued to pursue its goal of selling products for each room in the house. The one area in which Croscill did not budge was on price. It kept adding value to products with the Croscill name, believing that its core customers were willing to pay for quality.

The company continue to evolve in 2001. David Kahn was named CEO of Croscill Home and brother Doug became chief operating officer while remaining CEO of Royal Home Fashions. In truth, the title changes were just a confirmation of the roles the two men had already assumed in the company. Mike and Stanley Kahn continued as co-chairmen, but the torch was all but passed to the third generation. In April 2001 Dikomeit retired, after 15 years at Croscill and more than four decades working in the home textile industry. She had served as mentor for numerous designers, leaving the company well stocked with talent to develop the new patterns that would serve to keep the Croscill brand in good stead with consumers. Even as the company adapted to a changing retail environment, it continued to work with longtime partners. In May 2001 it rolled out a new sheet program, Croscill Classics, with J.C. Penney. It also struck up deals with new partners, such as licensing Croscill designs to Portmeirion, an upscale European tabletop supplier, as the company expanded into the dining room. Products for the living room were also enhanced by a licensing agreement with California’s Classic Slipcovers Inc. to provide furniture slipcovers with the Croscill name. Overall, the textile industry was changing, as more and more companies outsourced manufacturing to less expensive overseas facilities. Roughly a third of Croscill’s sales involved outsourced materials. The value-added, cut and sew part of the manufacturing process continued to be done in-house, but whether it would ever turn to overseas facilities to provide finished products remained an open question. Given Croscill’s history of adapting to new conditions, it was safe to say that it would not only find a way to survive, but very likely thrive in its chosen niche.

Principal Subsidiaries

Croscill Home Inc.; Royal Home Fashions Inc.

Principal Competitors

Pillowtex Corporation; Springs Industries, Inc.; WestPoint Stevens Inc.

Key Dates:

1946:: George Kahn starts Croscill Curtain Company.
1976:: Operating company changes name to Croscill Home Fashions Inc. to reflect changing business.
1985:: Company begins producing sheets for J.P. Stevens.
1990:: Annual sales exceed $100 million.
1993:: David and Douglas Kahn, third generation family members, gain top management positions.
2000:: Operating company changes name to Croscill Home Inc.
2001:: David Kahn and Douglas Kahn are named CEO and COO, respectively.