JLM Couture, Inc. History

Address:

225 West 37th Street, Fifth Floor
New York, New York 10018
U.S.A.

Telephone: (212) 921-7058
Fax: (212) 921-7608

Public Company
Incorporated: 1986 as Jim Hjelm's Private Collection, Ltd.
Employees: 70
Sales: $26 million (2003)
Stock Exchanges: NASDAQ
NAIC: 315999 Other Apparel Accessories and Other Apparel Manufacturing

Company Perspectives:

JLM Couture, Inc. is engaged in the design, manufacture, and distribution of bridal gowns and bridesmaids gowns.

Key Dates:

1986:: The company is incorporated.
1987:: The company is taken public.
1993:: Joseph Murphy takes over as president.
1994:: Occasions Collection is launched.
1997:: Alvina Valenta Couture Collection, Inc. is acquired.
1999:: A European sales office is opened.
2000:: The company launches two new bridesmaid divisions: Lazaro Ensembles and Jim Hjelm Just Separates.

Company History:

JLM Couture, Inc., is a New York City-based publicly trade company devoted to the business of designing, manufacturing, and distributing bridal gowns, bridesmaid gowns, and veils. JLM's main lines are Jim Hjelm, Lazaro, and Alvina Valenta. High-end apparel from these lines range in retail price from $1,000 to $6,000 for bridal gowns, and $180 to $300 for bridesmaid gowns. The company also offers a less expensive label, "Visions," which uses less costly fabrics for bridal gowns and retail from $800 to $1,200. Manufacturing is done at two company-owned plants as well as through independent contractors. JLM primarily sells its gowns in bridal boutiques and bridal departments in department stores and women's clothing stores. Advertising is purchased in such magazines as Modern Bride, Martha Stewart, Weddings, and Elegant Bride. In addition, JLM generates sales through the distribution of its own bridal and bridemaids catalogs and by promoting its products on five Internet sites.

From Star Designer to Company Founder: 1960s-80s

Originally named Jim Hjelm's Private Collection, Ltd., JLM was founded by long-time bridal gown designer Jim Hjelm. He was born and raised in Worcester, Massachusetts, where at an early age he became interested in fashion design. As a child, he designed wardrobes for the comic book character Brenda Starr and grew up with the dream of one day designing for the theater or film industry. However, after attending the New England School of Design, he was simply eager to find work. After a job-hunting trip in 1960 to New York City proved unsuccessful, a friend told him about an opening in Boston at the House of Bianchi, a major bridal house. He got the job and, essentially by accident, became a bridal gown designer. He stayed at Bianchi for two years and learned the basics: patterns, laces, and the construction of wedding gowns. He also began to develop his own flare for the traditional wedding gown design.

In 1962, Hjelm took a position with a rival bridal house, Priscilla of Boston, where he would work for 19 years. It was here that he learned the business side of the bridal gown industry and developed a reputation as a topnotch designer of both bridal gowns and party dresses, gaining luster for designing clothes for the daughters of American presidents: Lucy Baines Johnson and Julie and Trisha Nixon. Hjelm regarded the Johnson wedding as one of his most enjoyable and rewarding experiences. He stayed a full week in the White House, working out of the Lincoln bedroom, producing the wedding gown and 11 bridesmaids' gowns. In 1980, Hjelm finally moved to New York, becoming a designer for Galina-Bouquet, Inc. From his new boss, Steve Lawrence, Hjelm learned, in his owns words, "how to be a little tough." His name at this point had enough value that Galina often featured him in the company's ads, which added further to his name recognition. After several years at Galina, and 25 years in the bridal industry, Hjelm felt he was ready to launch his own label. In 1985, he found a business partner in Joseph L. Murphy, an accountant by training who was the boyfriend of a showroom model. They turned to families and friends to raise the money needed to launch the company, which was incorporated in April 1986 and then taken public in 1987 by First Devonshire of Spokane, Washington, priced at $1 a share. Thus, Jim Hjelm's Private Collection became the only publicly held bridal house in the industry.

