Kasper A.S.L., Ltd.

views updated

Kasper A.S.L., Ltd.

77 Metro Way
Secaucus, New Jersey 07094
U.S.A.
Telephone: (201) 864-0328
Toll Free: (800) 223-7698; (877) 435-7537
Fax: (201) 864-7768
Web site: http://www.kasper.com

Public Company
Incorporated: 1975 as Sassco Fashions, Ltd.
Employees: 1,600
Sales: $400.8 million (2000)
Stock Exchanges: OTC
Ticker Symbol: KASP
NAIC: 315234 Women’s & Girls’ Cut & Sew Suit, Coat, Tailored Jacket & Skirt Manufacturing; 42233 Women’s, Children’s & Infants’ & Accessories Wholesalers; 44812 Women’s Clothing Stores

Kasper A.S.L., Ltd., the world’s largest women’s suit manufacturer, designs, markets, sources, manufactures, and distributes women’s career and special occasion suits, sportswear, and dresses under Kasper A.S.L., Anne Klein, Albert Nipon, and Le Suit trademarks. The company also grants licenses for the manufacture and distribution of certain other products under the Anne Klein, Kasper, and Nipon names, including women’s watches, jewelry, footwear, coats, eyewear, and swimwear, and men’s apparel. In addition, the company operates retail outlet stores throughout the United States under the Kasper A.S.L. and Anne Klein names. Fabrics are selected primarily from Europe and Asia. The clothing is manufactured in the Far East.

Sassco Fashions: 1975-97

Arthur S. Levine, president of the Kelly Arden dress and suit lines of Bobbie Brooks, bought this division in 1972 and made it an independent company. In 1975 he secured a license for suits and dresses under the Sasson label and named his company Sassco Fashions, Ltd. Levine sold Sassco Fashions to Leslie Fay Inc. in 1980. It continued as a division of Leslie Fay, with Levine as its head. In addition to the Sasson label, Leslie Fay was, in 1980, marketing jeans designed by Herbert Kasper and women’s apparel under the name “Kasper for Joan Leslie,” although it is not clear whether these items were under the Sassco division at this time.

After a period as a private company following a leveraged buyout, Leslie Fay reemerged in 1986 as a public company under the name The Leslie Fay Companies, Inc. The Sassco division line now consisted of moderate- and better-priced dresses and suits under a number of labels, including Kasper for A.S.L., Sasson, and Suits by Dallas. The Kasper for A.S.L. designs and colors were intended to appeal to young career women. Moderate-priced suits in classic designs with specialty fabrics were offered under the Suits by Dallas name. By 1988 Sassco was the largest suit manufacturer based in Manhattan’s Seventh Avenue garment district. Sassco added Nolan Miller special occasion suits—aimed at older consumers—in 1987 and recorded sales of almost $130 million that year. Sassco acquired Albert Nipon designer- and bridge-collection dresses and suits in 1988. The division had seven units of its own that year: the Kasper suit and dress lines, the Sasson and Dallas suit collections, Nolan Miller, Albert Nipon, and a private-label suit business.

By 1992 the division was doing about $300 million in annual sales volume, of which branded suits and dresses accounted for $250 million and private-label merchandise for the remainder. These sales were all wholesale, but for late 1992 the division added a retail Kasper coat collection and a line of 200 or so in-store shops in major department stores. The target, in August 1992, was to be in 40 Federated Department Stores units, including units in the company’s Abraham & Straus, Blooming-dale’s, Bon Marche, Burdine’s, Jordan Marsh, Lazarus, and Rich’s stores, and in 40 May Department Stores, including the Filene’s, Kaufman’s, and Lord & Taylor divisions. Where the division—commonly but not officially known as Kasper for A.S.L.—did not have in-store shops, retailers were urged to move its offerings out of the suit department and into prime sportswear areas, as it responded to the more casual workplace by introducing seasonless fabrics, less structured tailoring, pantsuits, three-piece items, and suits sold with sweaters.

Leslie Fay, it was discovered soon after, had submitted false numbers for its 1992 results, and the following year the company fell into Chapter 11 bankruptcy. The Sassco Fashions division continued to offer moderate- to designer-priced suits under a number of different labels, including Kasper for A.S.L., Kasper II for A.S.L., Le Suit, Albeit Nipon, and Nolan Miller. It also offered moderate- and better-priced dresses under the Kasper for A.S.L. label and better-priced sportswear under the Kasper and Company for A.S.L. label.

At a bankruptcy court hearing in 1994, Leslie Fay’s president testified that Levine wanted to purchase Sassco Fashions back from the company. Sassco was the company’s strongest and most profitable division, with its fiscal 1993 sales of $300-$350 million accounting for roughly half of Leslie Fay’s $661 million in sales that year. Seemingly for that very reason, however, Leslie Fay was unwilling to sell the division to Levine, who reportedly offered $225 million but was unable to secure financing. In early 1996 an investor group offered to buy Sassco for about $240 million in cash and stock, but Leslie Fay rejected this offer as well. Because Levine and Gregg Marks, Sassco’s president, were considered essential to the business, the proposal reportedly called for them and other division executives to receive 25 percent of the stock for remaining at the helm.

