It sounds like the plot of a telenovela, complete with a Steve Jobs-like twist.
The immigrant son of parents who themselves had immigrated from Eastern Europe to Cuba, George Feldenkreis arrived in the U.S. in 1961 with $700 in his pocket. Fifty years later, he was chairman of a public company named for the star New York designer of his generation. Today, at age 82 and ousted from the chairmanship of the firm he built, Feldenkreis is trying to buy back a company run by his own son.
The board of Miami's best known clothing manufacturer, Perry Ellis International, is deciding whether to accept an offer from Feldenkreis and a New York investment firm to put control of the publicly traded company back in private hands. A company spokesman said there was no timetable for the board's consideration of George's offer. Oscar Feldenkreis, George's son and the company's current CEO, declined to comment on the offer.
Adding complexity is the crisis in retail that is upending even the boldest household names.
Perry Ellis, the brand, is the legacy of Perry Ellis, a Virginia-born designer who became one of New York's hottest fashion designers before dying of AIDS in 1986 at 46. One of his hallmarks was a relaxed, modern shape for traditional menswear. “Everyone says ‘classic with a twist’ now, but it really did begin at Perry Ellis,” one designer told the New York Times in a piece reflecting on Ellis' legacy.
After his death, the house of Perry Ellis went through a number of management changes. While it continued to hire top-level designers, including the then-unknown Marc Jacobs, by the late 1990s it had given up its manufacturing and distribution business. In 1999, Perry Ellis was acquired by Miami's Supreme International, which rebranded itself with the famed designer's name.
Now, this classic tale of literal rags-to-riches is moving toward a new chapter— one that Supreme's founder, Feldenkreis, fears may be its last.
While Perry Ellis has shown net income growth over the past three years, its stock price has failed to return to pre-recession levels. (PVH, parent of Tommy Hilfiger and Calvin Klein, has shown stronger performance.) Five years ago, a pair of Perry's largest investors called for reorganization. In September 2017, founder Feldenkreis was pushed out of his role as executive chairman.
The past six months have been the most gut-wrenching of his life, he says.
"That's my baby," he said. "That's what I created, from a zero company to a billion-dollar company."
The question is whether Perry Ellis' board will take what he's offering.
After the failed Bay of Pigs attack on Cuba in 1961, Feldenkreis came to Miami with his family. With his law degree now useless, he first took a job as a typist but quickly grew bored. With his brother Isaac, he set up a small company importing foreign products. In 1963, he visited Japan (which he'd grown fascinated with growing up in Cuba), touring factories and learning about the Japanese work ethic. Twenty years before Japanese products began to flood American markets in the 1980s, Feldenkreis sensed he could sell what Japan was making. His visit overseas coincided with the rise in popularity of motorcycle culture in the 1960s, and Feldenkreis says he secured an exclusive contract with Honda motorcycle parts for his company, called Carfel.
Feldenkreis got his start in the fashion industry almost by accident. His brother moved to Puerto Rico and worked as a manufacturers' representative for American apparel importers. In 1966, Feldenkreis took his young family to visit. It was back-to-school season, and Feldenkreis suggested that the Japanese could make a cheaper and better version of Puerto Rico's school uniform than any company his brother was working with at the time. They opened a company, Supreme International, to import the uniforms.
Three years later, Feldenkreis spotted another opportunity, this time in Miami, where the Cuban population had grown explosively. There was suddenly a huge demand for traditional guayabera shirts. Feldenkreis went back to his Japanese friends and asked them to design one that could be made cheaply. The shirts were an instant hit.
Still, even as the 1980s hit, Carfel continued to be Feldenkreis' largest business segment, according to published reports at the time. Nothing lasts in fashion, not even Miami's love affair with the guayabera. But Feldenkreis demonstrated a talent for staying on top of trends and spotting opportunities — as did his son Oscar, who dropped out of the University of Miami to join Supreme International as a vice president and rose to COO before becoming CEO in 2016; and his daughter Fanny, who eventually became the company's treasurer.
