SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JANUARY 28, 1995 COMMISSION FILE NUMBER 0-15898
DESIGNS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2623104
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation of principal executive offices)
1244 BOYLSTON STREET, CHESTNUT HILL, MA 02167
(Address of principal executive offices) (Zip Code)
(617) 739-6722
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $0.01 PAR VALUE
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock of the registrant held by non-
affiliates of the registrant, based on the last sales price of such stock on
April 21, 1995, was $140 million.
The registrant has 15,752,435 shares of Common Stock, $0.01 par value
outstanding as of April 21, 1995.
Continued
DOCUMENTS INCORPORATED BY REFERENCE
FORM 10-K REQUIREMENT INCORPORATED DOCUMENT
- --------------------- ---------------------
PART II
Item 5 Market for Registrant's Page 37 of the Annual Report to
Common Equity and Related Shareholders for the year ended
Shareholder Matters January 28, 1995.
Item 6 Selected Financial Data Page 16 of the Annual Report to
Shareholders for the year ended
January 28, 1995.
Item 7 Management's Discussion and Pages 17 through 23 of the Annual
Analysis of Financial Report to Shareholders for the
Condition and Results of year ended January 28, 1995.
Operations
Item 8 Financial Statements and Pages 24 through 34 of the Annual
Supplementary Data Report to Shareholders for the
year ended January 28, 1995.
PART III
Item 10 Directors and Executive All information under the caption
Officers "Nominees for Director and
Executive Officers" in the
Company's definitive Proxy
Statement which is expected to be
filed within 120 days of the end
of the fiscal year ended
January 28, 1995.
Item 11 Executive Compensation All information under the caption
"Executive Compensation" in the
Company's definitive Proxy
Statement which is expected to be
filed within 120 days of the end
of the fiscal year ended
January 28, 1995.
Item 12 Security Ownership of All information under the caption
Certain Beneficial Owners "Security Ownership of Certain
Beneficial Owners and
Management" in the Company's
definitive Proxy Statement which
is expected to be filed within
120 days of the end of the
fiscal year ended
January 28, 1995.
Item 13 Certain Relationships and All information under the caption
Related Transactions "Certain Relationships and Related
Transactions" in the Company's
definitive Proxy Statement which is
expected to be filed within 120
days of the end of the fiscal year
ended January 28, 1995.
DESIGNS, INC.
INDEX TO ANNUAL REPORT ON FORM 10-K
YEAR ENDED JANUARY 28, 1995
PART I Page
Item 1. Business...................................................... 4
Item 2. Properties.................................................... 16
Item 3. Legal Proceedings............................................. 16
Item 4. Submission of Matters to a Vote of Security Holders........... 16
PART II
Item 5. Market for Registrant's Common Equity and Related
Shareholder Matters........................................... 17
Item 6. Selected Financial Data....................................... 17
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations................. 17
Item 8. Financial Statements and Supplementary Data................... 17
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure........................ 17
The information called for by Items 5, 6, 7 and 8, to
the extent not included in this document, is
incorporated herein by reference to the Company's
Annual Report to Shareholders for the year ended
January 28, 1995.
PART III
Item 10. Directors and Executive Officers of the Registrant........... 18
Item 11. Executive Compensation....................................... 18
Item 12. Security Ownership of Certain Beneficial Owners
and Management............................................... 18
Item 13. Certain Relationships and Related Transactions.............. 18
The information called for by Items 10, 11, 12 and
13, to the extent not included in this document, is
incorporated herein by reference to the Company's
definitive proxy statement which is expected to be
filed on or about May 10, 1995.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K................................................ 19
PART I.
ITEM 1. Business
Summary
The Company is a leading retailer in the United States of apparel and
accessories manufactured by Levi Strauss & Co. The Company markets a broad
selection of Levi Strauss & Co. products in the Eastern United States
through mall-based first quality stores under the names "Designs" and
"Designs exclusively Levi's(R)" and outlet stores under the name
"Levi's(R) Outlet by Designs." A subsidiary of the Company also
operates, as part of a joint venture with a subsidiary of Levi's(R) Only
Stores, Inc. ("LOS"), a subsidiary of Levi Strauss & Co., stores under
the name "The Original Levi's(R) Store" featuring a more focused
selection of men's and women's Levi Strauss & Co. products. Through the
end of fiscal 1995, the Company also operated two stores under the name
"Dockers(R) Shop" and an Original Levi's(R) Store in Minneapolis,
Minnesota. These three stores were sold to LOS on January 28, 1995. The
Company does not anticipate participating in the future expansion of
stores in the "Dockers(R) Shop" format.
The Company makes extensive use of Levi Strauss & Co. brand names,
trademarks and trade names in its advertising, signs and store displays,
and uses the broad recognition of the Levi Strauss & Co. brand name to
generate customer demand.
The Company's stores are merchandised to capitalize on the strength
of the Levi's(R) and Dockers(R) brand names, and in-store displays reflect
the image, attractiveness and quality of Levi Strauss & Co. merchandise.
Management believes that the Levi's(R) and Dockers(R) names are two of the
most recognized apparel brand names in the United States and that the
Levi's(R) brand name is among the most recognized brand names in the
world.
Designs stores are located in enclosed regional shopping malls and
offer a broad selection of first quality Levi Strauss & Co. merchandise
for the entire family. In November 1994, the Company introduced
Timberland(R) brand apparel and accessories, a recognized manufacturer of
rugged, durable casual apparel, in certain of the Company's new and
remodeled multi-brand format Designs stores. Also in November 1994, in
addition to the Timberland(R) product line, the Company introduced a line
of private-label merchandise in these same stores.
Levi's(R) Outlet stores are located in manufacturers outlet parks and
destination shopping centers. Levi's(R) Outlet stores sell manufacturing
overruns, discontinued lines and irregulars purchased by the Company
directly from Levi Strauss & Co., as well as end-of-season merchandise
transferred from Designs stores. Levi's(R) Outlet stores have capitalized
on the rapid expansion of outlet shopping areas specializing in "value"
retailing. To date, each Levi's(R) Outlet store is the only outlet in its
shopping area selling exclusively Levi Strauss & Co. products. The Company
does not expect to open additional Levi's(R) Outlets during fiscal 1996,
with the exception of Levi's(R) Outlets opened by the joint venture
as discussed below. See "Expansion Strategy."
