New chief vows it's 'back to basics' for money-losing rainwear company 'MR. FIX-IT' AIMS TO REPAIR LONDON FOG

January 08, 1995|By Timothy J. Mullaney and Ross Hetrick | Timothy J. Mullaney and Ross Hetrick,Sun Staff Writers

The equipment is all over the place, jumbled up and pushed together on the floor of the Baltimore factory where London Fog Corp.'s new chief executive is walking and talking. Robert E. Gregory Jr. doesn't say it, but the factory floor is the perfect metaphor for the company he is taking over.

It's in disarray, and rebuilding it will take generous dollops of other people's money.

Mr. Gregory, whose hiring was announced last week, is London Fog's "Mr. Fix-It." The 52-year-old South Carolinian, who brought in his longtime lieutenant C. William Crain as president, is here to bring order to the chaos of a money-losing rainwear company that has alienated retailers, closed five factories in Maryland and Virginia in 1994, and is now seeing its fourth chief executive in 16 months.

"Rob was the No. 1 person identified by one of the top executive search firms in the nation," said Melvyn Klein, general partner of GKH Partners, which owns 37 percent of London Fog.

With an a accent as Southern as black-eyed peas, he's an approachable, nice guy. Yet, the self-assured aura of "I am the boss" is always lurking.

"I want to be successful, and I want to have fun doing it," he said. "We'd like people to walk around with a smile on their face."

Nice or not, though, the bottom line will prevail.

Mr. Gregory and Mr. Crain proved that at Gitano Group Inc., where they nearly fixed the unfixable after being summoned in 1993 to run a low-end designer jeans company whose spendthrift ways and near-total lack of financial discipline were notorious.

"Rob had basically 'mission impossible' at Gitano," said Michael Jacobs, director of corporate finance at Kurt Salmon Associates, a retail consulting firm in Atlanta that served as Gitano's investment bankers.

"None of the creditors expected to get more than half [of their money]."

The creditors eventually got up to 90 percent of their money, but the price was high. Mr. Gregory closed or sold nearly all of the company's operations, cutting 3,600 jobs to about 150. He got Gitano out of manufacturing businesses it didn't have the cash to support, got them out of a wide range of clothing and focused the company on the jeans on which it was originally built.

By late 1993, Gitano was a profitable design and licensing operation.

"Gitano was the worst of the worst of the worst," said Howard Davidowitz, chairman of New York retail finance consulting firm Davidowitz & Associates. "Within months, he devised a winning strategy. . . . He has a winning track record in everything he ever did."

Mr. Gregory has heard all of this, of course, but tries to downplay it. He would rather be as well-known for expanding the work force during his seven-plus years as president of VF Corp., the Pennsylvania-based parent of Lee and Wrangler jeans, as for cutting Gitano to 150 workers. And, after all, he has fallen short of a few goals in his life.

A decade ago Mr. Gregory wanted the top job at VF, but he was never to get it. He left at age 48 in 1990, saying CEO Lawrence Pugh was too young for him to wait around hoping to get the job someday.

"When I was 42, I knew I knew everything," Mr. Gregory said. "At 52, I know I don't."

After VF, more than two years passed during which he looked unsuccessfully for a company to buy. Then he took the Gitano job, a task that looked basically hopeless. Gitano had been run by entrepreneurs with so few financial controls that one year its auditors couldn't find $15 million of profit that management claimed to have made.

Even secured creditors thought they would be lucky to get half their money, recalls Michael Jacobs, Gitano's former investment banker.

Gitano was a huge success in some ways, but even though it buffed Mr. Gregory's reputation, Gitano ended in disappointment. A customs fraud scheme, perpetrated before Mr. Gregory arrived, led Wal-Mart Stores Inc. to threaten last January to cut off orders representing 35 percent of Gitano's sales unless the company was sold. Just when he had the much smaller Gitano making a little bit of money again, about $4 million in the last quarter of 1993, Mr. Gregory had to throw in the towel.

Nothing more to do

"He was dealt cards that had only one way to be played," Mr. Jacobs said. "When Wal-Mart made the call, there was nothing he could do."

But there was no two-year wait for the right new job this time. The apparel business has a roster of fallen stars in or near bankruptcy. Mr. Gregory had a shot to look at the No. 1 or No. 2 job at many of them, including glamour names like Liz Claiborne, Stride Rite and Leslie Fay.

"He had opportunities other than Liz Claiborne to be the No. 2 in very big companies," Mr. Jacobs said. But Mr. Gregory's criteria included being the boss and finding a company that had a chance to build rather than bust up, Mr. Jacobs said.

"If we [he and Mr. Crain] were turn-around people, we would do one of these other things and make more money," Mr. Gregory said.


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