Chorus Line Corporation

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Chorus Line Corporation

4504 Bandini Blvd.
Vernon, California 90040
U.S.A.
(213) 747-8466
Fax: (213) 780-5838
Web site: http://www.choruslinecorp.com

Private Company
Founded: 1975
Employees: 650
Sales: $190 million (1998 est.)
NAIC: 315233 Women’s & Girls’ Cut & Sew Dress Manufacturing; 315232 Women’s & Girls’ Cut & Sew Blouse & Shirt Manufacturing

Founded in 1975 by three men in southern California, Chorus Line Corporation is one of the most successful moderately priced apparel companies in the United States. Begun initially as a retail company focusing exclusively on juniors collections, Chorus Line in the past two decades has branched out to include in its lines designs specifically aimed towards women in their 20s and 30s as well as petite and plus size divisions. Despite being established during a time in which the retail industry was far from stable, Chorus Line in the 1980s and 90s has managed to not only maintain a firm hold in the juniors apparel market, but has continued to grow in both its profitability, which in 1998 topped $190 million, as well as its variety of product. The company’s most visible and successful line, a juniors brand called All That Jazz, makes up for more than 60 percent of its sales, but the business also has four other divisions, each of which targets a separate customer base.

Cornering the Juniors Apparel Market in the 1980s

Chorus Line was established by Barry Sacks, Mark Steinman, and Jay Balaban, three Los Angeles-based businessmen who came up with the company’s name after realizing their wives all shared a mutual love of dance. In the mid-1970s, there existed a paucity of moderately priced collections designed specifically for adolescent girls: choices were somewhat limited to clothes which were either decidedly styled for children or, on the other end, for adult women—with prices to match. In an increasingly silhouette conscious society, young girls became at an earlier and earlier age interested in fashion—fashion with a trendy, youthful edge—hence opening the possibility for a lucrative niche market, which Chorus Line helped to create.

In the development of All That Jazz, Chorus Line had essentially two goals in view: to appeal to a teenaged, female customer base and to keep prices low. The achievement of the former aim made it necessary for All That Jazz to not only offer stylish, youthful ensembles, but also to keep up with the ever changing trends and whims of the young-adult market. In order to keep costs for the line at a level palatable to middle-class families, Chorus Line had to focus on using inexpensive, mass-produced materials—a difficult objective when those same materials also needed to be durable and fashionable. By using its own design team and producing its collections through locally based factories, Chorus Line by the late 1970s saw both of its initial objectives fully realized, and was gaining a regional reputation as a growing, trendsetting force in the juniors apparel market. One of the most notable things about the company was that, from its inception, it produced collections which were constantly changing in style, but which were also reliably trendy, and therefore made itself continually appealing to the notoriously capricious tastes of the young female customer.

After beginning with an almost exclusive focus on casual, silhouette-conscious dresses, All That Jazz soon branched out, producing pant-suits, more formal dresses, and single pieces such as skirts and casual blouses which could be mixed and matched. By the 1980s Chorus Line started distributing All That Jazz to nationwide department and specialty stores, with the line being picked up by J.C. Penney and Sears.

During this time Chorus Line began to develop other divisions which were meant to complement and mirror the trendy, inexpensive emphasis of All That Jazz. The company’s first area of expansion was in womenswear, with the creation of a line called Molly Malloy. Molly Malloy, like All That Jazz, was a line with a decidedly style-conscious edge, but its focus was not so much on trendiness as it was on slightly more conservative, sophisticated apparel which would appeal to young working women in their 20s and 30s. Chorus Line, seeing the success of both divisions, particularly its original line, expanded All That Jazz to include More Jazz, a collection of plus-size apparel for juniors; Jazz Kids, which toned down the sexiness of All That Jazz in order to appeal to a younger customer base; Jazz Sports, a line which focused on T-shirts and sweatsuits; and Tickets, a collection of dresses and single pieces produced entirely in denim.