In recent years, Levi Strauss & Co. has broadened its product lines
through the addition of the Dockers(R) line of men's, women's and
children's casual apparel, as well as expansions of the traditional
Levi's(R) brand product lines. Levi Strauss & Co. continues to expand its
sales base on the Levi's(R) and Dockers(R) brands. Levi's(R) brand jeans
and Dockers(R) brand slacks are the leading market share products in their
respective casual apparel classifications.
By featuring a wide array of these products, the Company's Designs
and Levi's(R) Outlet stores appeal to all age groups and serve as
convenient places to shop for the entire family.
Through the end of fiscal year 1995, the Company operated two formats
for its Concept stores, the "Dockers(R) Shop" and "The Original
Levi's(R) Store". The Company's two "Dockers(R) Shop" stores, which
were located in malls in Minneapolis, Minnesota and Cambridge,
Massachusetts, featured men's and women's Dockers(R) brand apparel and
accessories in a classic, relaxed setting with traditional decor. On
January 28, 1995 the Company sold these two Dockers(R) Shops and an
Original Levi's(R) Store located in Minneapolis, Minnesota to LOS.
"The Original Levi's(R) Store" format is designed to appeal to
young men and women with an exciting, upscale setting that features
hardwood floors, custom wood fixtures and a multi-screen "video wall"
displaying Levi Strauss & Co. advertisements and popular music videos.
This format focuses on men's and women's Levi's(R) brand products
consisting of core traditional styles such as five pocket and 501TM jeans,
denim jackets, contemporary silverTabTM, Levi's(R) Europe and the new
560TM Loose fitting jeans, and shirts and sweats that complement the
extensive bottoms line for which Levi Strauss & Co. is known. During
fiscal 1995, the Company also introduced Levi's(R) Personal PairTM
individually fitted jeans for women in two of "The Original Levi's(R)
Stores." "The Original Levi's(R) Stores" are located in enclosed
regional shopping malls and in urban locations.
Management believes that the Company competes effectively with other
apparel retailers by offering superior selection, quality merchandise,
knowledgeable in-store service and competitive price points. The Company
stresses product training with its sales staff and, with the assistance of
Levi Strauss & Co. and The Timberland Company personnel and materials,
provides its sales personnel with substantial product knowledge training
across the Levi's(R), Dockers(R) and Timberland(R) product lines.
History and Development
Since its inception in 1976, the Company has grown through the
addition of new stores and the modification of its retail formats.
Since June 1987, the Company has increased the number of Designs
stores in operation from 28 to 51. In addition, as the Levi Strauss & Co.
product lines have diversified, the merchandise mix and visual
merchandising appeal of Designs stores have evolved. For example, the
Company has increased the volume of Dockers(R) products in its merchandise
mix as the Dockers(R) line of apparel has increased in popularity.
Similarly, in 1991 Levi Strauss & Co. began to expand its tops line,
making it easier for the Company to sell top and bottom coordinating
outfits. Sales of coordinates have increased the Company's unit sales and,
in turn, its profitability, as tops are traditionally sold at higher gross
margins than bottoms. Furthermore, in fiscal 1995, the Company introduced
in certain of its Designs stores Timberland(R) brand apparel, outerwear
and footwear as well as private-label apparel to complement the continued
growth of the Levi's(R) and Dockers(R) brand product lines. The Company
expects the new multi-brand format to provide a broader, enhanced
merchandise selection to its customers.
The Company opened its first "Original Levi's(R) Store" on
August 2, 1992 as a conversion of an existing Designs store in Orlando,
Florida. Since that time, through the end of fiscal year 1995, the Company
had opened eight "Original Levi's(R) Stores" which were contributed to a
joint venture between subsidiaries of the Company and Levi's Only Stores,
Inc. Since year end the joint venture has opened two additional "Original
Levi's(R) Stores" and intends to further expand the number of stores as
discussed below. See "Expansion Strategy."
In 1986, the Company opened its first Levi's(R) Outlet store in the
Potomac Mills Outlet Center near Washington, D.C. Based on the success of
this store, the Company decided to expand the outlet format and currently
operates 61 Levi's(R) Outlet stores. The expansion of the Levi's(R) Outlet
store format has increased the volume of merchandise purchased by the
Company from Levi Strauss & Co., expanded the Company's geographic base
beyond areas served by regional malls, and broadened the demographic
profile of the Company's customers to include "value" shoppers and
foreign and domestic tourists. The Levi's(R) Outlet store format also has
given the Company the ability to transfer merchandise at the end of every
season from Designs and Concept stores to Outlet stores. Levi Strauss & Co.
has informed the Company that LOS plans to open Levi's(R) Outlets and
Dockers(R) Outlets in the upcoming year. These stores are not expected to be
in outlet centers serviced by the Company although there can no assurances
with respect to this.
Over the past few years, management has instituted an operating plan
designed to enhance the performance of the Company by focusing on
individual store profitability. For example, under this operating plan the
Company has analyzed its unit inventory by using improved inventory
controls, which has allowed regional and store-by store, style-by-style
merchandise planning thereby improving customer service and visual
merchandising in its stores. In addition, the Company monitors sales
trends of each of the Levi Strauss & Co. products it sells, allowing
management to better assess promotional and end-of-season merchandise
buying opportunities and determine target quantities and prices for
promotional purchases.
In addition to enhancing controls over inventories, in fiscal 1994,
the Company developed a new look for its Designs stores featuring updated
fixtures and merchandise presentation. The Company remodeled three Designs
stores in fiscal 1994, three additional stores in fiscal 1995 and intends
to remodel at least 10 more Designs stores in fiscal 1996. The Company also
plans, barring unforeseen circumstances, to open up to five urban-based
multi-brand Designs stores in fiscal 1996. Until now, Designs stores have
been mall-based. By opening Designs stores in urban locations, the Company
expects to soften the impact of price competition that is prevalent in the
mall-based stores.