The company got off to a smooth start, which was not surprising to Hjelm, who had a bankable name and all the requisite contacts after a quarter-century in the business. He later told the press, "I knew we would be successful. It wasn't scary at all." He also discovered the joys of working for himself and the freedom to add his own touches. "When you work for somebody else," he told WWD in 1987, "you have to stay with the look of the house. When you have your own firm, you wear ten hats: production, boss, designer." At this stage, Hjelm both designed and ran the company, while Murphy served on the board as secretary-treasurer and devoted the bulk of his time to his own start-up, a public relations firm. He would become more active in the running of the bridal company when he took the position as chief financial officer.

Jim Hjelm's first collection under his own name premiered for the spring 1988 season. He pursued his preference for traditional wedding gown design, especially "heirloom" dresses featuring nets, silks, and antique-like laces. This approach, by his own admission, was in keeping with his background: "It's my Bostonian upbringing and working with Priscilla all those years. When you're a snob, it's very difficult." As long as his conservative taste was shared by brides, the company prospered, but in the early 1990s trends would change, and he would have to adapt. In the meantime, the company made a number of moves. In October 1990, it acquired Exclusives for the Bride, Inc. A year later, trademarks and inventories were bought from Samir & Associates Inc., a two-year-old company which designed and marketed special occasion women's apparel. These assets then formed the basis of a wholly owned subsidiary named Samir of New York, Inc. The goal was to spur the growth of the undercapitalized firm and allow Hjelm to expand beyond the bridal business.

New Leadership and New Lines in the 1990s

In 1991, Hjelm began to face some serious challenges. The poor economy proved especially harmful to its line of expensive bridal gowns, which were priced in the $2,000 range. The average price for a wedding gown, however, was around $800, a trend recognized by ready-to-wear manufactures such as Armani, Anne Klein, and Donna Karan. To offset the drop in demand for its high-end gowns, Hjelm introduced the JH Collection line of gowns that used synthetic fibers and retailed at the $750 price point. According to a 1994 Crain's New York Business article, "Making matters worse, prices for beaded lace skyrocketed and theft of the company's merchandise increased dramatically. When workers were denied their request for a pay raise, they slowed production by a third in protest." A 1997 Crain's profile offered another summary of this period for the company: "After a whirlwind romance, Jim Hjelm Private Collection Ltd. cashed in on Wall Street's infatuation with new issues. ... But by the early Nineties, the company looked more like an old maid than a blushing bride. With just $7.1 million in sales in 1992, the fledgling wedding dress manufacturer was stuck in a time warp, its entire product line made up of dated traditional styles." Jim Hjelm tried to answer the problem of declining sales of traditional gowns by forming a Contemporary Classic division to produce gowns with simpler styling, less lace and bead work, and less ornamentation overall. To take charge of the line, a young designer named Lezaro Perez, who had developed a strong reputation in the contemporary category, was brought it. The gowns would then be marketed under his name. The creation of the new division did not, however, address the underlying problems at the company.

The board of directors decided that it was time for Jim Hjelm to relinquish his management responsibilities and concentrate on design. In January 1993, Murphy was installed as president and he began to implement a three-pronged strategy to turn around the company's fortunes: cut costs, increase sales by diversifying the line, and find a new customer base. Part of cutting costs involved theft, known as "shrinkage" in retail parlance. According to Crain's, "Mr. Murphy took aggressive steps to stop shrinkage, including sprinting out of his own welcome party to track down two crates of dresses that had disappeared." In April 1993, the company launched a new line of less expensive dresses under the "New Traditions" label. A few months later, in July 1994, the Exclusives subsidiary was sold off.

