After coming apart at the seams, a global Canadian fashion empire is now on the mend
SUNG ALSO RIES
After coming apart at the seams, a global Canadian fashion empire is now on the mend
Fashion designer Alfred Sung was having a little trouble breathing. In addition to suffering from hay fever, he has recently developed an allergy to his beloved dog, DeDe. But rather than give away the three-year-old chow, as his doctor recommended, Sung opted for shots to desensitize him to his allergies. “Now, I get a needle in each arm, each week,” he said, rubbing his biceps. For the 45-year-old designer, it is just the latest in a string of aggravations. In April, Etac Sales Ltd., a Toronto-based clothing wholesaler and retailer that manufactured Sung’s women’s fashions under licence, went bankrupt. Because of the structure of the empire, Etac’s demise had no direct legal or financial effect on the 17 other licensees that make everything from Sung-brand eyeglasses to luggage. But in an industry where image is everything—and women’s fashion is the cornerstone of that image—it was a devastating blow. Even now, with three new stores opening this week in Toronto and the ink still fresh on two more licensing deals, the situation still rankles Sung and his colleagues. “It is so frustrating to hear ‘Alfred is back,’ ” says his business partner Saul Mimran. “Alfred was never away.”
Certainly, Sung’s designs of sophisticated classics have made him Canada’s best-known designer in the volatile international fashion scene. In all, there were $200 million worth of Sung-branded products—most notably perfume—sold in more than 60 countries last year. Still, the business has nearly come apart
at the seams several times. In recent years, customer complaints about declining quality led prominent retailers, including Holt Renfrew in Canada and Saks Fifth Avenue in the United States, to stop selling Sung’s fashions. And with the collapse of Etac earlier this year, Sung and his partners came perilously close to not producing a fall collection, even though fall is by far the most important retail season of the year for any Canadian designer. As it is, Sung’s fall collection is only available in the three Toronto stores. A new company set up to manufacture the clothing, Alfred Sung Collection Inc., will begin wholesaling the spring 1995 collection to retail buyers later this month. And if the buyers like what they see, Sung’s garments could once again
be available in stores throughout Canada by early next year. Above all, the re-emergence of Canada’s leading designer coincides with a rebound in the domestic retail industry as consumer confidence shows signs of gradually recovering to pre-recession levels.
In person, Sung is as understated as the clothing he designs. But in an interriew in his " spartan offices in Toronto’s garment district, j§ he was clearly relieved that the latest brush Ig with financial disaster is now behind him. “It || has been somewhat of a disturbance,” the É designer says. “But I wasn’t going to let it I stop my creativity. like they say in the enterI tainment field, ‘the show must go on.’ ” Because of the uncertainties and delays in finding a manufacturer, Sung and his part-
ners are about six weeks later than the rest of the industry in showing their samples for spring 1995 to the retail buyers. Nevertheless, he has already begun research on his fall 1995 collection and he will leave later this month to visit European fabric mills.
Sung says he is also extremely pleased by the emotional support from his partners, the other licensees and some members of the fashion industry. ‘They have all been very kind,” he notes. (Sung’s partners are brothers Saul and Joseph Mimran, longtime fashion industry executives who now head Torontobased Mimran Group Inc., which licenses the Alfred Sung trademark worldwide.) Executives at Riviera Concepts Inc., the Toronto-based perfumer that introduced the first Alfred Sung scent in 1986, say that the original floral scent is still as popular as ever— it sells about 60,000 litres annually. “In many parts of the world, Sung is better known as a perfumer than a designer,” explains Adrian Ellis, president of Riviera’s European division. In fact, Ellis said that the fragrance line has been so profitable that Riviera has begun
working with Sung to develop a fifth fragrance for introduction in early 1996.
While Sung kept on designing fashions when Etac crashed and burned, the Mimran brothers were also busy. Last month, they signed up Keystone Industries of Montreal to manufacture Alfred Sung men’s and women’s jeans under licence. They finalized an agreement with a Korean licensee to open three stores in Seoul next February. And they signed on an agent to license Sung’s full range of products elsewhere in the Asian market. “Alfred is already well-known in Asia—he is sort of a native son,” says Saul Mimran of Sung, who was bom in Shanghai and arrived in Canada in 1974 at the age of 25. At the same time, many of the retailers who stopped carrying the Sung label have pledged to reconsider the spring line.
Although the fashion manufacturing and retail business is cutthroat at best, the Mimran brothers’ timing may be fortuitous. The Canadian retail sector is finally starting to recover from a host of setbacks including the introduction of the Goods and Services Tax (GST) in 1989, the economic recession and the proliferation of cross-border shopping. Alasdair McKichan, president of the Retail Council of Canada, says that retail sales were up 8.6 per cent in July over the same month last year. Clothing store sales, he adds, have been particularly strong. “During the recession, there was a substantial rundown in people’s wardrobes, so some of those sales are wardrobe replenishment,” McKichan explains. And although the GST remains as unpopular as ever, the Canadian dollar has slipped against its U.S. counterpart from 86 cents (U.S.) in 1991 to 73 cents last week, making domestic shopping sprees more appealing.
According to Mimran, it is also a good time to start manufacturing Sung’s line of fashions in Canada. “There is a lot of idle machinery and golden hands in this country,” he says. Indeed, data from Statistics Canada indicates that there should be a large pool of experienced garment workers available: this year, there are more than 90,000 workers employed in the apparel manufacturing industry, up from about 75,000 at the depth of the recession in 1992. But the numbers are still down considerably from 1988, when the industry hit its peak and employed 113,000 workers. As well, Sung and his partners have had past—if not especially happy—experience in manufacturing their own line of clothing. From the time they teamed up in 1979 until 1991, their company made the Sung fashions right in Toronto. But when a bank withdrew their line of credit in the depths of the recession in 1991, Sung and the Mimrans restructured their venture so that it was strictly a licenser, leaving others to take care of the day-to-day headaches of production.
