Hung Out to Dry at Loehmann's
from Summer 1999
by Peter Winterble
The nine-member board of this discount women’s clothing retailer is facing troubles from all directions. Yes, earlier this year the company beat back a union attempt to organize its flagship outlet in New York City. But the 69-store national chain still faces drab earnings, a stock that’s deep in the basement, and a $95 million debt that was recently marked down from B2 to B3.
To make matters worse, the company is embroiled in a lawsuit involving Debbie Friedman, spouse of the company’s chairman and CEO, Robert Friedman. According to a recent $1.2 million suit filed by Forty Three Apparel Co., Mrs. Friedman took certain corporate secrets with her when she quit her job there. The suit claims she used those secrets to found her own company, Bigio Group, and then attempted to supplant her previous employer as a key supplier to Loehmann’s. Lawyers for both companies, along with the Friedmans themselves, declined to comment on the case.
Loehmann’s and its outside directors were no more forthcoming on the 37 to 32 vote against UNITE, the clothing workers’ union. The result stunned both sides, particularly since the union had won an 80% participation rate in the call to organize. For months, workers had complained about a “negative point system” under which they could be disciplined or even fired for such infractions as wearing a nonmatching sweater and skirt.
UNITE spokeswoman Jo-Ann Mort’s postscript—“We’re not planning on going back anytime soon”—could be the best news in a while for Loehmann’s board, which now needs to look ahead. Kelly Armstrong, an analyst who follows Loehmann’s for First Union Capital Markets in Richmond, Virginia, says, “Right now, they’ve got to work hard to meet Wall Street’s expectations, and I believe they’re headed in that direction. It’s a great brand name, and women all over the world know of Loehmann’s. The company’s new strategy of expanding into men’s clothing and gifts and upgrading existing stores to be much larger will, I believe, begin to pay off.”
ON THE RACK
Members of the board at Loehmann’s, with additional directorships:
Insiders
Robert N. Friedman, 57
Chairman and CEO
Robert Glass, 51
President and COO
Philip Kaplan, 67
Former chairman, president, secretary, and treasurer
Norman S. Matthews, 65
Co-Chairman
Progressive Corp.
Lechters
Finlay Enterprises
Toys `R` Us
Eye Care Centers of America
Outsiders
Cynthia R. Cohen, 45
President, Strategic Mindshare
One Price Clothing
Office Depot
The Mark Group & Capital Factors
Lorrence T. Kellar, 60
Vice president of real estate, Kmart
Richard E. Kroon, 55
CEO of DLJ Capital Corp. and
managing partner, The Sprout Group (venture capital affiliate of DLJ)
Educational Medical
Christina A. Mohr, 42
Managing director, Salomon Smith Barney
United Retail Group
Arthur E. Reiner, 57
President and CEO, Finlay Enterprises
