20 / 20 Foresight
Eyeglasses are fashionable these days. Just look at Michelle Pfeiffer or Eric Clapton.
Considering that 90% of us require vision correction by age 45, it’s easy to understand why aging baby boomers would welcome that trend, and why it’s one that Bernard Weiss has kept an eye on.
Seven years ago Weiss transformed his tiny telemarketing company into a distributor of brand-name optical wear. Inglewood-based Signature Eyewear, which handles the Laura Ashley, Hart Schaffner & Marx and Jean Nate brands, has emerged as one of the fastest-growing companies in an industry that had $15.4 billion in U.S. sales in 1997, according to trade publisher Jobson Optical Group in New York.
Now Signature is setting its sights higher. After raising $14.9 million in an initial public offering in September, it’s taking steps to catapult itself into the ranks of the top five U.S. distributors of eyeglass frames within three years. That would mean increasing annual sales from about $33 million now to the $100-million range.
Weiss’ wife, Julie Heldman, a former lawyer and a world-ranked tennis player in the 1970s, joined the company in 1985 and two years ago became its president. Weiss credits her with keeping the firm solid during its period of rapid growth.
“We are trying to run a company [that’s] tight, clean and profitable,” said Heldman, who routinely power-walks through Signature’s 44,000-square-foot office-warehouse complex, talking to some of the firm’s 105 employees.
“Our capabilities are yin and yang,” said Weiss, who is chief executive.
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This spring Signature will introduce an Eddie Bauer eye wear line for men and women, lessening its dependence on the Laura Ashley Eyewear Collection, which in 1996 accounted for about 75% of sales.
It will be the first major new product push since the company went public. Signature has committed $2.5 million of the proceeds to back the roll-out of the line.
Since Signature is a relatively small firm in an industry populated by giants such as Luxottica Group, Marchon and Safilo Group, industry watchers were surprised when Signature landed the Eddie Bauer rights.
“It’s a major coup for a company of its size to get the Eddie Bauer license,” said Jeanne Kraus, vice president and senior analyst with Van Kasper & Co. in San Francisco.
Don Perinchief, Eddie Bauer’s director of licensing, said Signature beat out half a dozen major contenders. Its small size seems to have worked in its favor. “We’ll get much more attention here,” Perinchief said.
Signature also went after the deal aggressively. Company officials phoned Eddie Bauer at least once every 12 months. Was the firm interested in striking a deal for an eye wear license? If not, when might it be?
“They’ve been calling us for years,” Perinchief said.
Repeating the success it found with Laura Ashley won’t be easy, though. Although the potential target audience for Eddie Bauer eye wear--men and women 35 to 54 years old--is much larger than Laura Ashley’s, Signature will face stiffer competition. There are countless designer eye wear brands. Kenmark Optical Co., for example, recently introduced a line of Hush Puppies frames.
Weiss remains confident. In 1992, Signature was a $9-million company and an optical industry small fry when it scored its first major hit with the Laura Ashley line. The wire frames feature intricate floral designs in the spirit of the English company’s women’s apparel and home furnishings.
Laura Ashley “came out at a time when the market was very unisex,” said Marge Axelrod, vice president and editorial director of Jobson. “It was a big success.”
Signature’s success didn’t happen overnight.
Weiss had a track record in the optical industry, serving in the 1970s as a sales and marketing executive with a now-defunct New York-based distributor of designer eyeglasses. He moved to Los Angeles in the early 1980s after his first marriage ended. He decided to pursue long-held entrepreneurial ambitions--but he had no money.
“I couldn’t get a Shell credit card,” he recalled.
But in 1983, with a $5,000 loan from a neighbor, Weiss founded USA Optical, a seller of other companies’ frames, in a tough Inglewood neighborhood where rents were cheap. “Our lunch break consisted of sitting on the second floor watching the drug busts,” Weiss said.
Despite the location, Weiss had contacts and the business grew. By 1990 he and Heldman saw changes afoot.
A retail revolution in eye wear was at hand: Big chains such as Lenscrafters, Pearle Vision Centers and Frame-n-Lens Optical were grabbing a growing share of sales at the expense of medical professionals who sold them as a side line. (Today the chains account for 35% of total U.S. retail sales of eye wear, according to Jobson.)
Weiss and Heldman concluded that Signature would have to move into the chains and start managing brands of their own.
Signature’s 1991 foray into brand marketing went well: It gained the licensing rights to the prestigious Wimbledon brand.
Weiss and his associates had flown to Britain, where he convinced the conservative All England Lawn Tennis & Croquet Club, keepers of the Wimbledon flame, to award his company the license. Weiss credited his silver tongue but found out later it was Heldman’s tennis credentials that carried the day. Heldman had played Wimbledon.
“The decision was made on the strength of Julie Heldman’s name,” said Arnold Schoenfeld, senior vice president with IMG, a sports marketing firm that oversees Wimbledon’s licensing and merchandising.
But after a year or so, it was clear the Wimbledon eye wear line was a “failure,” Schoenfeld said.
By then Signature had landed the Laura Ashley brand, which it thought held more promise. Signature negotiated a settlement to get out of the Wimbledon contract.
“They claimed they couldn’t operate the two brands,” Schoenfeld recalled. “They dropped it [Wimbledon] with a thud, much to the distress of the All England Club.”
Weiss says the company learned from this early misstep. Wimbledon Eyewear was high-quality merchandise, he said, but the line got lost in the competition. “We put it up against Polo. It was too close in styling and image,” Weiss said.
Today Weiss believes Signature has the products and the resources to be a $100-million company by 2000 or 2001. The firm is also watching for potential acquisitions, companies with eye wear licenses that would complement its existing business, he said.
Weiss also sees great potential internationally. Although only 9% of Signature’s sales come from foreign sales, he thinks that could rise to 15% in the next two years as the company adds international territories.
For the last five years, Signature has reported double-digit annual sales gains. For the 12 months ended Oct. 31, the most recent period for which figures are available, Signature reported $2.3 million in net income on $33 million in sales.
The firm’s rapid growth is putting a lot of pressure on Weiss and Heldman, but he says the stress is nothing compared with the early days. There were times the couple had to take out a second mortgage to make ends meet and offer suppliers personal guarantees to convince them to strike deals.
“In the early days, a mistake could have ruined us,” Weiss said. “Now we’re a public company so we can dig a little deeper. We have the funds to grow.”
