A Blossom Rises From the Ruins : Carole Little Suffered $11 Million in Riot Damage, Rebuilt and Remains Profitable in Tough Industry

Despite the calm that followed the verdicts in the Rodney King civil rights trial, Carole Little still looks like a company under siege.

Its complex of buildings in Los Angeles’ inner city is a fortress: enclosed by iron gates and razor wire, patrolled by heavily armed security guards. It is the legacy of last year’s riots, when vandals and looters raided the buildings, set fires and left the company with an $11-million nightmare.

“We felt very good about the way the city reacted” last month, said Leonard Rabinowitz, chief executive and co-chairman of the women’s apparel company. “And although that removed some of my negative feelings . . . we will not ease up” on security, he said.

Despite the somber appearance of the company’s headquarters, Carole Little manages to be a splash of color on the national fashion scene. It’s a small but ambitious presence in the quicksilver business of women’s clothing, a keystone in the Los Angeles garment industry. And, despite adversity, it is growing and expanding.

That’s no mean feat, considering the economic carnage in the retail business. Carole Little’s main customers, the big department store chains, have been retrenching in the face of shifting consumer allegiances and nimbler competition, their numbers dwindling through waves of mergers, store closures and bankruptcies.

Rabinowitz said that although last year was a tough one for the company because of the riots, its revenue still increased to $204 million, with additional sales growth expected this year.

Indeed, he said, Carole Little has “been a beneficiary” of the woes afflicting the retailing chains.

He explained that just as the retailers are cutting back on stores and staffing, they are also reducing the number of manufacturers whose products they sell. Fewer suppliers are therefore getting a greater portion of the floor space.

“They are going to go with the people they have relationships with,” Rabinowitz said, “and that means for people like ourselves and Liz Claiborne, it’s been very good.”

The merged Robinson’s-May stores, he said, “used to have two buyers (for better women’s clothing)--a buyer at Robinson’s and a buyer at May. Now they’ve got one doing the work of two.”

Where the two buyers might have handled 20 suppliers, Rabinowitz said, the one might be able to handle only 12 accounts, cutting out the less-established brands or suppliers.

When Carter Hawley Hale Stores operated three department store divisions, there were three separate buying staffs. But since the Emporium/Weinstocks and Broadway Southwest divisions have been folded into a single Broadway division, there is one buying staff, in Los Angeles, for all 83 stores, said Bill Dombrowski, vice president of public relations for Carter Hawley Hale.

“Carole Little had been a good business for us in Southern California but was underdeveloped in Northern California” stores, Dombrowski said. “We started buying for those stores up there and it has been a real good growth category. We’re seeing double-digit sales increases” in Carole Little lines throughout the Northern California stores.

As retailers have put known vendors such as Carole Little in more of their stores, “we’re getting a bigger piece of the pie,” Rabinowitz said.

That pie, however, isn’t as juicy as it once was.

“It’s been the most horrific period for retailers since the Great Depression . . . and very hard times for fashion stores in particular,” said Alan G. Millstein, a New York-based retail analyst and fashion industry consultant. “The number of stores that Carole Little can do business with has been diminished. They’re selling their wares to an ever-shrinking marketplace.”

Nearly 90% of Carole Little’s sales come from six retailers: Besides May Department Stores and Carter Hawley Hale, they are Dillard Department Stores, Federated, Dayton-Hudson (which also operates Mervyn’s and Target) and R.H. Macy. All of them, with the exception of Little Rock-based Dillard, have had their share of trouble.

On the West Coast, Macy’s, which also owns Bullock’s, has had a “well-developed business with Carole Little, with steady, consistent growth, in single digits, over the last three to four years,” said Jayne Spiegelman, president of merchandising for Macy’s West division.

And that is without an increase in the number of Macy’s stores selling Carole Little fashions. Spiegelman said Macy’s has taken a different approach since its bankruptcy filing 16 months ago and has been adding more “fringe” vendors to “make our stores unique.”

Retailing has been especially bleak in California, where Carole Little does nearly a quarter of its business. Like other manufacturers, the company has begun selling more of its “off merchandise”--goods that did not sell well in the regular retail venues--to discounters. That helps take up the slack left by retail’s woes.

Yet, throughout the hard times, Southern California’s apparel manufacturing industry has held its own and is now one of the few growth segments in the region’s melancholy economy.

