cASE 6

HOLLY FASHIONS
RAT I O A N A LYSI S

Billion-dollal a pparel c ompanies s uch a s C alvin K lein a nd L iz C laiborne a re unusual i n t he g arment i ndustry, w hich c onsists p rimarily o f m uch s malier apparel m akers. O ne s uch f irm i s H olly F ashions ( HF), l ocated i n C herry F lill,
New J eriey. H F w as s tarted 1 4 y ears a go b y W illiam H amilton a nd J ohn W hite, who b etween t hem h ad o ver 2 5:yearso f e xperiencew ith a m ajor g arment m anufacturer. A nd t he p artnership i nitially b lended v ery w ell. H amilton, r eserved and i ntrospective, i s e xtremely c reative w ith a r eal f lair f or m erchandising a nd trend s potting. M ainly a s a r esult o f h is g enius, t he H F l abel i s s ynonymous
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F urther. / hite w ould c ontinue t o

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C ASE6 H OLLYF ASHIONS

37

accept and ship orders to these qetailers eyen when it was clear that their ability t o p ay w as m arginal. l hite's p osition i s t hat.he d oesn't w ant t o l ose s ales and that the rough times these retailers face are only temporary.
Hamilton also wonders about the wisdom of passing up trade discounts. HF is frequently offered terms ol 1./1.0, net 30. That is, the company receives a l-percent discount if a bill is paid in ten days and in any event full payment is expected within 30 days. ffiite rarely takes these discounts because he
"wants t o h old o nto o ur c ash a s l ong a s p ossible." H e a lso n otes t hat " the d iscount isn't especially generous emd 99 percent of the bill must still be paid."

FINAL THOUGHTS
Despite ill of Hamilton's concems, however, the retationship between the two partners has been relatively smooth over the years. And Hamilton admits that he may be unduly critical of y'hite's management decisions. "After al1,"he concedes, " the m an s eems t o h ave r easonsf or w hat h e d oes, a rd w e h ave b een i n the black every year since we started, which is an impressive record, really, for a f um i n o ur b usiness."
Further, Hamilton has discussed with two condultants the possibility of selling his half of the firm. Since FIF is not publicly traded, the market value of the company's s tock m ust b e e stimated. T hesec onsultants b elieve t hat H F i s w