Despite Chorus Line Corporation’s success and expansion in the 1980s, the company found itself in debt. The retail market was at the time fluctuating a great deal, with start-up companies appearing all over the nation, particularly in southern California, and competition was becoming more than Sacks, Steinman, and Balaban could handle on their own. In 1987 Chorus Line was bought in part by two different investors: Merrill Lynch Interfunding purchased a 45 percent stake in the company, and an East Coast-based investment group headed by Ira J. Hechler bought another 13 percent. The three original partners of Chorus Line maintained control over the design, distribution, and manufacturing of the company’s divisions.

Further Growth and Expansion: 1991–94

In 1991 Chorus Line had net sales of over $96 million, making it one of the fastest-growing apparel companies in southern California. Retail insiders were not the only ones to notice the company’s success: in 1992, in preparation for the release of the film Batman Returns, Chorus Line struck a licensing agreement with LCA Entertainment and Warner Bros. Consumer Products. The deal allowed Chorus Line to design and manufacture dresses, shirts, and pants based on both the Catwoman cartoon character as well as the sensual heroine played by Michelle Phieffer in the Batman film. Predicting that teenaged girls would take their style cues that season from the black-clad film star, All That Jazz put out a collection of revealing body-suits and dresses, all of which bore the Batman insignia. The licensing deal was a first for the company, and sales in the end fell short of those initially predicted, but the partnership between Warner Bros. Consumer Products and Chorus Line proved that the latter had truly come into its own as a nationally recognized clothing manufacturer.

By the early 1990s Chorus Line Corporation’s lines were carried by dozens of regional and national stores, from J.C. Penney and Sears to Macy’s and Filene’s to Dillard’s, Foleys, and Carson’s. Lesser known regional shops also picked up Chorus Line Corporation’s lines, increasing the company’s orders at a seemingly exponential rate. To keep up with its increasing expansion, Chorus Line in 1992 moved from its 70,000-square-foot office and manufacturing area into a facility which included over 100,000 square feet in office space, a piece goods storage area as well as a computerized, round the clock cutting factory, all of which totalled more than 450,000 square feet of space. Possessing a facility of this size allowed the company to continue both its expansion and its commitment to closely managing its collections, from the inchoate stage of marketing and ideas to actual production and manufacturing.

In 1994 Chorus Line saw one of its most eventful and productive years. In February of that year the company financed about $26.5 million to buy back in full the 58 percent of the company owned by Merrill Lynch Interfunding and Ira J. Hechler’s investment group. Chorus Line received part of that funding from Nederlanden Capital, and with that deal the original three partners of the company once again owned Chorus Line outright.

That year, too, brought in record revenue for the company, with an increase of over 25 percent from the previous year and sales reaching to $206.3 million. With almost all the company’s divisions doing well, Chorus Line hired 125 new employees, bringing the total to over 700.

After developing such a successful distribution and manufacturing company, Chorus Line began looking towards opening its own outlet stores as a new method by which to increase revenue and brand recognition. So, in 1994, after much market analysis and planning, the company opened its first store, located in Goodyear, Arizona. Following quickly on the initial success of that store, Chorus Line opened others in Gainsville and San Marcos, Texas, as well as Camario, California. Eventually the company expanded to 11 stores in all, though most of Chorus Line Corporation’s revenue continued to come from its distribution deals with department stores.

One of the most important ingredients behind the appeal of Chorus Line Corporation’s lines was price: customers expected the collections from lines such as Molly Malloy and All That Jazz to be available at a cost well below other trendy and fashion-conscious labels. Indeed, the average price of a dress from All That Jazz in the 1990s ranged from around $50 to $80, far below the price of other labels, such as DKNY and Ralph Lauren, which also appealed to the juniors market. As a result of its need to keep production costs down, Chorus Line in the 1990s found it increasingly difficult to use purely domestic resources, which the company had done from its inception. By the early 1990s the company slowly began utilizing foreign, primarily Mexican, contractors for part of its production, and by the middle of the decade approximately 50 percent of the company’s mass manufacturing was handled outside the United States. While this change in direction took some business away from local contractors, it also allowed Chorus Line to keep its collections available to the consumer at consistently low prices.

