Apparel Consolidations in Vogue

Apparel Consolidations in Vogue
Breakfast Conference Dishes on Acquisitions and Industry News

In recent years, apparel manufacturers have consolidated at a relentless pace. Liz Claiborne acquired Enyce Holdings, LLC; Van Huesen acquired Calvin Klein; VF acquired Nautica, and Kellwood acquired Phat Fashions, to name just a few. Clearly companies need to constantly evaluate and strategize their positioning in the marketplace.

On June 9, leading industry speakers came together to address this and other industry trends at the New York State Society of CPAs’ Apparel and Textile Committee’s semi-annual breakfast conference at the Yale Club in New York City.

In response to the acquisition surge, featured speaker Richard Kestenbaum, chairman of Kestenbaum Associates LLC, gave an informative presentation discussing such issues as the life cycle of a company, at what point in the life cycle a company should consider mergers and acquisitions, what kinds of deals make sense and how to value a company.

Kestenbaum also gave real examples describing the objectives that shareholders and management had in entering into a transaction, and whether or not those objectives were attained.

Jeffrey Knopman, president of Profit Solutions Group, Inc., discussed what companies do to control chargebacks, something that has impacted apparel and textile manufacturers’ bottom line for many years now.

Knopman is experienced in providing manufacturers, wholesalers and distributors with professional services to facilitate the recovery of unauthorized and erroneous deductions issued by major retailers, specialty stores and catalogs.

After providing some insight into the motivation for buyers to take chargebacks, Knopman assisted the audience by focusing on some specific steps that vendors can take to combat it. Specifically, a company needs to ensure that individuals within the company have accepted responsibility for dealing with chargebacks, that there is effective communication between internal departments and management and that software is used to track, respond to and report on chargebacks.

Alan Goggins, of Barnes, Richardson & Colburn, rounded out the conference by discussing the anticipated impact on the apparel industry when the apparel trade becomes quota-free in 2005 among World Trade Organization members. He highlighted some of the criteria in which “safeguard mechanisms” will be implemented with respect to imports from China.

Goggins ended the discussion with a brief update on the status of litigation related to fees on cotton imports implemented to support generic industry advertising for the cotton industry.

Stuart A. Nussbaum, a senior manager at Weiser LLP, chaired the conference and is chair of the Apparel and Textile Committee. For more information about the committee, contact him at snussbaum@weiserLLP.com.