Expansion Strategy
The following table provides a summary of the number of stores in
operation at year end for the past three fiscal years. Levi Strauss & Co.
must approve all new store locations.
January 28, January 29, January 30,
1995 1994 1993
---- ---- ----
Designs 51(1) 64 64
Levi's(R) Outlet by Designs 61 48 41
The Original Levi's(R) Stores 8 6 4
Dockers(R) Shops --(2) 2 1
-- -- --
Total 120 120 110
=== === ===
(1) During fiscal year 1995, the Company closed fifteen Designs stores as
part of the restructuring program.
(2) The Company sold and an "Original Levi's(R) Store" located in Minneapolis,
Minnesota and the two "Dockers(R) Shop" stores to LOS on January 28, 1995.
Management currently plans to continue its focus on individual store
operations and profitability. In August 1991, Levi Strauss & Co. opened a
pilot Dockers(R) store under the name "Dockers(R) Shop" and a pilot
Jeanswear store under the name "The Original Levi's(R) Store" in
Columbus, Ohio. In March 1992, the Company assigned the lease for its
Cincinnati, Ohio Designs store to Levi Strauss & Co. for a three-year
period as part of the testing of the Concept store format by Levi Strauss
& Co.
On January 28, 1995, Designs JV Corp., a wholly-owned subsidiary of
the Company, and a subsidiary of LOS, entered into a joint venture agreement
to sell Levi's(R) brand products and jeans-related products. The joint
venture plans to open and operate up to 35 to 50 Original Levi's(R) Stores
and Levi's(R) Outlets throughout 11 Northeast states and the District of
Columbia over the next three to five years. Levi's(R) Outlet stores opened
under the joint venture will sell only Levi's(R) brand products and service
the close-out products of the Original Levi's(R) Stores.
In connection with the joint venture, Designs JV Corp. contributed,
for a 70% interest in the joint venture, eight of the Company's existing
Original Levi's(R) Stores valued at $11.1 million and three leases for
unopened stores in New York City, Nanuet, New York and White Plains, New
York. These stores are included in the planned 35 to 50 described above.
At the same time, the joint venture subsidiary of LOS contributed
approximately $4.7 million in cash to the joint venture in exchange for a
30% interest. LOS also paid the Company $875,000 for services, contributions
and risks taken by the Company in establishing the transferred Original
Levi's(R) Stores and in the development of the Original Levi's(R) Store
concept in the United States. A substantial portion of this amount offset
previously recognized costs which were incurred by the Company during
fiscal year 1995. The Company's Original Levi's(R) Store in Orlando, Florida,
which is not part of the joint venture, is being converted to the multi-brand
Designs store format.
The term of the joint venture is 10 years. However, the partnership
agreement contains certain exit rights that enable either partner to buy
or sell their interest in the joint venture or particular stores in the
joint venture after five years.
In June 1994, Levi Strauss & Co. advised the Company that it did not see
any additional growth in the Levi's(R) Outlet by Designs format, other than
additional Outlet stores that might be part of the Original Levi's(R) Stores
joint venture, as discussed above. The Company stocks its existing Levi's(R)
Outlet stores exclusively with manufacturing overruns, discontinued lines and
irregulars purchased by the Company directly from Levi Strauss & Co. and
end-of-season merchandise transferred from Designs and Concept stores. By its
nature, this merchandise is subject to limited availability. Levi Strauss & Co.
has informed the Company of their intention to open Levi's(R) Outlets and
Dockers(R) Outlets through their LOS subsidiary in the upcoming year. LOS has
informed the Company that it does not presently intend to open these outlets
in centers serviced by one of the Company's existing Levi's(R) Outlet stores.
Wholly-owned Levi's(R) Outlets and joint venture Levi's(R) Outlet locations,
are expected to be the only authorized retail outlet locations in their
respective outlet centers to sell Levi's(R) brand products.
In addition, the Company is actively seeking to expand and diversify
through the introduction of a private-label program. During fiscal year
1995, the Company introduced Timberland(R) brand apparel and a line of
private-label merchandise under the name "EFD-Exclusively for Designs".
On April 25, 1995, the Company announced the signing of a purchase and
sale agreement to acquire, subject to the satisfaction of certain
conditions and barring unforeseen circumstances, certain assets of Boston
Trading Ltd., Inc. The assets to be acquired include the Boston Traders(R)
brands and all inventory, fixed assets and leasehold improvements
associated with 33 existing Boston Traders(R) outlet stores. Boston
Trading Ltd., Inc. has established a strong quality image, primarily
through the wholesale and retail sales of sweaters and tops for both men
and women. The strengths of the Boston Traders(R) brand product line
provides the Company with access to a broad assortment of tops that
integrate the Boston Traders(R) brand into all Designs stores. This
addition is expected to impact sales and margins positively in the Designs
stores. There can be no assurances that the Company will be able to complete
the transaction nor, if the transaction is completed, that the introduction
and integration of the stores, brand and inventory will be successful.
Restructuring
During the fourth quarter of fiscal 1994, the Company recorded a non-
recurring pre-tax charge of $15 million to cover the expected costs to
close up to 10 of the Company's poorest performing Designs stores. As a
result of this, the Company established a $15 million restructuring
reserve to cover the cash costs of lease obligations, professional and
consulting services and employee relocations and termination costs and
noncash costs related to fixed asset disposals and inventory markdowns.
The Company completed the closing of the ten Designs stores in the third
quarter and in connection with the Company's ongoing review of Designs
store performance, in November 1994, the Company decided to close up to
five more of the poorest performing Designs stores during the remainder of
fiscal 1995.
The total cost to close these 15 stores was $11.8 million which was
less than the originally estimated $15 million due to favorable landlord
negotiations. The Company recorded the $3.2 million change in estimate
as income in the fourth quarter of fiscal 1995. In the first quarter of
fiscal 1996, The Company recognized $2.2 million in income related to the
results of subsequent negotiations in connection with termination of
certain leases.
Customer Base
During fiscal 1995, the Company commissioned market research surveys
to further explore and define a demographic profile of its customer base.
