Supreme International Corporation
Supreme International Corporation
Sales: $190.6 million (1998)
Stock Exchanges: NASDAQ
Ticker Symbol: SUPI
SICs: 5136 Men’s & Boys’ Clothing
Supreme International Corporation is one of the top suppliers of men’s and boys’ casual clothing in the country and the leading men’s sportswear company in the southern United States. The company represents over 30 brands, and designs, imports, and markets sportswear and casual clothing under a broad array of labels, including Natural Issue, Munsingwear, and Grand Slam. Its apparel is sold to department, chain, and specialty stores, mass merchants, and golf pro shops in the United States, Canada, and Puerto Rico. Headquartered in Miami, Florida, the company has offices in seven locations around the globe and produces its clothing in Asia, Latin America, and Mexico. The Feldenkreis family owns about 43 percent of the company.
Starting with Car Parts: 1961-65
George Feldenkreis started his first import business in 1956 while a law student in his native Cuba. George and his brother imported Japanese products such as Formica and car parts and sold them on the island. But in 1961, after Fidel Castro came to power, George immigrated to the United States along with his pregnant wife and year-old son. He had $700, a law degree not recognized in his newly adopted country, and some business contacts in Japan.
To support his family he decided to start another import business, because, as he told the South Florida Business Journal in 1986, “Cubans were more experienced with import techniques than American because so much of the Cuban economy depended on imports.”
After improving his English and studying trade statistics from the U.S. Department of Commerce, Feldenkreis founded Carfel Inc. and began importing automobile and motorcycle parts from Japan.
John Kennedy was president and few Americans drove Japanese cars. But Feldenkreis believed that would change. His first big sale occurred when a New York firm ordered $4,000 worth of clutch plates. With a loan from his father, Feldenkreis went to Japan, renewed his contacts there and made new ones. Carfel was on its way.
Expanding into Apparel: 1966-88
In 1966, Carfel had annual sales of about $3 million. That year, Feldenkreis and his brother began importing children’s school uniforms to Puerto Rico. The following year he formed a new company, Supreme International Corporation, and added guayaberas, the open-neck, pleated shirt popular with Hispanic men, to his offerings. The shirts were made by a Japanese firm, with Feldenkreis importing and wholesaling them in Florida and Puerto Rico.
Feldenkreis gradually expanded his companies to the point that he was selling his imports throughout North America as well as in England. Carfel represented the biggest part of the sales, importing auto and motorcycle parts from several Asian countries. Supreme International was growing, however. The company began importing men’s pants and knit shirts as well as the guayaberas from Asia and sold the clothing to major merchandisers such as Sears, Kmart, and J.C. Penney. Supreme’s shirts ranged in price from $9.50 to $60.
By 1981, the Feldenkreis importing group was a $30 million business, although Supreme International represented only $5 million of that total. In addition to Carfel and Supreme, the group included Master International Inc., United Trading Co., and Diamond Electronics Inc.
George’s son Oscar joined the business full-time early in the 1980s, after dropping out of the University of Miami. More alert to fashion trends than his father, Oscar made Supreme International’s products more upscale and expanded product lines. As he told Larry Briger of the Miami Herald,“We were positioned as an importer of parochial, children’s back-to-school uniforms, and guayaberas. I felt we could be more successful by finding niches … that could be filled and be recognized by name brands.”
His early attempts at creating Supreme’s own brands were not big hits. He first introduced the Feldini brand of Italian-style dress pants, well-made and half the price of Italian pants, but slow to sell. He then brought out the Gianni Abozzi and Simultaneous lines of sport shirts, but had to discontinue the Gianni Abozzi line. “We didn’t have a theme or direction,” Oscar explained in a 1995 Forbes article. “You have to develop a brand or a name that is easy for the customer to say.”
Focusing on Name Brands: 1989-94
Oscar found that brand in 1989, with the introduction of Natural Issue. “We were kicking around some ideas on a brand that would be part of what was happening at the time—recycling, natural fibers, the environment,” Oscar told Forbes. The new line started with printed silk and rayon sports shirts and quickly added 100 percent cotton printed shirts. The shirts retailed at $26 and were an immediate hit, putting Supreme in direct competition with well-known brands such as Dockers and Izod. The line boosted Supreme’s sales by over $2.5 million in the first year, to $18 million.
By 1991, Oscar was heading Supreme International as executive vice-president for marketing and sales. Due to his efforts (and Natural Issue), in fiscal 1990 Supreme International accounted for 39 percent of the overall sales of the Feldenkreis family holdings.
Going Public and Acquiring More Brand Names: 1993-94
For fiscal 1993, ended January 31, 1993, Supreme International had revenues of $33.5 million, an increase of more than 24 percent over fiscal 1992, with growth in all its product lines. Net income tripled in the same period, to $1.8 million. In May, Feldenkreis took the company public, raising some $13.8 million. George was chairman and chief executive officer and Oscar was president and chief operating officer.
