Veratex looks ahead after 10 years
October 12, 2001,
This fall market, luxury bedding supplier Veratex will be celebrating a decade in the home textiles business, and while the company may have come a long way from its beginnings — showing one printed comforter ensemble pinned to the walls of a hotel room — its president believes that Veratex still has a long way to go.
According to Cohen, the company is forecasting revenue of approximately $50 million for 2001, a far cry from its first year when Veratex did not even break the $1 million mark. In 1999, the company finished with almost $40 million in its coffers, while in 2000 sales reached the middle $40 million range.
Cohen is convinced Veratex has not even come close to its potential, a statement echoed by his vp, sales, Dale Talbert.
"It's a challenge, but we can get to the $100 million mark and over that," Talbert said, citing the work Veratex has yet to do in order to get its myriad products placed in various department store companies it doesn't yet do business with.
The challenge of gaining recognition from buyers has become less of a factor for Veratex after 10 years. And despite industry complaint about restrictive matrixes and play-it-safe buying philosophies, Cohen and Talbert maintain that retailers are more receptive now to new ideas than they ever have been.
While that may set the stage nicely for a fashion-forward business like Veratex, it doesn't come without operational hurdles. In fact, as retailer demand has grown for freshness, the average life cycle of a hot pattern has contracted, they noted. And the frequency with which home departments are turning over new patterns makes even infrequent mistakes much more costly to both the retailer and the vendor.
The measured success of a pattern has changed so much, Talbert said, that now a pattern which lasts a year is considered to have been very successful where in the past a "great" pattern lasted as long as two or three years. Although the pattern's success may be short-lived, he added, it is still lucrative for the retailer. "It's about the look," Cohen said. "In this business, it's the look, it's the look, it's the look."
That look has changed greatly over the years to include more opulent constructions with higher thread counts, added embellishments and more than one fabric per ensemble. Talbert recalled three years ago when one of Veratex's best-selling beds used only a single fabric in its construction.
"It's always been about differentiation," Cohen explained. "Everyone is shopping your prices. It's not live and let live.
"I think the whole business is more complicated now and a lot more is expected of Veratex now. But we expect a lot more of ourselves and no one put more pressure on us than ourselves.."
Despite ongoing pressure from retailers to keep price points down, "if the look is right, you can get the price you want," Talbert said, who recalled when the $250 price point seemed outrageous several years ago but now has been generally accepted. But that does not mean retailers have become more willing to buy. Just as retailers look at the pattern, they always have and always will look at the price point attached to that pattern.
"Generally, it's the toughest time we've faced in a long time," Talbert said, summing up the current economic climate and recent terrorist attacks. "I don't know if we've ever been through anything this bad. This is a combination of events we've never experienced before."
Despite its measure of success, Veratex cannot be accused of patting itself on the back or sitting back and watching while events unfold. In addition to its luxury line of bedding, the company also manufactures bath accessories and has a free-standing soft window coverings program as well as license agreements for tabletop, rugs, wall borders and framed art. While no new category entries are currently pending, but Cohen and Talbert agreed that possibilities existed in blankets, china, various tabletop items and window hardware.
In addition to its Panorama City, CA-based corporate offices, Veratex also has its manufacturing base and warehouse space here. The company moved into a brand new showroom at 303 Fifth Ave. in New York last fall and recently purchased a new distribution center/showroom space in Toronto.
Another major investment for the company was $750,000 for an application machine from Italy with a 200-yard-per-hour and 150-inch capacity. Cohen said the machine was bought to enable Veratex to customize looks for virtually any retailer and for any quantity they may want.
Said Cohen about the costly machinery and the large amount of capital Veratex spends overall, "You have to spend more in fashion. You must spend the money if you're really going to specialize for each customer."
Attributing much of the company's success to the people around him, Cohen cited specifically the contributions of Veratex's executive team of Sol Sobol, cfo; Mark Katz, senior vp; Scott Fluke, vp of manufacturing; Barbara Reich, head of bath accessories, window and licensing; and designers Suzy Cane and Susan Hagan, and Talbert. He also said he owed a large part of his success to the industry itself.
"We're doing good because of everyone around. It's not just about one person."
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