Company Perspectives:

With its focus on quality, design, up-to-the-moment styling and value pricing, Chorus Line Corporation has become one of the largest apparel companies in the nation.

Solving Problems, Preparing for the Future: Mid- to Late 1990s

After a peak year in 1994 Chorus Line began to feel the effects of both the shaky economy of southern California as well as the company’s own perhaps too rapid expansion. Just one year after reaching a record number of 750 employees, the company laid off 42 people, and, despite claims of increasing growth, began to downsize its departments and divisions. Among the departments to be most affected was the public relations segment of the company, which was canceled altogether, making it necessary for the company to bring in outside assistance in matters relating to the press and public. To blame for Chorus Line Corporation’s slumping performance was the company’s phenomenal increase in overhead costs: within a few years the business had opened outlet stores, moved into a new, enormous facility, and expanded its divisions, with negative results.

Around this time Steinman, Sacks, and Balaban developed plans to take the company public, with hopes of a public offering by early 1996. However, because of the business’s rocky response to its rapid growth, the plans were scrapped that same year, and Mark Steinman stepped down as president of the company. Replacing him was Andrew Cohen, a retail insider with many years of industry experience. Cohen first began working in the retail business in 1971 when he joined his family’s sleepwear manufacturing business, and eventually went on to work for such high-profile companies as Lily of France and Christian Dior. In 1993 Cohen gained the experience which would make him a true boon to a company like Chorus Line: he became president of Esprit Juniors and, later, of Esprit Wholesale, a position which exposed him to all the elements of the frenetic juniors apparel industry.

Cohen’s first objective was to increase his company’s focus on All That Jazz and Molly Malloy, with an added emphasis in both lines on after-five, more formal dresses. Additionally, Tickets, the company’s line of denim wear and its least profitable, was canceled, allowing Chorus Line to concentrate its financial energy on its remaining five divisions.

In 1996 Chorus Line again tried its hand with licensing agreements, signing a deal with Universal Consumer Products Group and Jay Ward Productions which allowed the company to feature cartoon icons such as Bull winkle on shirts and jackets. Cohen predicted that the deal struck with Universal Consumer Products would bring in over $150 million in revenue.

The late 1990s saw an increase in growth and stability for Chorus Line. Although the company had yet to top its record revenue year of 1994, it continued to increase in profitability, with sales up in 1998 by eight percent for All That Jazz, and 28 percent for Molly Malloy. In addition, the company continued to develop relationships with other retail businesses. In 1998 Chorus Line formed a partnership with ABS, a successful apparel business owned by Allen Schwartz; the partnership had as its aim the production of a line of moderately priced separates and dresses. The line was to be slightly more expensive than either All That Jazz or Molly Malloy, using more costly designs and materials, and was to be called Allen B. Under the terms of the agreement, Allen Schwartz and his team served as the creative end, producing the label’s designs and styles, while Chorus Line headed up the line’s more pragmatic side of manufacturing and marketing. In addition to the creation of Allen B., the partnership brought Schwartz on board as Chorus Line Corporation’s overall creative director.

In 1999 founding partner Jay Balaban, who had been one of the creative forces behind the company’s juniors divisions, left Chorus Line, and the company hired three new designers to take his place. With a broad range of retail design experience between them, the three designers—Jose Dias, Beata Beck, and Robert Romero—lent a renewed energy to the company’s junior lines, with sales increasing by 18 percent from the previous year.

Chorus Line, despite some internal instability over the years, maintained a solid reputation within the retail industry, one which continued to grow in positive ways. According to Richard Arkin, president of a retail consulting company in California, who was quoted in a Los Angeles Business Journal article, Chorus Line was “one of the very best apparel companies in the business,” a sentiment that was buoyed by the company’s steady popularity.