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Supply Chain Management of I.C. Isaacs & Company

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Supply Chain Management of I.C. Isaacs & Company
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Supply Chain Management of I.C. Isaacs & Company - January 10th, 2011

I.C. Isaacs & Company manufactures and sells sportswear for men, women, and children under the licensed labels Boss, Girbaud, and Beverly Hills Polo Club, as well as producing clothing under its own labels I.C. Isaacs, Lord Isaacs, Pizazz, and UBX. The company's labels are sold at hundreds of specialty and department stores across the United States, as well as in Puerto Rico and Europe. After growing steadily during the 1980s and 1990s, I.C. Isaacs has been financially troubled since going public in late 1997.

Early Beginnings, 1913 to 1980s

I.C. Isaacs was founded in 1913 by Isaac C. Isaacs and his family. Located in Baltimore, Maryland, the company was established to cater to the local horse racing industry, focusing its manufacturing on riding britches, jodhpurs, and shirts. The merchandise was produced in two company-owned factories in Mississippi. By keeping design and production under tight control, I.C. Isaacs was able to maintain the highest standards of quality. The company remained family owned and operated, with a narrow focus on riding gear, for decades. I.C. Isaacs enjoyed steady success, with its reach limited to the close-knit racing community of Maryland and other parts of the South, until the early 1980s.

National Growth, 1980s and 1990s

In 1984 I.C. Isaacs was purchased by outside investors who were interested in utilizing the company's name and manufacturing plants to extend the business into the broader and more lucrative world of general men's and women's apparel. Soon after the buyout, I.C. Isaacs began producing inexpensive men's and women's sportswear under an eponymous label. The brand sold well locally, and was within a few years picked up by the national chain J.C. Penney.

The new management hoped to make its mark on the national apparel industry by developing popular and profitable brand names. In addition to building up its own label, the company set out to license other brands with strong name recognition. Boss was a high-profile menswear collection featuring casual sportswear as well as dress jackets and suits. The label was sold at such national department stores as Macy's and J.C. Penney, and, with appeal for both older and young consumers, was considered a sound, stable investment. The Boss line continued to sell well under I.C. Isaacs, and the company began generating enough revenue to consider further acquisitions.

Soon after the acquisition of Boss, I.C. Isaacs licensed Beverly Hills Polo Club, a casual sportswear line for men and women that was sold primarily through J.C. Penney. The Beverly Hills Polo Club brand sold for slightly less than the Boss label, and, because it produced both men's and women's apparel, appealed to a broader range of consumers. Like Boss, Beverly Hills Polo Club was consistently profitable, and by the middle of the decade I.C. Isaacs was on its way to becoming a national contender in the apparel industry.

During this time I.C. Isaacs introduced two other collections of its own: Lord Isaacs, a menswear line, and Pizazz, a juniors' collections. Because the company was growing so quickly during the late 1980s and early 1990s, I.C. Isaacs had to turn to other companies for manufacturing. Within a decade after the company's 1984 buyout, more than 70 percent of the company's merchandise was being produced by outside manufacturers, including denim factories in Mexico. However, the company continued to utilize its two Mississippi factories to produce the I.C. Isaacs line.

By the mid-1990s I.C. Isaacs was growing rapidly, with sales rising into the hundreds of millions. Between 1992 and 1997, sales rose at an average rate of 30 percent a year. In 1996 the national chain store J.C Penney was the company's biggest customer, accounting for 13 percent of total revenue. I.C. Isaacs had risen within a decade from a small family-owned business to a company of national prominence.

The Acquisition of Girbaud and Faltering Sales, Late 1990s

In 1996 the company's most popular line was Boss, which accounted for more than 72 percent of sales. The Beverly Hills Polo Club label was growing quickly at that time as well, with sales jumping by 83 percent in 1995 and by 102 percent in 1996. As a result of this tremendous growth, the company's owners decided to take it public in 1997. Under the guidance of CEO Robert Arnot, I.C. Isaacs debuted on the NASDAQ stock exchange with an initial public offering of $10 a share. The company sold 3.8 million shares, raising $38 million.