In the late 1980s, according to George Feldenkreis, Supreme International turned to Korean manufacturers to mass-produce printed shirts using a then-novel reactive printing process for $10 a piece. It was a bargain compared with the prices American factories were charging. Supreme got a contract with Macy's, which would charge $24.99 for them in their stores.
By 1993, Supreme International had an annual profit of $33 million, and the company decided to go public. It spent the rest of the decade buying up other brands and taking advantage of its overseas sourcing savvy. It became a leader in men's formalwear, purchasing business attire brands like Manhattan.
In 1999, Supreme acquired Perry Ellis, its most high-profile brand to date, and renamed itself after the New York fashion house. Carfel was sold to a Michigan company in 2001.
By 2007, Perry Ellis International was manufacturing and marketing dozens of mid-market men's and women's brands, including Manhattan, Original Penguin, Jantzen and several golf labels. E-commerce was only starting to make a dent in traditional retail sales. The company's market cap reached an all-time high of around $1 billion. In an interview with CNBC that year, Feldenkreis said his main concerns were about how consumer spending might be impacted by high gas prices.
As he built Perry Ellis International into a company with a billion dollars in revenue, Feldenkreis continued to support his adopted hometown, founding Universal National Bank (which later merged with TotalBank) and becoming a champion for Jewish interests. The Greater Miami Jewish Federation described Feldenkreis as "one of Miami’s most steadfast and respected Jewish leaders and philanthropists for decades" when it awarded him the Friend of Israel Humanitarian Award. He is a member of the United Way's Million Dollar Roundtable, which recognizes individuals who have contributed seven figures or more to the foundation.
In 2007, Miami-Dade named a street after Feldenkreis, citing his numerous achievements and "a direct, significant lifetime contribution to this community." Since 1997, he has been a University of Miami trustee; he endowed the George Feldenkreis Program in Judaic Studies at UM and regularly attends lectures at the school.
Pamela Fuertes, vice president for economic development at the Miami-Dade Beacon Council, says Perry Ellis has been instrumental in helping the council's One Community One Goal working group promote Miami as fashion, creative and lifestyle destination. Perry Ellis dedicated an executive vice president to serve as the group's volunteer chair.
For the decades spanning the 1950s until the '90s, the Miami-Dade neighborhoods of Hialeah, Allapattah and Wynwood were filled with the warehouses of local clothing manufacturers. In the mid-1990s that changed as offshore manufacturing became cheaper. Today Perry Ellis is one of the county's last large clothing makers, with 570 workers at its Doral offices. It is one of Miami-Dade's largest employers.
In 2008, as the national economy tanked, retail discounts were rampant. Along with many other companies, Perry Ellis saw its share price plunge to less than $4 from about $20 in the span of a year. And then came the internet. Even as the market began to recover, apparel companies faced the twin headwinds of changing fashion and changing buying habits.
Meanwhile, outside pressure began to build on the family's control of the company. In 2014, Legion Partners, an investment fund and a minority stakeholder in Perry Ellis, joined forces with the California State Teachers' Retirement System to demand that Perry Ellis explore a potential sale. Although their combined holdings equaled just 6.3 percent of the total shares outstanding, the call made headlines.
Their contention: Inadequate oversight of the family's control was leading to poor performance.
Around the same time, the New York Post reported that Fanny Hanono, George and his ex-wife Dorita's daughter and then a company executive, had turned too much attention to GFX, a Miami-based auto-parts chain the company oversaw. A spokesperson for the company denied the allegation at the time. Hanano is no longer listed as a Perry Ellis executive or board member.
Ultimately the company split the positions of chairman and CEO in 2015, appointing J. David Scheiner, formerly with Macy's, as non-executive chairman. But Legion said the moves did not go far enough. "More change at Perry Ellis is required due to the domination of the Feldenkreis family," Chris Kiper, a Legion managing partner, said at the time. Kiper declined to comment for this story.
