1332 Londontown Boulevard
Eldersburg, Maryland 21783-5399
Telephone: (410) 795-5900
Fax: (410) 795-5900
Incorporated: 1922 as Londontown Clothing Company
Sales: $335.6 million (1998)
NAIC: 315228 Men's & Boys' Cut & Sew Other Outerwear Manufacturing; 315239 Women's & Girls' Cut & Sew Other Outerwear Manufacturing; 44819 Other Clothing Stores
London Fog's mission is to be the international leader in developing and marketing fashionable clothing to keep customers warm and dry at a high level of profitability.
London Fog Industries, Inc. is a major designer and distributor of raincoats and outerwear. Its own brands include London Fog, Towne, W by London Fog, Pacific Trail, Black Dot, and Inside Edge, which are made in Asia and Columbia. It also produces sportswear and outerwear under license for Sperry Top-Sider and Docker's. London Fog brands are sold in department and specialty stores and in its own chains of Weather Stores, Weather Clothing Company, and London Fog outlet stores. London Fog licenses stores in China and its subsidiary, Pacific Trail, Inc., licenses stores in Japan. A group of investment firms control the private company.
A Clothing Manufacturer: 1922--53
Israel Myers was 16 years old in 1923 when he went to work as a part-time stenographer at the Londontown Clothing Company. Londontown, which had been founded in Baltimore, Maryland, a year earlier, made finely tailored men's clothing and topcoats. The relationship between Myers and Londontown would last more than 40 years, but it almost did not survive the Depression.
Londontown failed in 1930, but Myers bought the name and the physical assets in 1931, and kept the company making men's clothing. In the process he become president and chairman. As he told the Baltimore News American in 1971, "If I [had] had a good job offer, I probably would have taken it. But there were no jobs available, [and] I had worked hard and saved my money."
When the United States entered World War II, Myers accepted a Navy contract to make rubber-based waterproof coats for enlisted men, even though he knew nothing about the procedure for doing so. When the war ended, Myers changed the name of his company to Londontown Manufacturing Company and continued to make raincoats. At that time, raincoats were considered by manufacturers and consumers as anything that would keep the water off, and Myers obviously saw possibilities.
He wanted to make the raincoats a fashionable part of the wardrobe, and to do that, he had to find a material that would be both waterproof and comfortable. When that proved impossible with conventional fabrics, he tried a new synthetic polyester developed by E.I. du Pont de Nemours & Co. The friction from his sewing machines, however, melted the fibers. Finally, Du Pont and Reeves Brothers, Inc., a fabric maker, created a cotton and Dacron material that did not melt during the sewing process, was water-repellent, and remained so even when put through a washing machine.
Raincoat Innovations: 1954--65
The company designed its new line of men's raincoats after the World War I "trench coats," with epaulets, sleeve straps, and a belt. Myers reluctantly agreed to use the name London Fog, having originally rejected it because he did not think it sellable. Saks Fifth Avenue was the first store to offer the raincoats, introducing London Fog in a New York Times ad on March 7, 1954. The ad described the coat as "The perfect answer to everything a man can ask for in a raincoat. Remarkably lightweight and wrinkle-free ... it actually resists creasing even after packing." The 100 coats sold out immediately, even though the $29.75 price was more than double that of other men's raincoats.
The following week, the New York Times called London Fog the perfect name. The "Advertising and Marketing Fields" column in the March 13, 1954 edition stated: "Every once in a while a name comes along for a product that is exactly right. It describes the product exactly and does a selling job that even the legendary 10,000 words cannot do. Such a one is London Fog."
Londontown quickly followed up this first wash-and-wear raincoat for men with a second innovation. After watching women customers buy London Fog coats for themselves, John Wanamaker's, the leading Philadelphia department store, asked Londontown to make a raincoat for women. Using the same design but adding two darts at the chest and moving the buttons to the left side, Londontown introduced the first line of women's raincoats in 1955, and Wanamaker's quickly sold all 90 produced.
During the 1950s and mid-1960s, Londontown appeared particularly attuned to what customers needed. It designed the first full, removable liner. With a simple zip, what had been winter raincoats could be used year-round. Londontown patented a process to keep buttons from falling off and an inner barrier to keep shoulders drier. Several of its innovations became commonplace, such as including replacement buttons and sewing washing instructions to the inside of its coats.
In 1961 Myers took Londontown public and soon began signing foreign licensing agreements. In 1966 the company was listed on the New York Stock Exchange.
Changes Occur: 1968--75
Jonathan P. Myers, Israel's son, assumed the presidency of Londontown in 1969, the year after coat sales fell by a quarter. Blaming the problems on the company's lack of attention to women's changing clothing styles, he spent the next five years working to gain back women customers. While maintaining its tradition for classic coats, the company began producing raincoats designed specifically for women.
The design of women's coats was not the only area in which Jon Myers made changes. He acquired Star Sportwear Manufacturing Company of Lynn, Massachusetts, a prominent maker of men's leather and suede garments, opened the first London Fog outlet store, and introduced the Clipper Mist label of well-made men's and women's rainwear, priced less expensively than the London Fog line. Clipper Mist, incidentally, was one of the names rejected by his father in 1954. By 1975, about two-thirds of all mid-priced and better raincoats sold in the United States carried the London Fog label.
Londontown also moved heavily into licensing agreements with U.S. companies, averaging nearly a license agreement a year between 1968 and 1983. Customers were able to buy London Fog accessories and clothing ranging from umbrellas and rainhats to sweaters, dress slacks, belts and billfolds, handbags, luggage, briefcases, sport shirts, flannel shirts, girl's and boy's outerwear, and even sunglasses.
