Nautica Moves Earl Jean East
Earl Jean Inc. is moving its denim business East.
The Los Angeles-based company, which is a subsidiary of New York-based Nautica Enterprises Inc., has announced plans to relocate its headquarters to New York City, effective immediately.
Nautica’s chairman, president and chief executive officer Harvey Sanders said the company’s decision to relocate is an effort to “streamline operations and leverage existing infrastructure.”
Earl Jean’s design and administration will be handled from a new location in New York, while the company will continue to operate a showroom on the West Coast. A company spokeswoman for Nautica said plans are being finalized for office space in Manhattan. The relocation process will be completed by summer, she said.
The company’s customer service and distribution will gradually be integrated into Nautica’s existing facility in Martinsville, Va., said the spokeswoman.
Carl Steidtman, chief economist at Deloitte & Touche in New York, said both companies would benefit from the move, mainly because of “downthe- hall communications that will take place on the East Coast as opposed to across the country.”
Nautica said about 55 employees will be affected by the relocation.
“This was definitely a difficult decision to make because of the impact on Earl Jean’s employees, but we believe this consolidation is necessary as it will enable greater growth potential for the brand over the long term,” explained Sanders. “We appreciate the valuable contributions that the Earl Jean employees have shown since becoming a part of Nautica Enterprises Inc., and we are committed to providing them with assistance during this time.”
Sanders said the company is expecting to add roughly $1 million, or 2 cents per diluted share, to the company’s annual earnings beginning in 2005.
Earl Jean founders Ben and Susanne Freiwald helped usher in the low-rise denim craze of the 1990s with their contemporary denim label. They sold it almost two years ago to New York-based Nautica Enterprises Inc. for $86 million.
At the time, the company’s earnings were in the mid-$30-million range.
Since then, the company has had three presidents and is expected to see net revenues in the high $30-million range this year.
Some sources speculate the move is needed to compete with other contemporary denim makers such as Lucky Brand Dungaries, Bella Dahl, Blue Cult and Seven for All Mankind. The company has initiated several management changes since Nautica purchased the brand. Last year, Joe Krafka, who previously served as Earl Jean’s president of sales, replaced Ben Freiwald as president. Bonnie Takhar, who had been managing director of the company’s European sales, replaced Krafka last month.
Earl Jean creative director Susanne Freiwald could not be reached for comment as of press time.
By relocating, Takhar said, the company is in a better position to compete with similar brands.
“We stand to gain a number of economic and strategic advantages for the Earl Jean brand as a result of this relocation,” she said. “It will provide us a stronger base to not only expand our business domestically but also on a global level.” —Claudia Figueroa