The results confirm that the strong association with the Levi's(R) brand
image has positively impacted customer satisfaction. Customer service was
consistently marked equal, or superior to comparable retailers. Strong
demand was evidenced across a broad spectrum of age groups with average
income above that of the trade areas.
The introduction of the Timberland(R) and private-label product lines
and the growth of traditional Levi Strauss & Co. product lines, have made
the Company's Designs stores places to shop for the entire family. In
addition, the purchase of certain assets of Boston Trading Ltd., Inc.,
if completed, is expected to provide our Designs stores with a
complementary and broader selection of branded men's and women's apparel.
A growing segment of the Company's customer base consists of foreign
travelers shopping for Levi Strauss & Co. products. The Original Levi's(R)
Stores feature men's and women's jeans, shirts, jackets and accessories
with the Levi's(R) brand name, in a entertaining, upscale setting which
includes hardwood floors and fixtures and a video screen wall displaying
Levi Strauss & Co. advertising and popular music videos. The Company's
product selection in these stores is designed to appeal to the casual
apparel needs of customers in all age groups and income brackets.
Merchandising
The vast majority of the assortment focus is on a core selection of
traditional Levi's(R) and Dockers(R) brand products. The Designs stores
also feature a wide range of Levi's(R) and Dockers(R) accessories from
authorized licensees. During the fourth quarter of fiscal 1995, the
Company began test market of complementary Timberland(R) brand products and a
private-label product line. Expectations are that the addition of non-Levi
Strauss & Co. brands will enable the Designs stores to capitalize on product
categories not offered by Levi Strauss & Co. or in which Levi Strauss
& Co. sells limited styles. These include classifications such as
footwear, outerwear and sweaters. The Company expects that 30% or more of
the product assortment in Designs stores will come from non-Levi Strauss &
Co. brands by the end of fiscal year 1996. These changes will further
enhance the Designs store image as a destination for quality casual apparel.
In its Levi's Outlet stores, the Company offers an ever-changing
selection of Levi Strauss & Co. merchandise including manufacturing
overruns, discontinued lines and irregulars purchased by the Company
directly from Levi Strauss & Co. and end-of-season merchandise transferred
from the Designs and Concept stores. The Levi's(R) Outlets opened under the
joint venture will sell only Levi's(R) brand products and service the
close-out products of the Original Levi's(R) Stores.
Merchandising in "The Original Levi's(R) Store" focuses on mens and
womens tops and bottoms under the Levi's(R) brand name, including
traditional 501(R), 505(R) and 550TM five pocket jeans; contemporary
silverTabTM jeans; the new 560TM Loose fitting jeans and Personal PairTM
individually fitted jeans for women; jeans jackets; a full line of women's
jeans; T-shirts; denim shirts; Levi Strauss & Co. brands of shorts and
sweats; and coordinating accessories. Many styles are unique to the
Original Levi's(R) Store, and are not available at any other retail store
in the United States. These products are presented in a stylized format
that features hardwood floors, custom wood fixtures and a multi-screen
"video wall" displaying Levi Strauss & Co. advertisements and popular
music performers.
All merchandising decisions, including pricing, markdowns,
advertising and promotional campaigns, inventory purchases and merchandise
allocations, are made centrally at the Company's headquarters with input
from store, district, and regional managers. Central to the Company's
merchandising strategy is the ability to tailor a particular store's
merchandise mix to the composition of the local consumer base.
The Company utilizes point-of-sale registers to capture daily sales
information and, at the end of the day, the Company's cash registers are
electronically polled to generate reports at the Company's headquarters
listing all merchandise sold by store, style, size and color. Based on
this information, merchandise assortments are varied by store to meet the
individual geographic, seasonal and demographic patterns and sales trends.
The Company's information systems are central to its ability to stock the
wide selection of Levi Strauss & Co. brand products available at each of its
stores in a timely manner. See "Information Systems."
Through the end of fiscal year 1995, the Company did not maintain any
warehouse facilities. Historically, each store has been stocked by
"direct to store" vendor shipments. As was previously discussed, barring
unforeseen circumstances, the Company plans to purchase certain assets of
Boston Trading Ltd.,Inc. including leases for 33 Outlet stores. This
acquisition, which utilizes off-shore sourcing of merchandise, will
require the Company to expand its current operations to include storage
and distribution facilities in order to assure the timely delivery and
replenishment of Boston Traders(R) merchandise.
During the fiscal year ended January 28, 1995, sales by format, by
product category were as follows:
Category Designs Outlets Concepts Total Company
- -------- ------- ------- -------- -------------
Men's 54% 52% 50% 52%
Women's 20% 17% 24% 19%
Shirts 16% 16% 18% 16%
Youth 6% 9% 2% 7%
Accessories 4% 6% 6% 6%
The Concepts category includes sales in the Company's Original
Levi's(R) Stores as well as for the Company's two Dockers(R) Shops and The
Original Levi's(R) Store in Minneapolis, Minnesota which were sold on
January 28, 1995.
"501(R)," "505(R)," "Dockers(R)" and "Levi's(R)" are registered
trademarks, and "550TM," "560TM," "LeviLinkTM," "silverTabTM" and
"Personal PairTM" are trademarks of Levi Strauss & Co.
Store Operations
Designs stores average approximately 6,000 square feet in size and
are located in enclosed regional shopping malls usually anchored by
department stores. Levi's(R) Outlet stores are located in destination
shopping centers and manufacturers outlet parks. Levi's(R) Outlet stores
range in size from approximately 8,000 to 17,000 square feet and offer the
consumer large quantities of irregulars and end-of-season Levi Strauss &
Co. brand merchandise in a "no frills" outlet format. To date, each
Outlet store is the only outlet in its shopping area selling exclusively
Levi Strauss & Co. brand products. Mall-based Concept stores range in size
from 3,500 to 5,000 square feet and urban Concept stores range from
5,000 to 9,000 square feet.
