NEW YORK – Hartmarx Corp. is going to take its Hart Schaffner Marx label into lifestyle brand territory, and it’s going to lean on its Hickey-Freeman unit to lead the charge.
Sources told MRketplace.com that many of the front-office operations necessary to expand HSM into a lifestyle merchandising approach – such as the development of sportswear and boys’ wear, retail stores, a Web site and licensing – will be managed by Hartmarx’s Hickey-Freeman group, headed by Paulette Garafalo, group president of Hickey-Freeman.
The sources emphasized that back-end operations managed out of Chicago – such as manufacturing, operations, customer service and finance – will continue as before, reporting to Richard Biegel, group president of HMX Clothing. Additionally, Biegel will retain total responsibility for other elements of the HMX unit, such as Austin Reed, Tommy Hilfiger, Claiborne, Perry Ellis and Palm Beach.
“It just wouldn’t be efficient to build a separate organization to do for HSM what we’re already doing for Hickey-Freeman within the Hickey organization,” one Hartmarx official told MRketplace.com. “We want to expand and build on the non-tailored portion of HSM brand. We’re really doing with HSM what we’ve already accomplished in the last three years with Hickey.”
Reached by phone at the company’s headquarters in Chicago, Homi Patel, chairman and chief executive officer of Hartmarx, declined to comment on the reports.
However, the lifestyle strategy being discussed for the historic HSM brand, which dates back to 1872, is entirely consistent with the corporate strategy repeatedly spelled out for Hartmarx in the recent past.
In a cautionary note in its 2006 annual report, the company said, “Continuation of widespread casual dressing in the workplace could further reduce the demand for tailored clothing products, especially for tailored suits. While the company markets several sportswear and casual product lines, consumer receptiveness to the company’s casual and sportswear product offerings may not offset the potential decline in tailored clothing unit sales.”
The company also noted in the report that sales of non-tailored product categories – men’s sportswear, golfwear, pants and women’s wear – grew to 48% of sales in 2006 from 46% of sales in 2005. “Sales of non-tailored product categories are expected to increase in fiscal 2007, principally from growth in the women’s brands and reduced moderate priced tailored clothing revenues…,” the annual report stated.
Hartmarx’s sales in fiscal 2006 totaled $597.9 million, $479.7 million in its Men’s Apparel Group. The 2006 figure was down a fraction from the 2005 figure of $598.2 million, $511.1 million of which was attributable to menswear.
To bolster its upscale women’s business, much of it distributed through a network of better women’s specialty stores, the company acquired Misook in 2004, Simply Blue in 2005 and the One Girl Who… and Zooey brands last year.
Last month, in disclosing a first-quarter loss of $3.4 million on a sales decline of 16.8%, to $120 million, the company disclosed that women’s apparel had grown to 25% of sales from 16% in the prior-year quarter. During the same interval, sales of moderate priced brands sold to mainstream department stores declined to 13% of the total from 18%.
Part of the decline in moderate clothing came from the discontinuation of previously licensed programs with Kenneth Cole and Jhane Barnes.
At the time, Patel noted that, with the exception of moderate tailored clothing, “other product categories performed satisfactorily. Tailored clothing and sportswear at the better and luxury price points are selling well at retail.”
Patel also forecast a return to profitability for Hartmarx in its current second quarter, which ends in late May.
In building its high-end Hickey-Freeman label into a lifestyle brand, the company has introduced an offshoot label, dubbed “hickey.” It also said last month that it had signed a lease for its third Hickey-Freeman store, to be located in San Francisco.