Regarding the case of the Lee Company

>At first it was a good and steady business but then it had its major setbacks.
>Due to a sudden fashionable trend of the cotton denims among women and men ,
the Lee company had problems in producing more denims.
>VF Corp. provide solution to Lee's problem (providing an automated sewing
machine)
>In the early 1980s, the shrinking population of young people , the spreading od
the older generation and the new and latest fahion trends ended the boom for the
Lee's company.
>Only 387 million pairs of jeans weere sold in US down from 502 million in the peak
year of 1981.
> Experienced 2 year decline in US jeans sales totalling 23%.
> VF is agressively trying to solve Lee's problem , but the brand still is unsteady.
>>Boom and bust left Lee company with too many factories and too much unsold
stock.
> Closed 10 plants while working down inventory.
>To attract more retail business, they cut wholesale prices 5-9%
> big retailers were cutting into the market and lee is counting on the success of a
new collection of casual pants, which are to be introduced in the fall---4 long years
after lee's privately held rival, Levi Strauss Associates Inc.
>lee had to catch up in the thriving heans markets overseas where his competitor
Levi, has bench headed.

> Earnings have been greatly hurt (Annual net income in the late 1985-1986 is 120
million, 1987-1989 160 million (boom due to sudden fashion trend but then had
abruptly declined during the next year from 160 million down to 80 million) With a
great amount of decline in earnings.

>In the fierce market Levis Strauss the lee's competitor is the leading brand in the
US followed by the Lee Co.
>While business struggles the lines of business revenue as a percent of 1990
revenue. Jeanswear is 55% which greatly contribute to the revenue of the company

follwed by the sportswear and active wear with 18.7%, Intimate apparel with 13.8%
and occupational apparel (12.5%)
> Replaced all top executives in marketing ,operations, and manufacturing since
1989\
>Over the past 2 years, Lee's problems have cost VF some $100 million in profit.
>Critics say that VF ordered Lee to bolster corporate earnings by squeezing as
much as it could from its basic jeans business while doing no long term planing.
>Lee division itself was heavy with managers who had a "commodity mentality" they would fill the retail pipeline with basic jeans and let the retailers worry how to
sell them.
> There was a problem in management at LEE.
> 1972 Lee realized someting seemingly hadn't dawned on other big jean markers.
Women wanted jeans made for women, jeans that fit. Lee then developed the Ms.
Lee Brand, and today Lee remains America's best-selling women's jeans.
>Its total ean sales, men's and women's doubled from 1972 to 978 and grew
another 70% between 1981 and 1985, even as the jean industry overall was
declining.

>When jeans were the rage, Lee apparently gave little thought to anything other
than boosting production. Lee jeans were in such demand that they sometimes were
rationed to retail stores.

> The managers at lee were very conservative , they didnt encourage creativity,
they wanted a safe output.
> As other jean markers branched out into different styles, Lee stayed to its basic
Lee Rider, which lee felt transcended faddishness (intensely fashionable for a short
time).

> As jeans flattened in the early 1980s, Lee made the tactical blunder of broadening
its distribution to mass-market chains such as Bradlees and Targets.
> Selling though discounters would , it was assumed, gurantee Lee an outlet. But
the decision had unwanted effects.

> They figured they could grow their way out of the slump through production
instead of trying to find ways to market fashion.

>Selling to the discounters threw Lee into the hurly-burly competition with low cost
jeans with low-cost jeans, which had strong brand name and did alot of advertising.

> Lee jeans were priced as much as 35% higher than other brands sold in discount
stores, so, to move merchandise, stores would mark down the jean, at the expense
of the store's profit margins.

>Lee's assault on yout exposed a number of its weaknesses. The brand added a
number of fancier jeans to its repertoire-jeans with cargo pockets, jeans with
embroidered detail. But Lee's factories despite all their unused capacity- would
have had to be retooled to make them.
>Lee started using overseas contractors that were late and erratic in their
deliveries.
>Hundreds of thousands of jeans were returned.

> VF is concentrating on integrating its businesses.

> Lee is retooling their factories to be more flexible.
> Lee has a long way to go. It is harder to predict when, if ever, in a shrinking
market consumers will again think that Lee jeans are hot.