Independent Company: 1997-99

Leslie Fay finally conceded defeat in 1997 in its effort to retain Sassco. As part of the reorganization plan under which it emerged from bankruptcy, the company spun off Sassco Fashions, Ltd., which issued notes and distributed 6.8 million shares, collectively valued at $110 million, to Leslie Fay’s creditors. Members of management received stock options for about 20 percent of the shares. The new company traded initially over the counter and was renamed Kasper A.S.L., Ltd. later in the year. The company was at this time making and marketing suits and dresses under the labels Kasper for A.S.L., LeSuit, b. bennett, and Albert Nipon, as well as Kasper & Co. sportswear and Nina Charles knitwear (which was dropped in 1999). During 1997 the number of company outlet stores grew from 36 to 47. Net sales, at $311.71 million, were flat.

Sales remained about the same in 1998. Net income of $3.17 million reflected interest and financing costs of $17.79 million, mostly on Kasper’s long-term debt of $110 million that it inherited from the Leslie Fay breakup. That year the company launched its first major advertising campaign in several years, displaying its name on buses and billboards around the country. In 1999 the campaign was taken to print advertising in magazines.

Kasper purchased Anne Klein Co. in early 1999 for an estimated $75 million. It was founded by the eponymous designer in 1968, with her work continued after her death in 1974 by Louis Dell’Olio and Donna Karan. Karan left in 1985 to found her own company. With business on the decline, Dell’Olio was replaced in 1993, first by Richard Tyler and then by Patrick Robinson. Neither was successful commercially, and in 1996 Anne Klein dropped its designer collection line, concentrating on its bridge collection of jackets, pants, and skirts that could be worn in numerous combinations (“bridge” being the name for the share of the marketplace between couture and ready-to-wear). Isaac Franco and Ken Kaufman, designers from rival Emanuel/Emanuel Ungaro, were hired to design this line, which was renamed Anne Klein 2.

Anne Klein registered $94.5 million in sales in 1998 and was the third most recognized designer name, according to a consumer survey by the publisher of WWD (Women’s Wear Daily), but the company lost money in both 1997 and 1998 as the volume of its mainstay bridge sportswear business declined. Whereas Kasper dominated the women’s suit market at prices of $200 and under, Anne Klein clothing was more expensive and sold at better-class department stores such as Neiman Marcus and Saks Fifth Avenue. Its core customer was seen by Kasper management as an upper-level executive, while Rasper’s own customer was likely to be a junior executive or secretary. Anne Klein had its headquarters in Manhattan and its warehouse in Secaucus, New Jersey; Kasper maintained a showroom and offices in Manhattan but had its warehouse and headquarters in Secaucus.

In Financial Difficulty in 2000

Franco and Kaufman were re-signed to direct the design of the new Anne Klein division of Kasper and to oversee creative direction of all Anne Klein licenses. They continued to produce the Anne Klein bridge collection and its casual counterpart, A Line Anne Klein. There were plans to expand distribution to Europe and Asia. In 2000 the division introduced Anne Klein Suits, a bridge line priced to retail around $400 to $500, and in competition with—among others—Albert Nipon. Kasper was hoping the new label would inherit Nipon’s reputation among merchants for suits that consistently fit well and could be supplied and resupplied to stores quickly. The new Anne Klein suits included 45 styles in an array of colors. Many of them incorporated key fabrics from the sportswear collection, and detailing included Anne Klein’s signature pick stitching, dolman sleeves, double-faced fabrics, snap buttons, leather details, and detachable fur collars. Among those well received by observers was a two-tone beaded gray flannel pantsuit, a one-button textured winter white wool skirt suit, and a rust-colored mohair jacket worn over an espresso turtleneck and wool trousers. Also unveiled for the fall of 2000 was a revival of the dormant Anne Klein 2 label for better-priced sportswear.

Key Dates:

1975:: Arthur S. Levine founds Sassco Fashions, Ltd.
1980:: Sassco Fashions is sold to Leslie Fay Inc. and becomes a division of that company.
1986:: After operating as a private company following a leveraged buyout, Leslie Fay is now a public firm, doing business as The Leslie Fay Companies, Inc.
1992:: Sassco is doing $300 million in annual sales.
1997:: Sassco becomes an independent company and changes its name to Kasper A.S.L., Ltd.
1999:: Kasper purchases Anne Klein Co. for an estimated $75 million.
2000:: Kasper fails to make semiannual interest payments of $7.2 million.

The Anne Klein acquisition also included licensed watches under the Anne Klein 2 and Anne Klein Swiss names and footwear under the Anne Klein 2 name, but the latter (and perhaps the former as well) were inactive by this time. By 2001 the Anne Klein licensing division had 17 licensing agreements in place and was offering a wide range of products bearing its trademarks, including watches, jewelry, footwear, coats, eyewear, sleepwear, swimwear, handbags, small leather goods, scarves, socks and hosiery, sewing patterns, and umbrellas. Kasper had licensing agreements covering women’s coats and blouses; men’s woven sports shirts; sweaters and casual pants; and handbags, portfolios, and wallets. (A Kasper footwear license in the mid-1990s had not proven successful.) Nipon had licensing arrangements including men’s tailored clothing, neckwear, and small leather goods, and women’s and girls’ coats and outerwear.