Each of the Company's stores utilize centrally developed interior
design and merchandise layout plans specifically designed to promote
customer identification of the store as a specialty store selling Levi
Strauss & Co. brand products. The merchandise layout is further adapted by
store management and the Company's visual merchandising department. Each
Designs store prominently displays Levi's(R), Dockers(R) and Timberland(R)
brand logos and distinctive branded promotional displays. The Levi's(R)
Outlet stores prominently display Levi Strauss & Co. brand logos and
distinctive promotional displays. "The Original Levi's(R) Stores" also
feature a multi-screen "video wall" presentation developed to promote an
upscale image of the men's and women's Levi's(R) brand products sold in
those stores. The Company uses various Levi Strauss & Co. logos and
trademarks on store signs with the permission of Levi Strauss & Co.
Mall store hours are generally determined by the management of the
shopping mall in which the store is located and downtown stores generally
remain open during regular downtown business hours. Most stores are open
seven days and six nights each week, with extended operating hours during
the "Holiday" selling season.
Customer Service
The Company stresses product training with its sales staff and, with
the assistance of Levi Strauss & Co. and The Timberland Company, provides
them with substantial product knowledge training across the Levi Strauss &
Co. and Timberland(R) product lines. This training includes promoting
sales of coordinating apparel and accessories. Management believes that
the Company's sales staff serves to reinforce the consumer's perception of
the Company's stores as branded specialty stores and to differentiate the
Company's stores from those of its competitors.
Each Designs store employs approximately 10 to 15 employees, and each
Levi's(R) Outlet and Concept store employs approximately 20 to 45
employees. The personnel required to operate each store includes a store
manager, assistant managers and a group of full-time and part-time sales
associates. The store manager is responsible for all operational matters
for that store, including hiring and training employees. All of the store
managers participate in a training program at one of the Company's
training stores. Most store managers also have prior experience with the
Company as a management trainee and have been employed by the Company for
at least one year before being appointed as a store manager. The
development of management and sales associate training programs is
performed internally by the Company's Store Training Department.
The Company currently employs 16 district managers, who have an
average length of service with the Company of approximately nine years,
one regional manager and three regional vice presidents, all of whom have
been with the Company for more than fifteen years, to provide management
guidance to the individual store managers. Each district manager is
responsible for hiring store managers at the stores assigned to that
manager's territory and for the overall profitability of those stores.
District managers report directly to the regional vice presidents/manager,
who report directly to the Company's President and Chief Executive
Officer.
Information Systems
The Company continues to devote significant resources to the
development of information systems which enable it to maintain rigorous
inventory, pricing and other financial controls. The Company's Information
Systems Department has developed and enhanced customized applications
software which permits the Company's business to be managed more
efficiently. The Company uses point-of-sale data terminals with bar-code
reading laser wands in all of its stores. This store-based equipment is
linked to the Company's central processing system, which includes two
linked IBM AS/400 computers.
The Company makes use of software systems for enhanced merchandise
replenishment. The merchandise replenishment system is an automated
allocation and planning tool designed to operate in the fashion apparel
area. This system is used to allocate merchandise in an environment of
ever-changing styles. The system also allows the Company's allocation staff
to efficiently utilize available sales and inventory data to react to the
individual needs of each store on a timely basis. The merchandising
replenishment system is used for all non-basic products.
Levi Strauss & Co. was one of the first manufacturers in the apparel
industry to bar code its merchandise and to develop automatic reordering
systems to enhance customer service. In 1986, the Company was chosen to be
one of the first participants in the LeviLinkTM Model Stock Management
system, a direct computer-to-computer link of retailer to manufacturer
that allows automatic replenishment of basic apparel items sold by the
Company. The Company's sales and receiving information by style, size and
color is forwarded to Levi Strauss & Co. on a weekly basis, where it is
matched against a model stock inventory level prepared by the Company and
adjusted based on current sales information for each style and store. The
system then automatically generates a shipping order that is used to
supply merchandise to each store, thereby maintaining inventory at model
stock levels.
Management estimates that the LeviLinkTM system has reduced the
average turnaround time for an order of basic apparel from as much as four
weeks to as short as a week. In addition, management believes that because
of LeviLinkTM, the year round in-stock position of color and size of core
items is enhanced. Finally, LeviLinkTM has enabled the Company to match
more closely each store's inventory supply with current demand and local
demographic factors, consistent with the Company's merchandising strategy.
The LeviLinkTM system automates the inventory cycle for basic goods from
the receipt of goods, through the sale, reorder and inventory
replenishment. LeviLinkTM encompasses approximately 40% of the inventory
items in the Company's Designs and Concept stores.
Improvements to the Company's information systems completed over the
past five years have also facilitated the following internal management
controls:
. Management is able to monitor the performance of each of its stores on
a daily, weekly and monthly basis, which facilitates the preparation of
sales, inventory and other reports used by the Company's management.
These include daily sales reports by store, item, style, size, color
and price, enabling merchandising decisions to be made accurately and
on a timely basis.
. The Company's headquarters are provided with a next-day computer
generated comparison of each store's register transactions and the
reported amount of cash and charge deposits made, allowing the Company
to detect and resolve possible errors and improprieties. The Company
previously required up to ten days to perform this function manually.
. Using its daily sales information, the Company forecasts its daily and
short-term (six months) cash needs. Using this forecast, the Company is
better able to invest excess cash or reduce borrowings on the revolving
line of credit, thereby reducing its net interest costs and bank fees.
. The Company's price look-up ("PLU") system allows management to
control merchandise pricing centrally via its network. The PLU system
permits faster and more accurate processing of retail sales and the
monitoring of specific inventory items to confirm that centralized
pricing decisions are carried out in each of the stores. Management
believes that the PLU system has produced savings from a reduction in
underrings, prevented potential losses in consumer goodwill from
overrings and reduced customer check-out time.
. Management is able to direct all price changes, including promotional,
clearance and transfer markdowns on a central basis, estimate the
financial impact of such changes and verify that such changes have been
made on a timely basis.
. The Company utilizes a third party credit network that permits it to
collect on its credit card sales (45% of total sales in fiscal 1995) in
less than 72 hours at favorable rates.
In addition, in an effort to tailor the Company's technology towards
future growth, the Company has recently acquired a new software package
designed to enhance the analytical capabilities of the Company's merchandise
and financial functions. The installation of the new software should be
complete by the fourth quarter of fiscal 1996.