Hjelm took an important step in 1994 when it created a new line called Occasions Collection, which grew out of a focus group the company sponsored in November 1993. According to Forbes, Murphy heard one woman complain, "I have ten ugly bridesmaids' gowns hanging in my closet that I don't have the heart to throw away." Her sentiment was repeated by others. After months of "going to weddings, calling up friends and checking out bridal boutiques," Murphy became convinced that there was a market for fashionable bridemaids' dresses that were designed to be worn beyond the wedding ceremony and reception. He told the company's designer for bridesmaids' dresses "to throw away the old book." Puffy sleeves and hoop-like skirts were eschewed in favor of a more fitted look and contemporary silhouettes. Cotton-candy shading gave way to muted pastels and metallic earth tones. Because the dresses could be worn to functions others than weddings, Murphy choose the Occasions name.

Although revenues fell from $7.1 million in fiscal 1992 to $6 million in fiscal 1993, Murphy, through his cost-cutting measures, was able to squeeze out a profit of four cents per share in 1993, compared to a loss of eight cents in 1992. In fiscal 1994, Hjelm experienced a further erosion in sales, dipping to $5.8 million, and the company essentially broken even, recording a loss of $2,700. More importantly, the company had turned the corner, as the product mix found a new balance between high-end traditional wedding dresses and less expensive bridal lines. The success of Murphy's initiatives were revealed in fiscal 1995, when the company enjoyed a 35 percent increase in sales, to $7.9 million, and a net profit of $63,586, or five cents a share. Earnings would have been even greater, but Murphy elected to plow profits into additional marketing to expand the Occasions line as well as the new Visions line, a collection of moderately priced wedding dresses designed by Jim Hjelm. These promotional expenses, however, were not expected to remain at such a high level. The investment clearly paid off in fiscal 1996, as Hjelm saw its revenues balloon by 61 percent to $12.6 million, due primarily to growth in the Occasions, Visions, and Lazaro lines. Net income improved to $471,000, or 29 cents per share.

Late 1990s and Beyond

Hjelm may have been enjoying success with its less expensive lines, but it was far from abandoning the high end of the market. In May 1997, Hjelm acquired Alvina Valenta Couture Collection, an upscale designer of wedding gown apparel. The addition of Valenta was important on at least two levels. It provided entry into an important new styling category in the bridal apparel business, falling in between the traditional and contemporary-classic sectors. Moreover, Hjelm added the asset of Alvina's talented designer Victoria McMillan, who had been designing the line since 1989. Because the company was now comprised of a number of labels, only one of which was Jim Hjelm, in July 1997 the business was renamed, JLM Couture Inc., which management believed more readily identified it as holding company for a number of bridal-related designer brand names.

JLM was enjoying success at both ends of the markets. The Occasions line was so successful that rivals began to emulate the line, not only copying styles but also the company's advertising. With young talents like Perez and McMillan designing expensive bridal gowns for the company, JLM quickly moved up the ranks of the upper end of the bridal gown business, from inside the top 20 to number three. JLM also began to turns its attention to the European market. In 1999, it established a sales office in England to begin to penetrate this new market with the Occasions and Lazaro bridesmaids gowns. From 2001 to 2003, European sales would contribute about 3 percent of JLM's total sales. Revenues grew at a steady pace over the next few years, topping $18 million in fiscal 1999 and $20 million in 2000, the same year that the company launched two new bridesmaid divisions: Lazaro Ensembles and Jim Hjelm Just Separates. Revenues reached $24.7 million in fiscal 2002 and profits surpassed $1.1 million. In 2003, JLM experienced a modest improvement in sales, reaching $26 million, due in large part to a national slowdown in the industry. Income dropped to $808,000, caused primarily by the cancellation of stock options and the renewal of certain leases. Nevertheless, JLM was well positioned for on-growing growth. When the company went public in the 1980s, a major risk factor was its dependence on Jim Hjelm. Now, with the name change to JLM Couture and the addition of designers Lazaro and McMillan, the business was preparing for the day when its founder would no longer be the driving force.

Principal Subsidiaries: JLM Europe Ltd.

Principal Competitors: Bar-Jay Fashions Inc.; House of Bianchi; Priscilla Of Boston Inc.

JLM Couture, Inc. History

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