Hollander's New Outlook

Brent Felgner, October 2, 2006

Boca Raton, Fla. — Jeff Hollander says his business is strong and that his recent decision to pull his company out of fashion bedding was merely an acknowledgement that it cost more — in time, money, and resources — than it was worth. It had become a distraction.

“It's really just the constantly changing focus of the fashion bedding,” he said in a telephone interview shortly after the announcement. “Our strengths as a company are innovative products and replenishment. And fashion has become a 'one and done' business, so it takes away the replenishment. And the innovation — because of the [eroding] price points — is diminishing. So it's really not fitting our core competencies.”

Hollander Home Fashions said it was quitting the business — at least for now — closing its New York design office and eliminating five designer positions as it refocuses on its core basic bedding businesses.

Fashion top-of-the-bed accounts for about 6% of Hollander's sales and the company will fulfill all existing orders and complete continuing programs, Hollander, who is the company's ceo, said. Some private programs may still be produced through “select retail-ready programs.”

Hollander core programs have grown about 40% over the last 2 years, he said. The company has zero long-term debt and no current borrowings. The closing will not result in any write downs, he said.

Fashion bedding just didn't have a good long-term outlook or strategy, Hollander said, with constant retailer demands to hit price points that all but eliminated the ability for design innovation. The business was “turning into a moving target every 60 days,” he explained.

“While I'm proud of the products we had in fashion bedding, it was getting to the point where it was simply going to have to be a price equation — and I didn't want to have product not worthy of our name,” he emphasized.

In the realignment, vp Amy Webster will continue her responsibility in basic bedding and Andy Schantz will continue as vp for the Laura Ashley line. Beth Mack remains senior vp for basic bedding with responsibility for bed pillows, Hollander's largest division, and Dave Sides continues as president. Additionally, cio Scott Anderson has been promoted to vp of operations.

The company also said the realignment will augment basic bedding factory space by more than 250,000 square feet, in addition to an 80,000-square-foot warehouse being opened in Pennsylvania.

The company is also creating Hollander Home Fashions Trading (Shanghai) Co., a new China-based sourcing and operating company that will augment its existing roster of joint ventures. Mason Carroll was named vp, global sourcing, from his former post heading fashion bedding.

Jeff Hollander also noted that the company's direction has been to blend more fashion into basic bedding. “There's a lot in down alternatives — probably half of our fashion business — but that's where I can be more relevant. There's a lot more differentiation,” he said.

He said the company might reconsider the segment when retailers begin looking for more value added to top-of-the-bed fashion.

But in the meantime, “Let's be in businesses where we can matter,” Hollander said.

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