In 1997 I.C. Isaacs also made one of its most important acquisitions, purchasing the license to Girbaud sportswear and jeans from VF Corporation. Girbaud, a French label, appealed to younger men and women, and had helped to make designer denim and sportswear chic in the late 1980s and early 1990s. Interest in the brand waned in the middle of the decade, however, as "grunge" fashion supplanted designer labels, and Girbaud's sales in the United States fell.

I.C. Isaacs focused on regaining the brand's popularity, looking to other successful U.S. denim companies for inspiration. Soon the company was producing cargo fatigue pants and slouchy denim jeans under the Girbaud brand, establishing the label as a purveyor of hip urbanwear that would appeal to buyers of Calvin Klein, Donna Karan, or the more traditional Levi's. Although the Girbaud acquisition was a bit risky, within a year the label was showing strong sales and was being offered in more than 370 stores nationwide.

Nevertheless, the fortunes of the company as a whole began to decline soon after I.C. Isaacs went public. The company's shares, after a brief initial rise, began a steady decrease in value, and finally bottomed out at $1.88 per share in 1999. With the exception of the Girbaud label, which was selling well, all of the company's brands were decreasing in sales.

Restructuring and Relaunching I.C. Isaacs, 1998-99

In November 1998 I.C. Isaacs announced a major restructuring plan that was designed to streamline production, cut unnecessary costs, and reduce the amount of overhead the company had developed during its decade-long growth spurt. In hopes of revitalizing its brands, I.C. Isaacs also planned to streamline the Boss label's junior line for boys in order to focus on guaranteed successes like jeans, discontinue Beverly Hills Polo Club women's sportswear, and refocus on Beverly Hills Polo Club sportswear for boys and men.

More drastically, the company discontinued most of its I.C. Isaacs women's sportswear and closed one of its oldest plants, in Carthage, Mississippi. The company cut its advertising budget as well, but spared the campaign for Girbaud, which was selling strongly. In a final step to streamline the company, I.C. Isaacs repurchased about $4 million of the company's common stock. By reducing the inventory and styles of labels that were not readily recognizable to the consumer, such as the I.C. Isaacs brand, and focusing on the growth of Boss and Girbaud, the company hoped to renew its profitability and gain a larger, more fashion-conscious consumer base. In the words of President Jerry Lear, speaking to the Baltimore Business Journal in 1998, "Our brands speak for the company, and that suits me fine. That's much more preferable to people knowing who I.C. Isaacs is and not giving a damn about our brands."

With that in mind, in 1999 I.C. Isaacs named retail insider Danny Gladstone president of Girbaud. Gladstone had formerly been president of sales for Calvin Klein's highly successful CK line, and was well equipped to lead I.C. Isaacs toward its goal of making Girbaud a household name. At the time of Gladstone's hiring, the label was being sold in almost 600 stores; within a year, that number had increased to nearly 900.

In September 1999 the company launched a new label called Urban Expedition, or UBX, a line of sportswear which, while having some similarity to the company's Boss and Beverly Hills Polo Club lines, overtly appealed to younger consumers who identified more with "streetwear" than sportswear. The collection included baggy jeans, t-shirts, and jackets, and was targeted at consumers interested in hip-hop and urbanwear. The company hired the hip-hop artist Rakim to promote the line. According to CEO Arnot, speaking to PR Newswire in September 1999, "The launch of Urban Expedition gives us the opportunity to capitalize on what we do best, providing style-conscious customers with cutting-edge fashions. By offering up-scale streetwear collections under a fresh new brand, we have an opportunity to capture a share of the audience who appreciates fashion-forward urban styling." I.C. Isaacs had taken a new turn indeed, using such trendy phrases "urban

1913:Isaac C. Isaacs founds I.C. Isaacs.

1984:Bought out by investors.

1990:Purchases its first license to a clothing label, the nationally known Boss.

1997:Goes public and purchases the Girbaud license.

1998:Announces a sweeping restructuring plan.

styling" and "streetwear" to present the company as modern, fashionable, and competitive.

Principal Competitors:Levi Strauss & Co.; Fubu; Tommy Hilfiger Corporation; Guess, Inc.

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