In Los Angeles County, nearly 99,000 people worked in the garment industry as of January, making it the eighth-largest employer--ahead, even, of the motion picture and television industry. It is probably even larger than official data show, said Jack Kyser, chief economist at the Economic Development Corp. of Los Angeles County, because “there is an underground economy (that) most people say could add another 20,000” workers.

There are some worries about what the proposed North American Free Trade Agreement would mean to the Southern California garment industry, where many of the companies are smaller, low-paying contractors that do the actual production for firms such as Carole Little.

And the industry has always been dogged by an image problem, Kyser said, because of its historical use of undocumented workers in sweatshop conditions. But, he said, “if you look where businesses are starting up, expanding or moving into the area . . . it’s in apparel and furniture manufacturing.”

Since its founding in 1974 by Rabinowitz and designer Carole Little, the company’s clothing lines have come to be identified with the California lifestyle, or at least with popular notions of the California lifestyle. The clothes, although aimed at the sophisticated career woman, show an attitude--in their design, fabric and bright palette--that is breezier than much of women’s clothing offered in the same price range.

In the $64-billion retail market for women’s apparel, Carole Little has “only a toe in the water,” Millstein said.

While it “has not broken into the ranks of world-class designers,” in part because there is a New York bias in fashion, he said, the company nevertheless shares in the California “mystique” that has given some of its styles and trends a boost.

In certain categories, such as jeans, sports shoes, beachwear and summer dressing, West Coast companies are market leaders. Carole Little remains a “great supporting player in the fashion business,” Millstein said.

It’s not just the clothes that are thought of as emblematic of California living, but the company and the people who run it as well.

Take company co-chairs Little and Rabinowitz. They started it, run it and together own 95% of it. She’s the creative side, he’s the business side. They own and use a jet to take them to showings or other business in New York or Europe. They have an interest in a film company.

They’re married, but have been separated for three years, each with an exclusive Westside address and a new relationship. Says Rabinowitz: “We are still real important to each other,” and they often socialize together.

Rabinowitz said he and Little continue to work smoothly together. “We never fight.”

Their offices, just steps apart, are strikingly monochromatic. The black-and-white decor is repeated throughout the offices and work areas in the headquarters building, although broken here and there by a touch of color from a potted palm or a bromeliad bloom.

The colors in Little’s office are in the swatches of fabric that spill from her desk and onto nearby surfaces.

Sitting near a table covered with more swatches, and sorting through an array of other choices for a prototype vest, Little said that when designers work with so much color, additional color on the walls or floors would be an interference.

For work, Little dresses herself like the walls--simply and with a preference for utility over fashion.

Though these days she no longer has time for designing, she supervises nearly every detail of the process, from the choice of colors, fabrics and buttons to the look itself.

The Carole Little name adorns clothes in four divisions: career clothing, dresses, sport and petite. This year, the company hopes to put clothes from two new divisions, street wear and large sizes, on store racks.

While the colors, shapes and hemlines of the clothes may change from season to season, all of the items made by the company bear the Carole Little name, and year after year they somehow retain a look that is distinctively Little.

Los Angeles is in the company’s blood, but Rabinowitz is thinking of moving it out. He said he was disappointed in the election last month, when voters rejected a measure to provide additional police.

“We really need that. . . . So we can’t let our guard down,” he said. “The problems of the inner city aren’t isolated” to the King trial and upcoming trial in the Reginal Denny beating case.

In the wake of Carole Little’s losses last spring, the company increased its guard staff to 27 from four.

Although Rabinowitz’s style is elegant--he favors Giorgio Armani attire--he says he sees the problems of the inner city and thinks about solutions because “I spend most of my time in the inner city.”

While he says the city needs companies like Carole Little to provide wages and stability for community residents, “we have grown dramatically and we need to expand or move,” Rabinowitz said. “We own property across the street, and one of the options is to build on that land. In fact, we would have broken ground there already” if not for the 1992 riots.

He is still, he said, “questioning the wisdom of making additional investment in the inner city of Los Angeles.”

Rabinowitz talks of moving most of the company’s operations to Nevada, and says other states are wooing the firm with incentives and concessions. But he says he’s “troubled” at the prospect.

“The people here have made me successful,” he said. A recent illness gave him even more reason to appreciate the company’s employees, he said.

So for now, Rabinowitz said, “I’m still here. And I’m trying to hold on.”