Concord Fabrics, Inc.
Concord Fabrics, Inc.
Sales: $180.2 million (fiscal 1995)
Stock Exchanges: American
SICs: 2259 Knitting Mills, Not Elsewhere Classified; 2299 Textile Goods, Not Elsewhere Classified
Concord Fabrics, Inc. designs and produces knit fabrics and designs woven fabrics from both natural and synthetic fibers, in a wide variety of colors and patterns. Most of its output is sold to manufacturers, chiefly of women’s apparel. The company also sells its products to chain, department, and fabric stores for retail sale to customers who sew at home. The Weinstein family has held a controlling interest in the firm since its inception.
Concord Fabrics in the 1960s
Based in New York City, Concord Fabrics was incorporated in 1958 as the successor to a business that began in 1920 as a staple converter for small apparel manufacturers. It went public in 1968, when 300,000 of its shares were offered for $15 per share. The following year 200,000 more shares were offered at $20 per share. The rest of the stock (about 70 percent) was held by the Weinsteins. At that time the company was a fabric designer and merchandiser with no production facilities. Its net sales had risen from $22.2 million in 1963 to $41.3 million in 1967, and its net income had increased from $485,000 to $1.3 million in that time. Alvin Weinstein was chairman of the company, and his brother Frank was president.
Concord Fabrics was developing, designing, and styling fabrics from woven and knitted greige (unfinished) goods bought from outside sources. Independent plants then printed, dyed, and finished the goods with designs, colors, and combinations specified by Concord Fabrics. At this time the company was producing about 20 types of woven fabrics in a wide range of solid colors. These were coordinated with about 75 plaids and 100 prints. Knit fabrics, introduced in 1967, were available in five fabric types and about 30 patterns. Designs were contemporary and intended for a youthful market. The company leased space in Manhattan’s garment district for its main offices and showroom and for warehousing and distribution. For a time it also leased an office and showroom in Los Angeles.
About 72 percent of the output of Concord Fabrics in 1968 was going to manufacturers of young women’s moderately priced casual clothing. The rest was being sold to department stores and other retailers as piece goods for sewing at home. This market, which indicated growing interest by young women in sewing, had grown to 28 percent of company output from only 11 percent in 1965. In all, about 3,000 customers were being served by 50 commissioned salesmen handling Concord’s goods exclusively and 44 agents who also handled competing lines.
Entering Manufacturing in the 1970s
Sales and profits increased in the following years for Concord Fabrics, which continued to benefit from the growth of the home sewing market. Annual sales increased from $53.3 million in 1968 to $82.2 million in fiscal 1975 (ending August 31, 1975), and net income rose from $2.2 million to $3.7 million. No dividends were distributed after 1970, however. Leonard Machinery Corp., a subsidiary of Concord Fabrics, was sold in 1972. In 1971 the company opened its first production facility, a 110,000-square-foot knitting mill constructed on 60 acres of land purchased in Milledgeville, Georgia.
Majority ownership of Concord Fabrics was held at this time by AFW Fabric Corp., which in turn was owned by Alvin Weinstein, Frank Weinstein, and several Weinstein family trusts. When a merger of the two companies was proposed, other holders of Concord Fabrics stock complained that the $3 per share offered them was inadequate, even though the stock was trading for less than that amount when the plan was announced. Five lawsuits were filed to halt the merger, one of them by the attorney general of New York, who was granted a temporary injunction blocking the action by a state court in June 1975. The merger plan was dropped in February 1976, by which time Concord Fabrics stock was trading at $9.50 per share.
Concord Fabrics broadened its scope in 1976 by leasing a 140,000-square-foot dyeing and finishing mill for woven goods in Washington, Georgia. (This plant was purchased in 1986.) But the late 1970s were difficult years for the company, which lost $164,514 in fiscal 1977 on sales of $78.3 million. Sales rose to $93.8 million in fiscal 1978, but net income amounted to only $472,000. During the next two years, as Concord Fabrics directed its efforts toward the more profitable women’s fashion apparel market, sales slumped and the company fell into the red. Long-term debt. was nearly $8 million in 1980.
Acquisitions in the 1980s
By fiscal 1983 Concord Fabrics was back on track, economies enabling it to earn $1.2 million on sales of $84.3 million. The following year the company earned $3.1 million on a sales volume of $116.2 million. In 1984 it acquired, for $825,000 in cash, Eastern Software Distributors, Inc., a microcomputer software and paper products distributor with annual sales of about $4 million. Established as a subsidiary of Concord Fabrics, Eastern Software, based in a suburb of Baltimore, was “intended to provide a vehicle for growth in an expanding field,” according to Alvin Weinstein. It proved not to be profitable, however, and soon was disposed of by the parent company.
