London Fog replaces chairman

August 24, 1994|By Ross Hetrick | Ross Hetrick,Sun Staff Writer Sun staff writer Jay Hancock contributed to this article.

Arnold P. Cohen, the London Fog Corp. chairman and chief executive who oversaw the closing of factories and the elimination of hundreds of jobs in Maryland, has lost his own job after only a year in the position.

"He's a man who fired a thousand people. Now he gets fired," said Carmen S. Papale, manager of the regional branch of the Amalgamated Clothing and Textile Workers Union. "Maybe what goes around comes around."

Mr. Papale, who represents workers at London Fog, and Mr. Cohen have been on opposite sides of a struggle that has resulted in the closing of three factories with 575 workers and the threatened closing of three more plants with 700 employees by the end of October.

While union or state officials refused to speculate about whether the change in management will save the plants, they agreed that it gives them new hope. "At least it can't be any worse than what we have," Mr. Papale said.

But William Richins, London Fog's executive vice president and chief financial officer, said the change at the top does not represent a shift in the company's stance in the negotiations. "It was not related to that," Mr. Richins said. "Our position is the same as it was."

London Fog promoted two executives to replace Mr. Cohen: John Varvatos, 40, who was brought to London Fog from Calvin Klein last November by Mr. Cohen, as chairman; and James Milligan, 55, a veteran turnaround specialist who joined London Fog in April through the company's acquisition of Pacific Trail Inc., as CEO.

Mark L. Wasserman, secretary of the state Department of Economic and Employment Development, said he will contact the new management today to discuss the company's future and offer state assistance.

"The introduction of new personnel into the mix at least affords the opportunity to pose the question with intensity," Mr. Wasserman said. "We'll keep plugging on until someone says 'no.' "

Mr. Richins would not say whether Mr. Cohen resigned or was fired and would not discuss the reasons behind the departure. But an industry source said the change was probably driven by GKH Partners, a Chicago-based limited partnership that acquired a 36 percent stake in the company in April as part of the Pacific Trail merger. "It was the usual philosophical disputes," the source said.

Mr. Cohen, the former president and chief operating officer of J. Crew Group Inc., has brought a whirlwind of changes since taking command last August of the country's dominant raincoat company, which has $500 million in annual sales.

In addition to the factory closings, the company's headquarters was moved from Eldersburg to Darien, Conn.; 100 nonunion positions were eliminated; West Coast clothing company Pacific Trail was acquired; and the London Fog line of apparel was broadened to appeal to younger customers.

Last month, after four months of bitter negotiations with its union, the company announced it would shut down three plants in October because it was unable to reach an agreement with the union that would reduce the $18-per-coat gap between the cost of domestic production and overseas operations.

The plants -- the company's last U.S. manufacturing centers -- are a factory in Northwest Baltimore with 300 workers; a Hancock plant, also with 300 workers; and a cutting facility in Williamsport, with 100 employees.

A faint hope remains, with the two sides saying they would continue to meet. Those efforts will continue, Mr. Richins said.

Mr. Varvatos, who was vice chairman and executive vice president of design and merchandising, has worked to broaden the company's customer base to a younger audience while also trying to extend the company's upscale products, Mr. Richins said.

As chairman of the London Fog board's executive committee, Mr. Milligan has worked closely with Mr. Cohen in running London Fog, according to sources familiar with the company's operation.

Mr. Milligan is also a board member of GKH, which had owned Pacific Trail. As GKH acquired its stake in London Fog, Merrill Lynch Capital Partners, which had owned 95 percent of London Fog, reduced its holdings to 58 percent, he said.

An industry observer said GKH, which has taken an active role in other companies, was instrumental in Mr. Cohen's departure. Merrill Lynch, which hired Mr. Cohen, did not interfere, the source said.

Mr. Milligan is no stranger to troubled companies. He was president of Sunbeam Corp., which emerged from bankruptcy proceedings four years ago.

Previously he was president of Tampa, Fla.-based Spalding and Evenflo Cos. Inc. , a maker of sporting goods, baby products and building materials.

Mr. Milligan and GKH officials did not return phone calls.

As for what he will do now, Mr. Cohen said he would relax and spend time with his family.

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