Content area
Full Text
A female plant manager is held hostage at the manufacturing plant in Mexico by employees who are fearful that they will be dismissed without severance; a walkout strike occurs in the middle of peak shipping season at the company's primary distribution facility; a Mexican lawyer purloins the bond money after the strike is settled; the EVP of Operations, tells the secured lender that "inventory is not his problem. " Such were the obstacles to a successful turnaround at R. G. Barry Corporation.
ESTABLISHING A FIRM FOUNDATION
R. G. Barry Corporation, aka The Dearfoams® Company, is a publicly traded company headquartered in Columbus, Ohio, whose principal business is the design, manufacturing, and marketing of "at-home" and "around-the-home" comfort footwear, principally slip-pers. Barry sells under a variety of brands and retail private labels, but its primary brand is Dearfoams slippers. The company was founded in 1947, based on use of newly discovered foam rubber to create a comfortable, washable slipper. The company's chairman and CEO, who had been running Barry for 40 years, is the son of two of the founders. Under the chairman's management, annual revenues peaked in the mid 1990s at $150 million, and Barry's stock price peaked at $25 in November 1994.
Barry sells through most traditional retail channels, including department stores (Federated, etc.) retail chains (Sears, Penney's and Kohl's), mass merchants (Wal-Mart and Target), and discounters (Dollar General, etc.). The company believes it has a 30% market share in a $300-$350 million wholesale market in the United States. It tried to establish a distribution/marketing presence in Europe during the '90s but had to withdraw from this market in 2002 due to continuing losses. Its next nearest competitor is Isotoner/Totes with an approximately 20% market share. The rest of the business is split among direct-buy private label, brokers and minor brands. The strongest brand in the industry is Dearfoams, followed by Isotoner. Barry traditionally has been the category leader, especially in the department store segment, although its leadership position has deteriorated in recent years. The strongest trend negatively affecting Barry's brand dominance has been the retailers' introduction of private label brands, which has been driven by both differentiation and margin improvement strategies.
In addition to the growing emphasis on private label, two major...