Advertising
The Company benefits from the high visibility and recognition of the
Levi's(R) and Dockers(R) brand names, as well as the natural flow of
traffic that results from locating stores in areas of high retail activity
including large regional malls, destination outlet centers and prime inner
city shopping districts. Historically, the Company has received co-
operative advertising allowances from Levi Strauss & Co. that typically
fund approximately one third of all advertising expenditures. Marketing
approaches are tailored to the needs of each segment:
Designs Stores: In addition to shared efforts with landlords to
generate increased overall mall traffic through lease related advertising
and media funds, the Company uses a variety of media, including both
institutional and product/price formats, to promote its products to
individual target customers. Major efforts include newspaper inserts,
magazines and billboards as well as customer mailing lists. The Company
works with Levi Strauss & Co. to leverage its promotional campaigns to
take advantage of the heavily funded national advertising schedules for
Levi's(R) and Dockers(R) brand products.
Levi's(R) Outlet Stores: Tourists, foreign travelers and vacationers
comprise large segments of the outlet customer base. Outlet marketing is
focused on methods to inform customers who are unfamiliar with the area
of the store's location. Primary programs include billboards, shopping
guides and bus tours.
Original Levi's(R) Store: The marketing effort is both institutional
and product/image driven. LOS provides a staff marketing professional to
create and coordinate major Original Levi's(R) Store campaigns. On a
location-by-location basis, efforts are driven by the nature of each
store's customer base; such as a bi-lingual hotel guide in New York City
and international airport dioramas in Boston, Massachusetts.
Competition
The United States casual apparel market is highly competitive with
many national and regional department stores, specialty apparel retailers
and discount stores offering a broad range of apparel products similar to
those sold by the Company. The Company's competitors in the casual apparel
market consist of national and regional department stores in the Company's
market areas, such as J.C.Penney Company, Sears, Roebuck & Company,
Dillard Department Stores Inc., May Company, Kohls and Filene's. In
addition, the Company competes with several specialty apparel retailers,
including The Gap Stores, Inc., The Limited, Inc. and County Seat Stores,
Inc. Management believes, however, that these specialty apparel retailers
appeal to narrower demographic spectra than does the Company.
Employees
As of January 28, 1995, the Company employed approximately 2,500
persons, of whom 2,360 were full and part-time sales personnel and 140
were employed at the Company's headquarters. The Company employs
approximately 600 additional part-time personnel during the "Back to
School" and "Holiday" selling seasons to service the increased customer
traffic.
All qualified full-time employees are entitled to life, medical,
disability and dental insurance and can participate in the Company's
401(k) savings plan. Store, district and regional managers are eligible to
receive incentive compensation subject to the achievement of specific
performance objectives, including store profitability. They are also
entitled to use an automobile provided by the Company or to receive an
automobile allowance. Sales personnel are compensated on an hourly basis
and receive no commissions, but are eligible to earn incentive prizes as
part of individual store sales contests. Certain store, district and
regional managers, as well as certain other employees, have been granted
stock options. Management believes that the Company's policy of promoting
from within has led to a lower than average rate of employee turnover.
None of the employees are represented by a union.
ITEM 2. Properties
As of January 28, 1995, the Company operated 51 Designs stores, 61
Outlet stores and eight "Original Levi's(R) Stores." All stores are
leased by the Company directly from shopping mall, outlet park and
downtown property owners. Designs store leases are generally ten years in
length with no renewal option. Levi's(R) Outlet store leases are usually
for a series of shorter periods and sometimes contain certain renewal
options extending their terms to between 10 and 15 years. Most of the
leases provide for annual rent based on a percentage of store sales,
subject to guaranteed minimum amounts.
The Company's headquarters in Chestnut Hill, Massachusetts, is
leased under an agreement with an affiliate of Stanley Berger, the
Chairman of the Board and the estate of Calvin Margolis, a former director
of the Company. The lease expires in April 1996. See Notes F and H of
Notes to Consolidated Financial Statements.
Sites for store expansion are selected on the basis of several
factors intended to maximize the exposure of each store to those persons
the Company believes are likely to be Levi Strauss & Co. customers. These
factors include the demographics profile of the area in which the site is
located, the types of stores and other retailers in the area, the location
of the store within the mall and the attractiveness of the store layout.
The Company believes that its selection of locations enables the Company's
mall, downtown and outlet stores to attract customers from the general
shopping traffic and to generate its own customers from the surrounding
areas.
The Company considers site selection an important factor in its
expansion plans for its stores. In locating and assessing potential sites,
the Company often relies upon relationships it maintains with major
shopping mall developers such as The Edward J. DeBartolo Company, New
England Development, S.R. Weiner Associates and Melvin Simon Associates
and with outlet park developers such as The Horizon Group, Western
Development, Belz Enterprises and The Stanley Tanger Company. These
developers provide the Company with detailed demographic and geographic
information regarding many new mall and outlet park developments.
See "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Liquidity and Capital Resources - Capital
Expenditures."
ITEM 3. Legal Proceedings
The Company is a party to litigation and claims arising in the
course of its business. Management does not expect the results of these
actions to have a material adverse effect on the Company's business or
financial condition.
ITEM 4. Submission of Matters to a Vote of Security Holders
No matter was submitted during the fourth quarter of fiscal 1995 to
a vote of security holders, through the solicitation of proxies or
otherwise.
PART II.
ITEM 5. Market for the Registrant's Common Equity and Related
Shareholder Matters
The information required by this item is furnished by incorporation
by reference to Page 38 of the Annual Report to Shareholders for the year
ended January 28, 1995.
ITEM 6. Selected Financial Data
The information required by this item is furnished by incorporation
by reference to Page 16 of the Annual Report to Shareholders for the year
ended January 28, 1995.
ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The information required by this item is furnished by incorporation
by reference to Pages 17 through 23 of the Annual Report to Shareholders
for the year ended January 28, 1995.
ITEM 8. Financial Statements and Supplementary Data
The information required by this item is furnished by incorporation
by reference to Pages 24 through 34 of the Annual Report to Shareholders
for the year ended January 28, 1995.