Kasper invested $1 million in a comprehensive web site that made its debut in 1999. In partnership with Planet Direct and ZineZone, the company introduced a “Kareer Center” page as a comprehensive resource to organize their workday and personal agenda, and a “Kasper Klothing” page to display the company’s ready-to-wear and sportswear lines. Planet Direct’s custom portal enabled Kasper to offer features including e-mail, an online calendar, real-time stock quotes and portfolio management, news, and local weather. ZineZone offered access to career, industry, investing/personal finance, and business news libraries. Online shoppers could view photos and descriptions of current clothing offerings, with zoom software allowing them to view textures, colors, and features of selected apparel, and a sizing chart for misses’, petite, and women’s sizes.

Kasper’s net sales dropped $1 million, to $311.21 million, in 1999. Operational expenses rose by almost $15 million— chiefly to revive Anne Klein—and interest and financing costs increased by almost $3 million. The company incurred a net loss of $4.77 million. For the first half of 2000, the company reported a loss of $3 million on $191.3 million in revenue. On September 30, Kasper announced that it would not make its semiannual interest payment of about $7.2 million to the holders of its senior notes, who were receiving an annual interest rate of 12.75 percent. The company said it was in the midst of a liquidity crisis because of costs tied to the launch of the new Anne Klein 2 line and a difficult spring for Kasper and Anne Klein goods.

Chase Manhattan Bank and eight other creditors of Kasper agreed in November 2000 to waive the company’s compliance with certain financial covenants and all existing defaults so that the company could restructure its financial obligations and improve its ability to meet long- and short-term strategic plans. The nine creditors had extended Kasper a revolving-credit and letter-of-credit line of $160 million in 1999, and this remained valid, according to a company spokesperson. As of the end of that year, Kasper had borrowed $53.44 million directly from the credit line and about $22.74 million in letters of credit. Kasper closed 2000 with sharply higher net sales of $400.8 million. Royalty income came to an additional $14.91 million. Costs were also up, however, including $25.58 million for interest and financing and $2.34 million in restructuring charges. The company’s net loss for the year was $25.19 million.

Kasper was placing its hopes for the fall 2000 season on a revival of the suit business, which had been sagging for the past five years because of the rise of casual dress in the workplace. Retailing data from the spring and summer indicated that shoppers were finally ready to update their sweater sets with jackets, but the trend was not yet well established enough to afford any degree of certainty. Kasper ranked ninth among women’s suitmakers in a biannual survey of consumer brand awareness and preferences taken in late 1999.

In early 2001 the company was selling its products in about 2,000 department and specialty stores in the United States, Canada, and Europe. These included Federated (Blooming-dale’s, Macy’s East, Macy’s West, Rich’s/Lazarus, Bon Marche), May Company (Lord & Taylor, Hecht’s, Robinsons-May, Foley’s, Kaufman Famous-Barr, Filene’s, Meier & Frank), Saks, Inc. (Parisian, Proffitt’s, Carson Pirie Scott), Marshall Field’s, Dillard’s, and Belk. In all, department stores accounted for about 66 percent of gross sales in 2000. The company also was selling its products in 66 company-operated retail outlets under the Kasper A.S.L. name and in 29 company-operated retail outlets under the Anne Klein and Anne Klein 2 names. These stores were selling licensed as well as company-produced items. They accounted for about 19 percent of the company’s net sales in 2000.

The Kasper collections in 2001 were Kasper A.S.L., Kasper Dress, Kasper & Company Sportswear, Kasper & Company Woman, Kasper Woman, Le Suit, and Le Suit Woman. Kasper A.S.L. held about 70 percent of the “upper moderate” women’s suit market in the United States in 2000 and remained the company’s core business, responsible for about 36 percent of net domestic wholesale sales in that year. The Le Suit line was a less expensive alternative and accounted for about 16 percent of net domestic wholesale sales. Kasper also was manufacturing suits under the Albert Nipon label and was designing and manufacturing suits under private labels for various department stores. Kasper and Company A.S.L. sportswear accounted for about 11 percent of net domestic wholesale sales in 2000. Anne Klein and A Line Anne Klein sportswear accounted for about 14 percent of net domestic wholesale sales. Anne Klein 2 accounted for another 8 percent.

Each of the company’s product lines had its own design team. A manufacturing facility in China went into production in 1998 and accounted for about 5 percent of finished goods in 2000. The rest of its goods were being turned out by more than 30 contractors located primarily in China, Hong Kong, the Philippines, and Taiwan.

Kasper’s principal shareholders in March 2001 were Whippoorwill Associates, Inc., 18.1 percent; Bay Harbor Management, L.C., 15.9 percent; and ING Equity Partners, L.P. I, 9.5 percent. Trading of Kasper stock moved from the NASDAQ to the OTC (Over-The-Counter) bulletin board in February 2001 because the company was no longer meeting certain NASDAQ listing requirements. As of March 20, 2001, a share of stock was trading for less than ten cents.