Bernstein has 'designs' on success with bedding
Don Hogsett -- Home Textiles Today, August 3, 2001
Atlanta — Sounding much like the cat who swallowed the canary — as in fact he just had, buying the Crown Crafts adult bedding business for just $8.5 million — Michael Bernstein sounded more confident and relaxed than he had in the past two years as he started making plans for his smaller, but profitable, new venture, Design Works Holding Co.
"I feel great and I'm raring to go. I haven't felt this good in two years," said an ebullient Bernstein, ceo of Design Works. "You know, I can now spend a full day on the business, and not have to worry about down-sizing or dealing with banks. No more distractions, no more craziness. Let me tell you what a joy that is. You don't know how much fun it is, to be able to just run the business. I'm like a kid in a candy store. I really feel years younger."
The business that he can focus on — to the exclusion of the financial wrangling and deep losses of the past few years, and the very considerable pain of laying off long-time associates — are two luxury bedding franchises, Calvin Klein Home and Royal Sateen, and a smaller private-label business, all of which generated about $76 million in sales last year, and even more this year, said Bernstein.
More importantly, perhaps, said Bernstein, the business is now making money. "I'm cutting costs wherever we can, and we're going to be profitable the very first month, right out of the box. We have very little debt, and it's very easily serviced. Whoever said that leverage is good, just shoot him."
But it wasn't an easy deal to get done, Bernstein acknowledged. "We've been working on this for months. It was a tough deal to get done. There was a lot of heavy lifting, a lot of parties involved. But all the people like Calvin Klein and Kitan (the Israeli company which produces the fabric for Royal Sateen products) were really great. They worked with us, were willing to go along with us, and stood by us. I'm really lucky and really proud of all those people we deal with."
For the time being, Bernstein's new business will continue to share space with his former company, Crown Crafts, now an infant and juvenile bedding producer. "At some point in the next 12 months, we'll find new headquarter space."
And Bernstein's new operation will keep Crown's former New York office, at 156 West 56th St., as well as the Calvin Klein Home showroom. "For the time being, we will show Royal Sateen and other products in a hotel for October market. For previews, we'll use the West 56th Street office. We still don't know exactly what kind of space we'll need in the future."
In addition, Bernstein's new operation keeps a Roxboro, NC, distribution center as well as a down-sized manufacturing operation, which employs about 30 of the new company's 200 workers.
Working side by side with Bernstein as president of the new Design Works operation, is Crown Crafts veteran Rudi Schmatz. "I can't even imagine what it would be like not to work with Rudi," said Bernstein.
Another Crown Crafts veteran, Marcia Brandwein, is heading up design for Royal Sateen and private-label products. Paul Schmidt is vp, national sales manager, while Steve Zaffos, vp, directs Calvin Klein Home sales. Dennis Cochran is cfo.
"Basically, we've down-sized the business, got out of most manufacturing and will focus on the product people want," said Bernstein. "We're more of a marketing than a manufacturing company, even though we will still have some manufacturing here. We're sourcing around the world, and we're contracting out some manufacturing. Probably 60 percent of what we do is imported, and 40 percent is produced domestically."
Any plans to take the new company public at some point? "Not in my lifetime," Bernstein grinned. "I can state that categorically. It's a lose-lose situation being public in this kind of environment. The market isn't going to value for what you're worth, and you're telling your competition everything about your business. No, thank you. Right now, we have the ideal business. We're a private company with great brands, great people, no manufacturing and very little debt. What more can I ask for?"
Mednick Talks to HTT about Online Trends for Textiles