Hartmarx digs Doc

April 17, 2008
BY SANDRA GUY Staff Reporter

STRATEGY Venerable suitmaker adds Martens line of sportswear

Hartmarx, the venerable Chicago company known for its Hart Schaffner Marx men's suits, will start making men's and women's sportswear for the hip, off-beat Doc Martens label as part of its makeover into a global and higher-priced clothing manufacturer.

Doc Martens boots gained popularity among punk rockers in Great Britain in the 1970s, but the clothing line has evolved into an eclectic mix of T-shirts and club shirts for 15-to-25-year olds. The menswear line launches in fall of 2009 followed a year later by the womenswear.

Click to enlarge image Maria Bragioli checks lining material at the Hartmarx plant at 1680 E. Touhy in Des Plaines in 2006. The company plans to do less licensing of brands while expanding globally into luxury offerings. (Al Podgorski/Sun-Times)

The 123-year-old Hartmarx, hit hard by Macy's takeover of St. Louis-based May Department Stores three years ago, has started opening retail stores to display its brands and has bought womenswear jeans, knits and sportswear labels.

CEO Homi Patel told the media after the company's shareholders meeting Wednesday that Hartmarx's other big changes this year will include terminating its license to manufacture the Tommy Hilfiger line, and partnering with a company in India to sell Sansabelt slacks, Pierre Cardin tailored clothing and Hart Schaffner Marx suits in that country.

Hartmarx had already terminated its licenses to make Kenneth Cole, Perry Ellis and DKNY Donna Karan New York men's tailored clothing.

CEO Homi Patel told shareholders that Hartmarx remains the largest U.S. tailored clothing business, but its model of licensing a brand and paying the licensor will be a shrinking part of its strategy.

Instead, Hartmarx aims to expand globally and target the luxury men's and women's markets, both casual and tailored.

Patel would not name the company's new partner in India, but the deal follows by a year Hartmarx's partnership with Youngor Group Ltd., the largest public menswear retailer in China, to open 400 franchisee-run stores in China. The first store opened recently in the port city of
Ningbo on the East China Sea.

In the China deal, Hartmarx outsourced manufacturing to China and collects licensing revenues as a percentage of sales, with a guaranteed minimum of $1 million annually.

Hartmarx plans to expand its global sales of Hart Schaffner Marx men's tailored suits to Indonesia, Thailand and Central and South America.

Hartmarx's transition is evidenced by:

Clothing manufactured for sale in middle-market department stores has dropped to 17 percent of Hartmarx's business, and should decline into the single digits later this year. The percentage was once as high as 25 percent.

Macy's department store is no longer one of Hartmarx's biggest retail clients. Macy's has put a greater emphasis than did Marshall Field's on selling its own clothing brands.

Luxury clothing accounts for 29 percent of Hartmarx's business versus 21 percent two years ago. Hartmarx's sales totaled $562.4 million in fiscal 2007.

Among the fastest-growing businesses are those for women, such as Simply Blue, Monarch and Exclusively Misook. The women's business did $129.5 million in sales in fiscal 2007, or 23 percent, compared with $433 million in menswear sales.

Separately, Hartmarx will open its Hickey Freeman store 114 E. Oak St. in Chicago in late July.
Though Hartmarx's retail stores reported year-over-year sales declines ranging from 9 percent to 17 percent in March, its makeover strategy is good news for Hartmarx's factory in Des Plaines, where employment has held steady at about 600.

Hartmarx competes primarily with European tailored-clothing manufacturers in Italy, France and Scotland, rather than low-priced clothes makers in Asia, Patel said.

Hartmarx's quarterly sales and earnings results have proven dismal as the economy has weakened, but Patel sought to assure employees, retirees and shareholders at the meeting Wednesday at the Chicago Club, 81 E. Van Buren.

"It's been a tough couple of years," Patel said. "We're going to have to dig in deep and deeper. But this company went through World War I, the Great Depression and World War II. If they could figure out how to get through that, this is nothing."