It's taps for Bugle Boy Industries Inc.
The apparel company that made parachute pants an '80s fashion statement filed for Chapter 11 bankruptcy protection Thursday, the first step in what could be a complete liquidation of the troubled Simi Valley firm.
Bugle Boy bankruptcy attorney Paul Aronzon said the company's largest secured lenders--a syndicate headed by Foothill Capital Corp. and General Electric Credit Corp.--are owed about $75 million. Claims by manufacturers, suppliers and other unsecured creditors could amount to an additional $30 million, Aronzon said.
The sportswear firm has already vacated its longtime Simi Valley headquarters building, laid off some employees and begun closing some of its 150 retail and outlet stores.
Aronzon said company founder William Mow resigned last week, and that an interim chief executive has been installed to oversee the liquidation.
"This business is going to be broken up into pieces and sold," Aronzon said.
Bugle Boy is the latest Southern California apparel company to hit the skids. Chorus Line Corp., which operated venerable dress house Carole Little, padlocked its doors late last year, buried under a mountain of debt.
Mark Brutzkus, an attorney representing eight Turkish manufacturers holding $2 million in claims against Bugle Boy, said the company's demise is not likely to rock local contractors and suppliers like Chorus Line's shuttering did.
"Most of the manufacturing was overseas," Brutzkus said. "So the foreign manufacturers are going to get killed. But domestically, not a lot of people will get hit."
Aronzon could not say how many workers Bugle Boy employed nationwide. As recently as 1999, the company had 450 workers at its Simi Valley headquarters and distribution facilities, according to a city official. But industry sources say that number had dwindled to fewer than 100 in recent months.
Aronzon said plans call for an immediate sell-off of all inventory and equipment. The retail stores and outlets will hold going-out-of-business sales before shutting down. The real value, he said, is in the company's trademarks. He said the liquidation team is already fielding offers for the sportswear brand.
But some industry watchers are skeptical that the Bugle Boy label will fetch top dollar. Once one of the hottest names in young men's fashion, some say it has become a tired, bargain-basement brand.
"Once a label has gone all the way down, it's difficult to bring it back up," said Ilse Metchek, head of the California Fashion Assn.
Bugle Boy's demise sounds the death knell for one of longest-lived companies in the capricious Southern California garment trade. It also ends the reign of Chinese immigrant founder Mow, an engineer who bucked the odds in the fickle world of fashion.
Mow was not available for comment. But his rags-to-riches story made him one of the most watched entrepreneurs on the Southland apparel scene.
Founded in 1977 as Buckeroo International, Mow's company struggled in the early going. But a name change, popular prices and the zippered nylon parachute pants craze propelled Bugle Boy into the limelight by the early 1980s.
The parachute fad deflated quickly, nearly taking the company down with it. But Mow fought back with other hot youth fashions such as designer jeans and cargo pants. A hit TV commercial ("Excuse me? Are those Bugle Boy jeans you're wearing") helped make the label into a household name. By the early 1990s, sales topped $500 million. Bugle Boy extended its line to include clothing for the whole family and secured shelf space in major department stores nationwide.
But industry watchers say Mow's obsession with growth--he still boasts on the company Web site that sales will reach $1 billion this year--undermined profit margins and the upscale retail business that had given the brand legitimacy.
Many retailers, including giant Federated Department Stores Inc., had dropped the line by the mid-1990s as Bugle Boy flooded discounters and off-price merchants with its clothing.
"They took the brand downscale, and that lowered its margins and hurt its ability to be successful in department stores," said industry analyst Todd Slater of Lazard Freres.
To keep moving its merchandise, Bugle Boy opened a vast chain of its own retail and outlet stores. But industry veterans say that strategy works only if your product continues to hold sway in the retail mainstream.
"People don't go to outlets to buy unbranded merchandise . . . they want Ralph Lauren," Metchek. "An outlet won't help you if don't have a strong presence in the regular marketplace."