Former Sportswear Leader Puts Its Label Back On The Racks -- Generra Name Now The Game
It was once the largest young men's sportswear company in Seattle, employing more than 500 with manufacturing operations all over Asia. Its youthful, cutting-edge, casual fashions and rainbow-hued Hypercolor clothing were in demand nationwide.
Then in 1992, a decade after its meteoric rise, Generra Sportswear went into a tailspin, brought on by rapid growth, mounting debt and a fickle retail climate. The company, founded by former executives of Brittania, which helped make Seattle the U.S. jeans capital in the 1970s, owed more than $60 million and wound up in bankruptcy court.
Generra grew too fast and put too much money into the Hypercolor fad - T-shirts and jeans with heat-sensitive dyes - which burned out quickly.
Today, more than two years after emerging from Chapter 11 bankruptcy protection, Generra is a different company. Shrunk to a fraction of its former size, it has little in common with its predecessor beyond a name.
And the name is the game.
Generra's shirts and pants still carry the Generra logo and label. But the Seattle company no longer designs, manufactures, imports or markets apparel; it signs licensing contracts with companies to take care of that.
What Generra does full-time now is sell its name and collect royalties. It has no factories, no transportation worries, little overhead and almost no staff.
Yet the forced downsizing has brought growth for the new Generra - a company with not even a dozen employees working in airy Pioneer Square offices. While Generra hasn't reclaimed the market share it enjoyed in its heyday, company officials expect sales to reach $100 million this year, more than double sales in 1993, when Generra emerged from Chapter 11.
Companies in New York, California, Mexico and Florida have licensing agreements with Generra to produce and market men's, women's and children's sportswear, hosiery, neckties, men's shoes, watches and sunglasses. Generra just signed its 21st licensing agreement with a New York manufacturer - this one for a complete line of girls' shorts, skirts, shirts, jackets and jeans.
The company recently launched a multimillion-dollar ad campaign in such magazines as GQ and Glamour, targeting both aging baby boomers, who were the old Generra's biggest customers, and the younger Generation X consumer.
The Generra name remains the company's biggest asset, said Alan Bobin, a veteran executive of the apparel industry hired in 1994 as company president by Household Commercial Finance, a large creditor and now Generra's major shareholder.
A 1993 independent consumer study by Colton Bernard, a national apparel research firm, found that more than 50 percent of people surveyed recognized the Generra name; 70 percent of those who had bought a Generra item said they would do so again.
The strength of the Generra name convinced the troubled company to become a full-time licenser, using royalties to pay off debt.
"It's worked wonderfully," said Joseph Gaspers, president of Generra during the transition and now head of sales for California-based Vans Inc., a shoe company. "Generra had a good image that was never really tarnished."
Generra's job as a full-time licenser is to protect that image. It works with each licensed company to set a standard of fashion and quality, then monitors whether the agreement is being followed.
The downsized Generra is making money as a full-time licenser, said Bobin, who would not reveal profit figures. Its market focus is different from the old Generra, noted for higher-end, high-flair young men's fashions found in better department and specialty stores such as Nordstrom and Bloomingdale's.
Life after Chapter 11 has meant licensing more moderately priced, functional designs for men, women and children. "The high-fashion business, especially in the young men's market, is dangerous. It's flighty and inconsistent," said Bobin.
Generra's greatest growth in the last year has come in the women's line. Volume now equals the men's line, and Bobin eventually expects it to be triple the men's.
How receptive retailers are to the new Generra will determine whether Bobin's vision comes true. Generra's financial troubles and consolidation of key department-store chains hurt the company's distribution network. And the brand had pretty much run its course in the better department stores, said Steve Miska, a founder of Generra Sportswear and its former chairman. "There wasn't really a chance for Generra to maintain at that level," he said.
Through its licensees, the company is slowly rebuilding the network, focusing in the nation's top 10 consumer markets on moderate-price retailers such as J.C. Penney, Sears, Ross, Federated Department Stores' Broadway chain in California, and Mervyn's.
Bobin so far has resisted the strategy taken by several manufacturers-turned-licensers whose brands have shifted from department stores to mass merchandisers such as Kmart and Wal-Mart. "Once you take the name down, you can't bring it up again," he said.