With that financial cushion, the company went on a buying spree, scooping up brand labels. With a cash bid of $360,000, Supreme International won a bankruptcy court auction for Publix Group LP in August. This brought Supreme the designer licenses for the Adolfo and Albert Nipon brands of shirts as well as for private labels for dress and sport shirts including Career Club, Cotton Mill, and CC Sport.
The following month the company acquired Miami-based Alexander Martin Corp. which made sports shirts, casual pants, and swimwear for the Big & Tall segment of men’s clothing. The purchase gave Supreme International a manufacturing base in the United States and doubled the company’s volume in that portion of the industry, with the Alexander Martin, Al Mar Sports, and Active Sport U.S.A. labels. At the same time, the company acquired the Gianfranco Ruffini license for dress shirts and casual pants.
Revenues for fiscal 1994 more than doubled, reaching $75 million in sales with earnings of over $4 million. Both Forbes and Business Week named Supreme International one of the year’s best small companies. All this occurred while rivals such as Izod, USA Classic, and Munsingwear were in financial trouble. George Feldenkreis credited the company’s success to its sourcing capabilities and distribution channels. “A lot of men’s wear companies really don’t have the sourcing capabilities that we have,” Feldenkreis told the Daily News Record in 1993. “We have been close to that sourcing group for 25 years, and I think that’s been a big part of our success.”
Responding to the Casual Trend: 1994-95
Another factor in Supreme’s growth was its ability to quickly respond to fashion trends with attractive products. The company’s process was fairly simple. Its art department at headquarters sent computer-designed prints (more than 2,000 in 1993) to company offices in Asia and Guatemala which contracted with over 40 production companies to make the clothes. The shirts, pants, and other apparel were shipped to two warehouses in Miami and distributed to stores in North America, Puerto Rico, and Latin America. As Leslie McCall, an analyst with Oppenhei-mer & Co. Inc. explained in a 1995 Investor’s Business Daily article, “Supreme is way ahead of the game for a company of its size. The CAD [computer assisted design] system gives Supreme a jump on fashion trends and allows them to beat the market at value-for-price. When a particular trend hits the streets … Supreme can get more … shirt styles out in a shorter amount of time for less money than the competition.”
In the United States, which received more than 80 percent of the products, retail outlets ranged from Macy’s and Federated Department Stores to Sears and Kmart. Department stores and chains represented 80 percent of Supreme’s customers and the remainder were specialty stores. “Supreme has a tremendous niche in quality men’s apparel,” an industry analyst explained in a 1994 USA Today article.
For 30 years, we ’ve scouted international markets for the highest quality and lowest cost manufacturers of apparel Because of these sourcing capabilities, we’ve become one of the few companies to profitably service the full spectrum of apparel retail distribution channels.
Sales continued to increase, reaching $90 million for fiscal 1995. While adding new brands, Supreme kept its Natural Issue brand fresh and out front. J.C. Penney, for example, established Natural Issue Focus Shops in 250 stores, with exclusive displays of Supreme’s products. In the spring of 1995, the company introduced Textures by Natural Issue, a collection of high-end men’s clothing. It also licensed the production of Natural Issue underwear and sleepwear, and began designing and producing cold weather clothing such as jackets and sweaters for men and boys. That move positioned Supreme as a year-round supplier.
That fall, Supreme International raised $17 million through a second public offering and used the proceeds to repay debt. The company ended the year with sales of $121.1 million, although 1995 had been a tough one for most manufacturers and retailers of men’s wear.
Going for the Golfer: 1996-97
The company started 1996 by repurchasing shares of its common stock, considering the price undervalued. Then, in March, Supreme International announced it would acquire Miami-based Jolem Imports for around $3 million. Jolem was a ten-year old private company that made casual clothes aimed at younger Hispanic men. Its brands included Tippos and Sun Splash. This niche complemented Supreme’s other lines, attracting a different customer base.
But the big men’s wear news in the mid-1990s was the growing popularity of golf and golf apparel. That market had long been dominated by lines such as Greg Norman and Jack Nicklaus, made by Reebok and Hartmarx, respectively, and licensed by individual golfers, or brands dedicated solely to golf wear, including Munsingwear, with its Penguin logo.
The appearance of Tiger Woods, the aging of baby boomers, and the continuing move to casual clothing, made golf and the sport’s pants, sweaters, and knit shirts more popular. Citing figures released by the PGA early in 1996, Bobbin reported “the largest group of golfers, 23.9 percent, are affluent, career-oriented male baby boomers.” Moreover, with the National Golf Foundation finding that the number of male golfers had increased more than 27 percent since the mid-1980s, men’s clothing manufacturers could not ignore that market. Long consigned to pro shops at country clubs, golf wear began appearing in department stores, mass market venues, and specialty shops. Polo Ralph Lauren, which started its golf line in 1989, was soon joined by Tommy Hilfiger, Georgio Armani, and Haggar, and department stores began introducing private label collections, such as Federated’s Arnold Palmer, Dayton Hudson/Marshall Field’s Payne Stewart, and Nordstrom’s Callaway.