Concord Fabrics formed a new heat transfer print unit, called the Printed Knit Division, in 1985. A company spokesman said the new division would function as a converter, buying both the transfer print paper and the knitted fabric to style and sell these prints. The new division was to complement and capitalize on the capabilities of the company’s existing print work. In 1987 Concord Fabrics acquired Trilogy Fabrics, Inc., a New York print converter, and hired its principals to run its print fabrics division. Subsequently, however, Concord Fabrics contracted out all of its print requirements. A dyeing and finishing plant in Chino, California, was purchased in 1987. The machinery and equipment were sold in 1994 for $2 million to another company, and the building was leased.
After earning only $76,000 in fiscal 1985 and $463,000 in fiscal 1986, Concord Fabrics had a net income of $2.2 million on sales of $138 million in fiscal 1987. In fiscal 1988, however, it lost $3.6 million on sales of $139.1 million. That year, even though the Weinstein family held about 62 percent of the company’s stock, shareholders approved an antitakeover measure creating two classes of stock. For each current share, stockholders received one Class A and one Class B share, with each Class B share having 10 votes, compared with only one for each Class A share. The change, said Alvin Weinstein, “will help the current management retain control of the company and let them worry about something longer than three months ahead.”
Mixed Results in the 1990s
Concord Fabrics returned to profitability in fiscal 1989, when it earned $3.6 million on $174.4 million in net sales. The following year it had net earnings of $4.3 million on sales of $195 million. Sales ranged between $197 million and $201.7 million during the next four fiscal years. Net income was below $1 million in 1991 and 1992, but it rose to $4.6 million in 1993 and a record $6.4 million in 1994.
Concord Fabrics launched two new fabric lines for home furnishings in 1991. The company, in 1994, purchased Kat-Em International Inc., a Los Angeles importer and distributor of woven and knitted fabrics with annual sales of about $25 million, for $1.15 million. It believed this purchase would enhance its ability to buy fabric and sell its output overseas.
In fiscal 1995 Concord Fabrics again fell into the red, losing almost $3 million on sales of $180.2 million. This outcome reflected a deficit by Kat-Em International (which accounted for about 13 percent of consolidated sales) as well as the fluctuating and highly competitive nature of the textile and apparel industries. Historically, Concord’s sales had been affected not only by general economic conditions but also by the degree of public acceptance of its fabrics and designs.
Concord Fabrics closed its Washington plant in 1995 because of poor business. By the end of the year its only remaining production facility was the knitting and finishing plant in Milledgeville, which now occupied 130,000 square feet. The company believed this facility would provide substantially all of its requirements for the knitting, dyeing, and finishing of knitted fabrics. Its requirements for the finishing and printing of woven goods to its specifications would be contracted to outside finishers, who were doing the bulk of this work even before the Washington plant was closed.
In fiscal 1995 woven fabrics accounted for 69 percent of the company’s fabric sales. The unfinished goods were obtained from about 85 suppliers and designed by the Concord Fabrics staff to meet current and developing styles. Knitted fabrics accounted for the other 31 percent of fabric sales. Yarn for knitting was being purchased from 13 suppliers in fiscal 1995. The company generally produced knitted fabrics to meet orders received in advance and, as a result, these fabrics usually were not being styled with a view to anticipating fashion trends. During the year 88 percent of the yarn purchased by Concord Fabrics was knitted at the Milledgeville plant.
Sales of Concord’s finished products were being made both by company salesmen and independent sales agents. In fiscal 1995, 68 percent of the company’s fabric sales were to manufacturers and 32 percent to retail stores. Sales were made primarily to manufacturers of budget- and moderate-priced women’s apparel, but also to manufacturers of men’s wear, to the home furnishings industry, and for resale to the home sewing market. Of about 4,100 customers in fiscal 1995, the largest, a retail chain store, accounted for about 3 percent of sales, and the 20 largest accounted for 27 percent of sales. The New York metropolitan area was the principal sales market.
Alvin Weinstein was still chairman of Concord Fabrics in 1995. His brother Frank was vice-chairman. Earl Kramer had been president of the company since 1979. Company headquarters remained in Manhattan’s garment district, where Concord also continued to maintain a showroom. The company’s long-term debt was $20 million in May 1995.
Concord FSC, Inc.; Kat-Em International Inc.; Trilogy Fabrics, Inc.
“Agreement Is Set To Purchase Kat-Em International Stock,” Wall Street Journal, February 22, 1994, p. A4.
“Concord Acquires Trilogy,” WWD, July 20, 1987, p. 11.
“Concord Fabrics Fashions Growth Pattern Via Innovative Stress,” Barron’s, December 16, 1968, p. 37.
“Concord Fabrics Forms Printed Knit Division,” Daily News Record, August 27, 1985, p. 8.
“Concord Fabrics Inc., AFW Fabric Abandon Proposal To Merge,” Wall Street Journal, February 11, 1976, p. 21.
“Concord Fabrics Inc. Merger with AFW Is Blocked by a New York State Court,” Wall Street Journal, June 13, 1975, p. 19.
Luther, Michael, “Concord’s Caplan: Converters Facing ‘Era of Hard Sell,’” Daily News Record, January 10, 1979, p.17.
“Shareholders Ratify Measure Creating 2 Classes of Stock,” Wall Street Journal, April 5, 1968, p. 8.