Not everyone sees a problem with the family's ongoing control. Marshal Cohen, an analyst for market research firm NPD group, says throughout their history that the Feldenkreises have proved they can navigate an industry that is always changing.
"I don't see their leadership as a hindrance," he said.
Taking on tech
Oscar Feldenkreis is well aware of the challenges. While it may have once commanded headlines in glossy fashion magazines, Perry Ellis today serves as distributor of the brands it oversees.
That means it is in charge of every facet of the production stream, including retailing, which is increasingly going digital.
"Today we’re seeing the growth of apparel [and] fashion moving more and more towards mobile," he said. "It is becoming an important way of life and we have to adapt to what that new online experience is going to become."
On the company's most recent earnings call with financial analysts, Oscar said that at least 95 percent of Perry Ellis' marketing efforts are now going to digital. In March, he oversaw a pitch competition in conjunction with the Wynwood LAB for technology startups that could help boost Perry's efforts toward adapting to the fashion landscape in 2018. The three winners, who are now eligible for contracts with Perry, covered a variety of Perry's functions: a data analytics firm, a personal style customization service and a mobile software company.
Part of the challenge is the mid-market brands Perry Ellis owns, some of which may not be widely seen as "cool" and may be unfamililar to many younger shoppers. Steven Dennis of retail group Sageberry Consulting says the company has been losing market share for some time, and has fallen off many analysts' radars.
"There's nothing particularly interesting or innovative to latch on to," he said.
Meanwhile, Perry Ellis continues to add new brands to its portfolio as it divests others.
"I wouldn’t be surprised if we saw a landscape shift within the portfolio," said NPD's Cohen. "Some [brands] might need to leave home to spread their wings and move on to next level."
For 2017, the company posted positive results, with earnings up more than 3 percent to more than $50 million. The company currently has a market cap of about $400 million.
While going private may not be essential to Perry's survival, Cohen said it would nevertheless be "advantageous and timely" given the amount of investment now required to keep up with the times.
"Almost all of the brands they compete with are getting more competitive in the same way," he said. "That means more direct to consumer selling, more online selling, and more retailer specific strategies." Going private means "not having to make profits as quick large and often" and "allows for a more nimble brand portfolio," he said.
Founder's last stand
George Feldenkreis, now 82, says a rigorous overhaul is needed, especially as the entire business world faces down the arrival of artificial intelligence. Perry Ellis must also strengthen its international presences to compete with thriving European brands like Zara and H&M.
Such long-term moves often stretch the tolerance of public shareholders, he said.
The Wall Street Journal reported in February that Feldenkreis, Perry Ellis' second largest shareholder, had made his bid at a price of $27.50 per share with backing from Fortress Investment Group. Blackrock investments is the company's largest shareholder, with 12.5 percent of Perry Ellis stock. George Feldenkreis holds 11 percent, while Oscar Feldenkreis holds 7.5 percent.
Last month, Perry's board announced it would hold off on naming new directors to the board as it mulled George's offer. Industry analysts say they may also be considering alternative offers from other companies who may want access to one or more of Perry's most successful brands, like Nike Swimwear (which Perry distributes) and might buy the company outright to get them.
George believes a sale is only a matter of time. Miami has a stake in the outcome; a non-Feldenkreis owner could move the company elsewhere, he said.
He wants to give himself and Miami one last shot.
"Yes I do [miss working at the company]," he said. "I won’t lie to you."
Perry Ellis International
Founded: As Supreme International in by George Feldenkreis
Located: In Doral
Employees: 570 locally; 2,500 total
Executives: Oscar Feldenkreis, CEO and president; J. David Scheiner, non-executive chairman
Largest stock holders: Blackrock Inc., George Feldenkreis, Dimensional Fund Advisers, Oscar Feldenkreis, Vanguard Group
Friday share price close: $27.07
Friday market capitalization: $429 million