Supreme International moved into the golf market, spending $18 million in cash to acquire the domestic and certain international trademarks of Munsingwear Inc. More than 100 years old, Munsingwear produced the first golf shirt, in 1954, and introduced the first designer logo, its penguin. For its money, Supreme received the Munsingwear brand, a golf label sold to mass merchandisers including Bradlees and Montgomery Ward; Penguin Sport, another golf line sold through Sears and Kohl’s; and the Grand Slam line, distributed through Federated Department Stores, May Department Stores, and Dayton Hudson. With the acquisition of Munsingwear’s Grand Slam Tour brandy Supreme also gained access to the “green grass” golf pro shop distribution channel.
As George Feldenkreis told Daily News Record in a September 10, 1996 interview, “We’re going to have multiple labels to sell all channels of distribution. … We have more brands to offer to mass merchandisers and regional chains. They want brands because established names don’t want to go down to that level of distribution.” Supreme International also gained the royalties from Munsingwear’s licenses, including sales of the Penguin and other logoed shirts, golf balls, umbrellas, and shoes, as well as its $50 million men’s underwear business licensed to Fruit of the Loom.
However, the company was not depending solely on acquisitions to keep growing. During the year, Supreme International introduced Corporate Gear, a new private brand developed for Sears especially for Casual Friday wear. Supreme International’s two purchases, combined with increased sales of its own labels, resulted in sales for fiscal 1997 of $155.7 million.
1997 to the Present
Supreme International continued to grow, following a business strategy based on increasing brand name recognition, diversifying product lines, seeking private label opportunities, and pursuing acquisition and licensing opportunities. It purchased Crossings sweaters, opened a new, $18 million headquarters, warehouse, and distribution center, and signed top designer Andrew Fezza. It also arranged more licensing deals, introducing a Ping line of golf clothes and signing an agreement with PNB Nation Clothing, thus expanding its presence in the growing young men’s market segment. Under that license, PNB Nation designed and marketed the clothing and Supreme was responsible for sourcing and sales. Revenue for fiscal 1998 reached $190.7 million.
The “Asian flu,” which hurt U.S. exporters during 1998, enabled Supreme International to reduce its costs, as imports became less expensive. The company concentrated on its Munsingwear brands during the year, introducing an advertising campaign and creating the Munsingwear.com web site. Supreme used the web site to steer Internet users to nearby stores which sold the products seen on the site. Following a successful test launch in 1997, Supreme added its new Munsingwear Lifestyle label to products sold to regional mass merchants. Lifestyle targeted the dress casual sportswear market, but was positioned beside the popular Slammer brand golf wear. As a Supreme official told Daily News Record,“What we did was to expand a very familiar golf and sportswear label into a new area. We traded on the authenticity and the recognition value of the brand to extend it into new lifestyle areas.”
At the end of 1998, Supreme announced the purchase of the John Henry shirt line, which it had previously licensed, and the Manhattan shirt brands, including Lady Manhattan, from Salant Corporation for $35 million. The purchase helped Supreme further broaden its brand portfolio and gave it a much stronger position in the men’s dress shirt segment. It also increased the company’s international business, since Manhattan was the number two brand of dress shirts in China. Supreme indicated it would likely introduce a brand of Manhattan sportswear. “Manhattan has been boxed in as a dress shirt brand, which it shouldn’t be,” Feldenkreis told the Miami Herald. “We plan to broaden its appeal.” Supreme also announced it would license its Munsingwear, Penguin Sport, and Natural Issue labels to Fishman & Tobin, Inc. to produce and market boys’ sportswear.
The company that began as an importer of school uniforms and guayaberas had become a major manufacturer of men’s and boys’ clothing. Its labels could be found in just about every segment of retail, from Saks Fifth Avenue to Kmart to regional chains. While almost half its revenues came from the sale of knit shirts, it also produced dress, flannel, linen, and cotton shirts, slacks, shorts, sweaters, and jackets, and licensed underwear and boys’ clothes. In addition, it was the leading distributor in the country of guayabera shirts. As the consolidation in wholesale continued, the company felt well positioned to meet its customers needs for a wide variety of design apparel.
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_____, “The Supreme Choice: Munsingwear Gets a Dressy Edge,” Daily News Record, September 28, 1998, p. 2.
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“Making the Internet Work for Supreme International,” Business Wire, June 8, 1998.
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_____, “Supreme International Sees Big Growth in Brands,” Daily News Record, December 30, 1993, p. 3.
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—Ellen D. Wernick