Still, not all of those agreements have worked out according to plan. In 1991, the group signed a 50-year licensing agreement with Etac to make and market the premier Alfred Sung label and the less expensive Sung sport line. Chinese-born financier Alfred Chan
established Etac in 1975 to import inexpensive merchandise, including T-shirts, from his homeland and elsewhere in the Far East. After raising several million through a share issue in 1986, Etac went on a buying binge, acquiring both mid-priced men’s and women’s fashion businesses and diversifying aggressively into such unrelated areas as real estate.
The Sung label was supposed to be the jewel in Etac’s corporate crown. But Sung and other fashion industry insiders say that the company’s roots in low-end apparel meant that Etac was illequipped to make and distribute designer merchandise. ‘They didn’t have the expertise on staff,” declares Sung. Matters grew worse when Etac, intent on saving money, moved the garment manufacturing operations to China. It then became difficult to ensure the quality that Sung’s established customers expected from a wool jacket that costs $350 or a silk blouse that costs $120. Jackets and skirts, for instance, were sometimes cut from fabric from different dye lots, leaving shoppers unable to buy a suit that matched. The final straw for the handful of retailers that remained loyal to the Sung label came in February, 1993, when Etac purchased all nine of the Brettons department stores from Comark Inc. With Etac suddenly positioned as a competitor as well as a supplier, the remaining retailers phased out Sung’s clothing collections.
The announcement in February, 1994, that Etac, which owed $128 million to its secured and unsecured lenders, had filed for court protection from its creditors proved to be a blessing in disguise for Sung. Etac’s first move in an attempt to restructure was to scrap its Sung operations, closing its 25 Alfred stores across Canada. But the company was plunged into bankruptcy in April when Etac’s creditors refused to support the proposed restructuring. Shortly afterward, an Ontario Court judge agreed with the Mimran Group that Etac had breached the terms of the licensing agreement and returned the licence to the Mimran Group from 1995 onwards.
Getting back the work and materials prepared for the fall 1994 season proved more difficult. Sung had designed the collection in November, 1993, and samples of the garments were ready to show to retailers—but they were still held in Etac’s inventory. Saul Mimran says that the court-appointed receiver, Doane Raymond Ltd., wanted more than $1 million for the patterns and samples—and he countered with an offer of $35,000. They eventually settled, for an undisclosed price, and the Mimran Group had the patterns back by June.
While Etac was winding down, the Mimran Group was kicking into high gear. Its new company, Alfred Sung Collection Inc., is a joint venture with Michael Waitzer, a Toronto retail executive. The biggest challenge now, says Waitzer, who was previously executive vicepresident for Marks & Spencer Canada, is to resist the temptation to grow too fast. “The pressure from outside is amazing,” he says. “So many retailers want Alfred back in their stores.” Knowing that his designs are still in demand— and that hay fever season ends with the first frost—Alfred Sung should soon be able to breathe a little easier. □
Fashion designers, as the label implies, usually start their careers designing men’s or women’s fashions. Then, if they are talented enough, have good business sense—or the sense to have a good business partner—some may branch out into other related areas, from fashion accessories to perfume. That is the career path that Montreal designer Simon Chang has followed since he burst onto the Canadian fashion scene in 1983. Today, his women’s readyto-wear collection is sold in more than 300 stores across Canada. Hundreds
more stores sell everything from his signature fragrance, Kimono, to men’s silk ties or eyeglasses. But now Chang has crossed over into an area where few other fashion designers—and none in Canada—have gone before: furniture design. (In North America, only Ralph Lauren and Calvin Klein have made the move from designer fashions to hard goods like furniture.) And as Chang bounced about in one of his oversized leather-and-tweed-covered chairs at a recent preview of the furniture collection in north Toronto, he was clearly excited by the new venture. “I could never understand why fashion and interior decor—in effect, fashion for the home—were always separated,” he said. They are both a reflection of an individual’s style.”
In Chang’s case, a reflection of his style. The furniture, made under licence by Cooper Bros. Upholstery Co. Ltd. of Toronto, is divided into five living-room groupings. As with his clothing, Chang provides the consumer with the opportunity to mix and match. Each grouping of traditional to contemporary sofas, love seats, chairs, ottomans and accent cushions is available in a selection of co-ordinating fabrics. Cooper Bros., in fact, will make the furniture to order based on each customer’s specifications. But unlike his clothing, which sells in the mid-priced range, the Chang furniture is clearly a luxury line. The sofas, for instance, will sell at the retail level for about $2,300. Still, Chang says that the collection fills a missing gap in the market: “People can buy a decorator sofa, with a selection of designer fabrics, but not pay made-toorder prices.”
There are high hopes in some quarters that Chang’s distinctive style will lend some muchneeded pizzazz to the Canadian furniture industry. According to one industry analyst, who asked not to be named, international buyers have long held Canadian-made goods in high esteem for £ the quality of the crafts§ manship. But, adds the I analyst, “they have always I been a bit doubtful about I Canadian design. Let’s ^ hope the Chang-Cooper alliance will reassure them.” That theory will first be tested at the industry’s annual market in January that attracts furniture buyers from stores from around the world. Until then, Eaton’s, which will launch the furniture collection later this month in Vancouver before rolling it out to Montreal and Toronto, will carry the line exclusively. For the energetic Chang, who also has collections of chinaware and sheets and bedding bearing his name, the furniture line is yet another step towards his goal of creating a total home environment. He has designed furniture that is comfortable to lounge in, but he is not one, after all, to rest on his laurels.
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