THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Sunday, November 20, 1994 TAG: 9411190345
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER
DATELINE: CHESAPEAKE LENGTH: Long : 130 lines
It's a good thing Louis E. Schwartz likes a challenge. He's taking over 69 shoe stores with empty shelves and a somewhat barren warehouse just days before the holiday shopping season kicks off. So, what's this top shoe dog going to do?
Schwartz, soon to become the head of Hofheimer's Inc., spent much of last week sweet-talking the manufacturers of loafers, pumps and boots into lightning-fast shipping to the chain's stores.
Not an easy job, considering that some of those manufacturers remember flipping through stacks of late payments with Hofheimer's name on them. Over the summer news of Hofheimer's ailing financial condition quickly spread through the industry. Soon, manufacturers wouldn't even sell the company a shoelace.
``Several years ago, they took a big hit financially,'' Schwartz said. ``Their memories are fresh.''
Schwartz is betting he can woo back suppliers with reassurances that Hofheimer's is again credit-worthy.
What he has to offer is his reputation and that of Hofheimer's new owner. What he doesn't have is time. Droves of shoppers will hit the malls in less than two weeks, and he needs inventory.
Schwartz has determination and the strength of Gabor Shoe Co. behind him. The German manufacturer has a big bank account and is willing to pump money into its new subsidiary. About $5 million is now going to boost Hofheimer's stores' inventory before the holidays.
Hofheimer's will become Gabor's second U.S. shoe chain when the deal for an undisclosed price is finalized by year's end. The first was Prague's Shoe Co. of Glastonbury, Conn., in 1980. Frank Prague decided to sell the company partly because he had no family to carry on the business.
Little is known about Gabor Shoe and its owner, Joachim Gabor. Those in the shoe industry say the bespectacled businessman is reserved. His company, founded shortly after World War II in southern Germany, doesn't release its sales or production figures.
Gabor is said to be the largest manufacturer of women's dress shoes in Europe. It produced 5 million pairs of shoes in 1988, according to the National Shoe Retailers Association.
In June, the German company asked Schwartz, then working with Shoe Show Corp. of America in North Carolina, to become Hofheimer's president and chief executive.
Those in the industry say Schwartz is a natural in the shoe business. They say you can tell a true shoe businessman if he's looking at your feet instead of staring into your eyes.
Schwartz prefers feet.
He has been in the industry since his college days, when he stocked shelves at a shoe department store. Since then, he has sold shoes and bought shoes. Always, he says, he is ``a workaholic and a perfectionist, unfortunately.''
His nervous habit is chewing his nails; to relax, he might take his small sailboat on the Long Island Sound.
Schwartz, who has three children, said he has experienced a number of successes in his career in shoes. He can recall only one embarrassing experience in his years in the business.
``We were taught to sell and point out the fine features of the leather and the comfort,'' he said. ``This one lady was buying men's shoes and I was pointing out the shoe features - how they were long-lasting. And the lady put her hand on my shoulder.
``She said, `Son. These will last a very long time. They're going to be on my father who's being buried tomorrow.' ''
Schwartz's work habits are part of the reason he was knighted to head both Prague's and Hofheimer's by Joachim Gabor, king of one of the largest shoe manufacturers in Europe.
That means Schwartz's duties will almost double.
Hofheimer's has 69 stores and 650 employees. It also operates the Bootlegger and Hofheimer's Express stores. Prague's has 33 stores and 250 employees.
``Obviously, it's not going to be easy,'' Schwartz said.
Executives will hire extra staff, including a senior district sales manager who will serve as the liaison between Hofheimer's and the Prague's headquarters in Connecticut.
But other employees will lose their jobs in the transaction. Hofheimer's headquarters in Chesapeake will move north to Connecticut. Several workers will be relocated, but most will have to move on.
Hampton Roads may get more stores if Schwartz goes ahead with his expansion plans. He is considering introducing a Rockport shoe store in this region.
Meantime, the Hofheimer's stores will remain much the same but will have an improved selection, including the Gabor brand, a fine leather shoe. That brand probably will appear at about 20 stores beginning in spring.
The shoe selection also will reflect regional demand.
``In the South, they wear prettier shoes,'' said Robin Feyre, buyer of women's shoes for Prague's. ``More heels, more flattering shoes.''
The biggest change will be the leadership. Gabor and Prague's deal only in shoes. The current owner of Hofheimer's is a group of investors called Shore Enterprises Inc., which also has a chain of convenience stores on the Eastern Shore.
``They don't have any idea how to run a retail company,'' said a former administrator at Hofheimer's. ``They cut out the sizes, the selection. You can't do that in the fashion business. They thought customers wouldn't notice.
``Well, guess what? They did.''
Prague's executives are irritated by any comparison to Hofheimer's previous owners, who haven't lasted.
``We're not buying the company to make a good buck,'' said Michael Flanigan, chief operating officer of Prague's.
Hofheimer's was founded by several members of the Hofheimer family in 1885. In 1982, it was sold to a British conglomerate, which in turn sold the chain in a $29 million leveraged buyout to a management group led by British businessman Anthony V. Beechey.
Shore Enterprises, headed by Duncan McDuff, bought Hofheimer's and tried to turn it around. For a while, it worked. But the company said it could not survive after a slump in the industry.
Only the companies that have financing and experience in the shoe industry last.
``You're up against a lot of difficult situations - strip malls, department stores,'' said William Boettge, president of the National Shoe Retailers Association in Columbia, Md. ``Department stores are tough competition. To compete against that, you'd better know your customer.'' ILLUSTRATION: Color photo
BILL TIERNAN/Staff
Louis E. Schwartz, soon to be president of Hofheimer's, is hoping to
assure suppliers - and customers - that the company is healthy
again.
Photo
BILL TIERNAN/Staff
Incoming Hofheimer's President Louis E. Schwartz has worked in the
shoe industry since college.
KEYWORDS: PROFILE BIOGRAPHY SHOES by CNB