ITEM 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
PART III.
ITEM 10. Directors and Executive Officers of the Registrant
Information with respect to directors and executive officers of the
Company is incorporated herein by reference to the Company's definitive
proxy statement expected to be filed within 120 days of the end of the
fiscal year ended January 28, 1995.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "Commission").
Officers, directors and greater-than-10% shareholders are required by Commission
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company during fiscal 1995 and Forms 5 and amendments thereto
furnished to the Company with respect to fiscal 1995, the Company believes
that all Section 16(a) filing requirements applicable to its officers,
directors and greater-than-10% shareholders were fulfilled in a timely
manner, except that, due to an oversight, Mr. Thigpen did not timely report
on Form 3 the amount of his initial beneficial ownership of the Company's
Common Stock within 10 days of the date of his election to the Company's
Board of Directors. After reviewing this matter, the Company has concluded
that the omission was inadvertent, and that the transactions did not give
rise to liability under Section 16(b) of the Exchange Act for recapture of
short-swing profits.
ITEM 11. Executive Compensation
Information with respect to executive compensation is incorporated
herein by reference to the Company's definitive proxy statement expected
to be filed within 120 days of the end of the fiscal year ended January
28, 1995.
ITEM 12. Security Ownership of Certain Beneficial Owners and
Management
Information with respect to security ownership of certain
beneficial owners and management is incorporated herein by reference to
the Company's definitive proxy statement expected to be filed within 120
days of the end of the fiscal year ended January 28, 1995.
ITEM 13. Certain Relationships and Related Transactions
Information with respect to certain relationships and related
transactions is incorporated by reference to the Company's definitive
proxy statement to be filed within 120 days of the fiscal year ended
January 28, 1995.
PART IV.
ITEM 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K
(A) 1. & 2. CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
The financial statements and schedules listed in the index below
are filed as part of this annual report.
Reference (Page)
----------------
Annual Report
Form 10-K to Shareholders
--------- ---------------
1. CONSOLIDATED FINANCIAL STATEMENTS
Covered by Report of Independent Accountants:
Consolidated Balance Sheets at January 28, 1995
and January 29, 1994 --- 24
Consolidated Statements of Income for the
years ended January 28, 1995, January 29, 1994
and January 30, 1993 --- 25
Statement of Chanages in Stockholders' Equity --- 26
Statements of Cash Flows --- 27
Notes to Consolidated Financial Statements,
except Notes L and M 28-34
Report of Independent Accountants 36
Not Covered by Report of Independent Accountants:
Note L - Subsequent Event 34
Note M - Selected Quarterly Data 34
2. CONSOLIDATED FINANCIAL STATEMENT SCHEDULES:
All schedules have been omitted because the required information is
not applicable or is not present in amounts sufficient to require
submission of the schedules, or because the information required is
included in the financial statements or notes thereto.
3. EXHIBITS
3.1 Restated Certificate of Incorporation of the Company, as amended. *
Incorporated herein by reference to the Company's Registration
Statement on Form S-1, (No. 33-13402).
3.2 By-Laws of the Company, as amended (included as Exhibit 3.2 to the *
Company's Annual Report on From 10-K dated April 29, 1993, and
incorporated herein by reference).
10.1 1987 Incentive Stock Option Plan, as amended (included as Exhibit *
10.1 to the Company's Annual Report on From 10-K dated April 29,
1993, and incorporated herein by reference).
10.2 1987 Non-Qualified Stock Option Plan, as amended included as *
Exhibit 10.2 to the Company's Annual Report on Form 10-K dated
April 29, 1993, and incorporated by herein by reference).
10.3 1992 Stock Incentive Plan, as amended (included as Exhibit A to *
the Company's definitive proxy statement dated May 10, 1994, and
incorporated by reference).
10.4 License Agreement between the Company and Levi Strauss & Co. *
dated as of April 14, 1992 (included as Exhibit 10.8 to the
Company's Annual Report on Form 10-K for the year ended January
30, 1993, and incorporated herein by reference).
10.5 Executive Incentive Plan effective through the fiscal year ended *
January 28, 1995 (included as Exhibit 10.8 to the Company's
Annual Report on Form 10-K for the year ended January 29, 1994,
and incorporated herein by reference).
10.6 Credit Agreement among the Company, BayBank Boston, N.A. and State *
Street Bank and Trust Company dated as of November 17, 1994
(included as Exhibit 1 to the Company's Current Report on Form 8-K
dated November 22, 1994, and incorporated herein by reference).
10.7 Consulting Agreement between the Company and Stanley I. Berger
dated December 21, 1994.
10.8 Employee Separation Agreement between the Company and Geoffrey
M. Holczer dated December 27, 1994.
10.9 Participation Agreement among Designs JV Corp. (the "Designs *
Partner"), the Company, LDJV Inc. (the "LOS Partner"), Levi's Only
Stores, Inc. ("LOS"), Levi Strauss & Co.("LS&CO") and Levi
Strauss Associates Inc. ("LSAI") dated January 28, 1995 (included
as Exhibit 10.1 to the Company's Current Report on Form 8-K dated
April 24, 1995, and incorporated herein by reference).
10.10 Partnership Agreement of The Designs/OLS Partnership (the *
"Partnership") between the LOS Partner and the Designs Partner
dated January 28, 1995 (included as Exhibit 10.2 to the Company's
Current Report on Form 8-K dated April 24, 1995, and incorporated
herein by reference).
10.11 Glossary executed by the Designs Partner, the Company, the LOS *
Partner, LOS, LS&CO, LSAI and the Partnership dated January 28,
1995 (included as Exhibit 10.3 to the Company's Current Report on
Form 8-K dated April 24, 1995, and incorporated herein by
reference).
10.12 Sublicense Agreement between LOS and the LOS Partner (included *
as Exhibit 10.4 to the Company's Current Report on Form 8-K
dated April 24, 1995, and incorporated herein by reference).
10.13 Sublicense Agreement between the LOS Partner and the Partnership *
(included as Exhibit 10.5 to the Company's Current Report on
Form 8-K dated April 24, 1995, and incorporated herein by
reference).
