Delta Galil Names Paula Schneider CEO of DG Premium Brands
NEW YORK, October 18, 2016 — Delta Galil Industries Ltd. has tapped Paula Schneider, former chief executive officer of American Apparel, as CEO of DG Premium Brands, responsible for Seven For All Mankind, Splendid and Ella Moss.
Susan Kellogg, who has served as president of DG Premium Brands, will remain with the company as a consultant until the end of the year. Barry Miguel, president of Seven For All Mankind, will be leaving the company as a result of the restructuring to pursue other interests.
Isaac Dabah, CEO of Delta Galil, said, “Paula brings an entrepreneurial mind-set, demonstrated leadership skills and strong vision, which will be instrumental in executing our ambitious goals for these brands.”
“Seven For All Mankind, Splendid and Ella Moss are all leading premium brands with strong consumer appeal,” Schneider said. “With Delta Galil’s extensive manufacturing expertise, high-quality products and commitment to innovation backing me, I am excited for the tremendous opportunities ahead in growing each of these brands.”
Schneider, who was speaking Tuesday at Fortune’s Most Powerful Women Summit in Laguna Beach, Calif., told WWD that she wanted to take the job because her background was “first and foremost” contemporary. “I like the idea of going back into contemporary. I think the brands are very strong, and I think there’s a lot of potential,” she said. Schneider will be based in Los Angeles.
She said she will look at opportunities both domestically and global to grow these three brands. “My initial priorities are always product, it’s making sure the product is the absolute best it can be, and it’s the execution of making sure you get it out at the right time with the value proposition, and then a strong marketing campaign.”
Discussing whether the three brands would eventually consolidate in one facility (Splendid and Ella Moss are in downtown Los Angeles, and Seven For All Mankind is in Vernon, Calif), she said, “I think the plan is to have the three brands consolidate into one building. There’s already been consolidation of some tasks because you’ve got three businesses that were run as two businesses. You had Splendid and Ella, and Seven in a different facility, and a lot of the back end was duplicative so the new ownership made the decision to streamline it.”
Prior to serving as CEO of American Apparel, Schneider was President of Warnaco Swimwear Group, President of Laundry by Shelli Segal and President of Sales at BCBG.
In June, Delta Galil acquired Seven For All Mankind, Splendid and Ella Moss from VF Corp. for $120 million. At the time, Delta Galil said it sought to bolster the brands’ wholesale market share, optimize the supply chain, become more efficient and expand the product categories. The acquisition was expected to add more than $300 million to the company’s top line annual sales and was expected to contribute to earnings in 2017. The deal closed in the third quarter of 2016. Last month, 55 layoffs took place at Splendid and Ella Moss, and 50 layoffs occurred at Seven For All Mankind across multiple departments.
Asked if there would be more layoffs, Schneider said, “I have no idea. I haven’t stepped foot in the building yet.” She begins Wednesday.
At the time of the acquisition, a Delta Galil investor presentation, based on data from VF Corp., revealed a steady decline for the group in both revenue and earnings before interest, taxes, depreciation and amortization since 2012. The company that year reported EBITDA of $74 million on revenue of $446 million. The three brands last year had revenue of $344 million and EBITDA of $23 million. The group’s EBITDA this year was projected at the time of the deal to be about $10 million on revenue of about $300 million.
Delta Galil described opportunities in the market for all three labels in its acquisition presentation. The two-year growth program for Seven For All Mankind included store improvements, product innovation, supply chain efficiency and growth at wholesale for the 16-year-old premium denim brand. The plans for Splendid and Ella Moss called for the expansion of Splendid men’s, closure of underperforming stores and build out of e-commerce among other tactics.
The three businesses had been overseen by Kellogg, who had served as president of contemporary brands for VF Corp., (prior to the sale) for seven years. Earlier she was CEO of Elie Tahari and Group President of Liz Claiborne. Miguel was Global President of Seven For All Mankind for over five years, before which he was Global CEO of Tracy Reese and Global President of Zac Posen.
Schneider assumed the CEO role of American Apparel in January, 2015 and was originally charged to lead a turnaround of the struggling company, but resigned last month amid plans to sell all or part of the retailer. During her tenure, the company filed for Chapter 11 bankruptcy 10 months into her arrival, in a move to enable it to start rebuilding the brand. The company emerged from bankruptcy in February.
Her resignation letter, which was obtained by WWD, said the “sale process currently under way for all or part of the company may not enable us to pursue the course of action necessary for the plan to succeed nor allow the brand to stay true to its ideals. Therefore, after much deliberation, and with heavy heart, I’ve come to the conclusion it is time for me to resign as CEO.” She said in her letter that little could be done in her first year in business, blaming the company’s debt and “macroeconomic headwinds in retail that have proven challenging for American Apparel along with most other specialty retailers in the U.S.” Chelsea Grayson, American Apparel’s general counsel and chief administrative officer, succeeded Schneider as CEO last month.
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