Generra Slashes Its Operations

Generra Sportswear, which two years ago introduced a new clothing line, employed more than 500 and generated sales of $165 million, is withering to a unit that will employ only about 20 and will license its name and designs to other companies.

The move means Generra, until last year the largest of several young men's sportswear companies in Seattle, will no longer make or sell its own clothing lines. The change should be complete by September, said Steve Miska, chairman and chief executive officer. Generra, which is in Chapter 11 bankruptcy reorganization, has been cutting staff for a year and now employs about 100, Miska said.

The sluggish retailing environment took a toll on Generra's department store customers. New competition from sources such as The Gap, and warehouse clubs, such as Costco, also hurt Generra's sales.

It was difficult to decide to cut to licensing only, said Miska, who founded the company in 1980 with three partners.

"At least the company will continue to exist, although it will be a completely different company than in its heyday," he said. "The Generra name will still be out there . . . it's not going away."

The company is shipping the last of its spring and summer clothing now. It will not have a fall line.

Since the bankruptcy filing, Generra has been aggressively licensing its name - and that of its Blue Stone men's sportswear division - to companies selling various products including men's

slacks and jeans, girls and boys clothing, hosiery, neckties, shoes and sunglasses.

The company said it hopes to sell licenses for other items, including coats, swimwear, underwear, dress shirts and women's and children's shoes. It also hopes to continue licensing its Hypercolor trademark for the heat-sensitive line of T-shirts, tank tops and jeans that caused Generra's sales to soar when the line was introduced in 1991.

In conjunction with Generra's decision to become a full-time licensor, the company named Joe Gaspers as president. Gaspers, who has been in charge of the company's licensing efforts, replaces Dan Prentice, one of the company's founders, who will stay on the board during the transition to full-time licensing.

Company officials began toying with the idea of making the company a full-time licensor sometime after Generra introduced its fall line in New York in late February. Sales were poor, not only for Generra, Miska said, but for other companies selling young men's sportswear collections.

It was poor sales that drove the decision to turn exclusively to licensing, Miska said, not financing problems.

Asian factories supplying Generra have been extending financing to the beleaguered firm. Recently, according to an attorney involved in the Generra bankruptcy, the factories asked to be replaced as financiers by a bank, but Generra was having difficulty finding a replacement.

However, Miska said the factories recently agreed to extend financing through the third quarter.

The decision to become solely licensors made the most financial sense, said chief financial officer Russ Riggins.

"We'll be extremely profitable," he said.

So far, Generra has signed about 20 contracts, which are about evenly divided between U.S. and international licensees.

"Consumer awareness and brand recognition of the Generra mark is still widely known," said Miska. "The companies are taking advantage of that."

Employees were notified of the company's decision yesterday.

When it filed for bankruptcy reorganization, Generra listed liabilities of about $94 million and assets of about $89 million.