10.14 License Agreement between the Company and the Partnership *
(included as Exhibit 10.6 to the Company's Current Report on
Form 8-K dated April 24, 1995, and incorporated herein by
reference).
10.15 Administrative Services Agreement between the Company and the *
Partnership dated January 28, 1995 (included as Exhibit 10.7 to
the Company's Current Report on Form 8-K dated April 24, 1995,
and incorporated herein by reference).
10.16 Agreement between the Company and LOS covering the payment to *
the Company of a $875,000 fee from LOS (included as Exhibit 10.8
to the Company's Current Report on Form 8-K dated April 24, 1995,
and incorporated herein by reference).
10.17 Asset Purchase Agreement between LOS and the Company relating to *
the stores located in Minneapolis, Minnesota dated January 28,
1995 (included as Exhibit 10.9 to the Company's Current Report
on Form 8-K dated April 24, 1995, and incorporated herein by
reference).
10.18 Asset Purchase Agreement between LOS and the Company relating to *
the store located in Cambridge, Massachusetts dated January 28,
1995 (included as Exhibit 10.10 to the Company's Current Report
on Form 8-K dated April 24, 1995, and incorporated herein by
reference).
11 Statement re: computation of per share earnings
13 Annual Report to Shareholders for the year ended January 28,
1995.(With the exception of the information incorporated by
reference included in Items 5, 6, 7 and 8, the 1995 Annual Report
to Shareholders is not deemed filed as part of this report).
21 Subsidiaries of the Registrant.
23 Consent of Coopers & Lybrand, L.L.P. dated April 28, 1995.
27 Financial Data Schedules
* Previously filed with the Commission.
(B) REPORTS ON FORM 8-K:
(i) The Company reported under Item 5 on Form 8-K dated November 22, 1994,
its decision to close up to five additional "Designs" stores during
the fiscal year ended January 28, 1995, in connection with the
Company's ongoing review of the performance of its "Designs" stores.
(ii) The Company reported under Item 5 on Form 8-K dated December 7, 1994,
the resignation of Geoffrey M. Holczer, Senior Vice President,
Treasurer and Chief Financial Officer of the Company.
(iii) The Company reported under Item 5 on Form 8-K dated January 27, 1995,
that subsidiaries of the Company and Levi Strauss & Co. had entered
into a joint venture agreement to operate 35 to 50 "Original Levi's(R)
Stores" and "Levi's(R) Outlets" stores selling Levi's(R) brand jeans
and jeans-related products. Following the formation of the joint
venture the Company's "Original Levi's(R) Store''located in
Minneapolis, MN and its "Dockers(R) Shop" located in Minneapolis, MN
and Cambridge, MA were sold to Levi's(R) Only Stores, Inc., a
subsidiary of Levi Strauss & Co.
(iv) The Company reported under Item 5 on From 8-K dated April 24, 1995,
that, as previously announced, that subsidiaries of Levi Strauss & Co.
and the Company entered into agreements, dated January 28, 1995
establishing a joint venture to operate up to 35 to 50 "Original
Levi's(R) Stores" and "Levi's(R) Outlets." Accompanying this report
as exhibits 10.1 through 10.8 are certain agreements related to the
formation of the joint venture.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
DESIGNS, INC.
April 26, 1995
By: /s/ Joel H. Reichman
---------------------
Joel H. Reichman
President and Chief Executive Officer
Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the Company in the capacities indicated, on April 26, 1995.
Signatures
/s/ Joel H. Reichman President and Chief Executive Officer
- ----------------------- and Director (Principal Executive Officer)
Joel H. Reichman
/s/ Carolyn R. Faulkner Vice President and Controller
- ----------------------- (Principal Financial and Accounting
Carolyn R. Faulkner Officer)
/s/ Stanley I. Berger Chairman of the Board and Director
- -----------------------
Stanley I. Berger
/s/ James G. Groninger Director
- -----------------------
James G. Groninger
/s/ Melvin Shapiro Director
- ----------------------
Melvin Shapiro
Director
- ----------------------
Bernard M. Manuel
/s/ Peter L. Thigpen Director
- ----------------------
Peter L. Thigpen
Exhibit 11. Statement Re: Computation of Per Share Earnings
Fiscal Year Ended
January 28, January 29, January 30,
1995 1994 1993
----- ---- ----
(In thousands, except per share data)
Income before
accounting change $16,903 $5,669 $12,320
Cumulative effect on prior
years of change in accounting
for income taxes 79
Net Income $16,903 $5,748 $12,320
======= ====== =======
Weighted average
shares outstanding
during the period 15,914 15,916 14,354
Common equivalent
shares * * 312
Number of shares for
purposes of calculating
net income per common
and common equivalent
share 15,914 15,916 14,666
====== ======
Incremental shares to
reflect full dilution n/a n/a 175
Total shares for purposes
of calculating fully diluted
net income per share N/A N/A 14,841
======
Net income per common share
before accounting change $1.06 $0.36 $0.84
Cumulative effect on prior years
of change in accounting for
income taxes per common and
common equivalent share (1) N/M
Net income per common and
common equivalent share $1.06 $0.36 $0.84
===== ===== =====
Fully diluted net income
per share $0.83
=====
* Less than 3% dilutive
(1) The Company adopted Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes" during the first quarter of fiscal 1994.
Exhibit 21. Subsidiaries of the Registrant
Designs Securities Corporation
(a Massachusetts securities corporation)
Designs JV Corp.
(a Delaware corporation)
Designs Acquisition Corp.
(a Delaware corporation)
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the
registration statements of Designs, Inc. on Forms S-8 (Reg. Nos.
33-22957, 33-32690, 33-32687 and 33-52892) of our report dated
February 24, 1995, on our audits of the consolidated financial
statements of Designs, Inc. as of January 28, 1995 and January
29, 1994 and for the three years in the period ended January
28, 1995, which report is incorporated by reference in this
Annual Report on Form 10-K.
Boston, Massachusetts
April 28, 1995 COOPERS & LYBRAND, L.L.P.