Part of Interco Corp.: 1976--88
In 1976 Londontown had sales of $71 million and agreed to be bought by Interco Inc. of Saint Louis in a stock swap worth about $33.3 million. Interco was the parent company of Ethan Allen furniture and Florsheim shoes, among others.
Jon Myers remained president until 1980, when he was named chairman and CEO. Mark Lieberman, who had joined the company in 1978, became president and, in 1981, assumed the CEO position. Among his first moves was to merge the Clipper Mist and Startown subsidiaries, which began operating as Star Sportwear Manufacturing Corp.
During the 1980s, domestic rainwear companies came under greater pressure from cheaper imported raincoats. In 1983 Londontown introduced its London Towne brand, a less expensive line of raincoats, made overseas. The company hired actress Stephanie Powers for a television ad campaign, which saw sales "explode," according to Lieberman.
At the same time, department stores and other retailers wanted more diversity in their rainwear departments. Customers with more disposable income wanted both a classic raincoat and lines offering a wider variety of fabrics and colors. During 1983 and 1984, Londontown sold more than half its merchandise in fashion rainwear, according to a January 22, 1985 WWD article.
In 1985 Londontown bought Milford Sportwear, Inc., its licensee for men's knit shirts. By 1987, the company had 3,000 workers and was the world's largest manufacturer of raincoats and outerwear, with six domestic manufacturing plants.
In July 1988 Interco announced that it would sell its clothing manufacturing group in a restructuring undertaken to fight a takeover bid. Near the end of December, Londontown CEO and president, Lieberman, along with four other top executives, organized as Eldersberg Acquisition Corp. and acquired Londontown Corp. for $178 million, taking it private in a leveraged buyout. Total financing came to $311 million. Sales for the year ending February 28, 1989 were about $231 million, more than triple the $71 million in sales for 1976, the year Interco bought Londontown.
New Management and a New Image: 1989--90
The new owners laid off some workers in a cost reduction necessitated by the huge debt Londontown had, but increased budgets for advertising, design, and marketing. The strategy was to emphasize the company's lines of women's and fashion-oriented raincoats and outerwear and styles to attract younger customers.
In June 1989 Londontown went public, using proceeds from the sale of $75 million in junk bonds to pay part of the debt from the buyout. Sales for the year increased to $265.1 million, with the company selling more jackets and outerwear than raincoats, and women's apparel accounted for 52 percent of overall sales. Fifteen years earlier, in 1975, rainwear had represented 85 percent of sales, with 65 percent in men's categories.
New Owners: 1990--92
In June 1990 management sold a 90 percent interest in Londontown Holdings, the company's parent, to Merrill Lynch Capital Partners, Inc., which paid a reported $275 million. That amount included assumption of about $180 million in debt. Merrill Lynch gained three seats on Londontown's 11-member board, but Lieberman and Londontown's other officers remained responsible for day-to-day operations.
Lieberman moved more aggressively into wool coats for women. "People need coats for the rain and the cold, no matter what the retail cycle is," he told Women's Wear Daily in 1990. "Our high name recognition--98 percent of consumers recognize the London Fog brand&mdash′etty much insures that we will get a substantial share of the markets in which we sell."
In 1992 the company began selling London Fog raincoats in the United Kingdom and continued to expand beyond rainwear. It introduced Gold Fog, a line of high-priced, fashion outerwear including a gold lamé jacket and a cotton velvet jacket with gold studs and fox fur trim. It also expanded its lower-priced Towne by London Fog line of rainwear and hired actress Stephanie Powers again for a $4 million national television campaign.
The company had sales for the year of $318 million, but a loss of $262,000. The company was still the largest raincoat maker in the United States, but its share of the rainwear market had dropped to around 60 percent.
New Leadership: 1993--94
The following year, 1993, Lieberman created London Fog Corp., a holding company, with Londontown Corp. as its sole subsidiary. He retired in June, selling his interest in the company.
Three months later, in September, Arnold Cohen, from catalog clothing company J Crew, was hired to be the new president and CEO. Over the 11 months of his tenure at Londontown he made several major changes. He moved company headquarters from Maryland to Darien, Connecticut, near his home, laid off 1,000 people, closed five plants, and shifted almost all manufacturing overseas. He also mounted a big marketing campaign, started to push the company into children's sportswear, and increased the use of new fabrics and styles, including, finally, microfibers, which were by then dominating the outerwear market.
One of his most critical undertakings was to prohibit stores from marking down London Fog coats until the second week of December. This move greatly angered retailers whose best raincoat business traditionally occurred during their Columbus Day, Veterans Day, and Thanksgiving promotions. Many were further incensed because London Fog was selling its coats at discount at its 100 outlet stores. Department store orders dropped significantly.
In April 1994 Cohen merged London Fog Corp. with Seattle-based Pacific Trail, Inc., which had been making ski jackets and other outerwear since 1945, and was owned by GKH Partners. The merger gave GKH a 36 percent share of London Fog. Around this time, the company's name was changed to London Fog Industries.
New Leadership: 1994--95
London Fog's debt stood at $425 million. It had poor relations with its large retailers and was barely breaking even on cash flow. In August 1994 Cohen was ousted and James Milligan, a seasoned troubleshooter, was named CEO and charged with rescuing the company.
Milligan relaxed the ban on discounts, and although he did not eliminate it completely, he helped repair relations with the department stores. He also moved the company back to Eldersburg, Maryland and went after the discount and chain store customer, with five separate labels. The company ended the fiscal year with a loss of $125 million in operations alone, not counting debt payments.
New Leadership: 1995--96
With the company not able to make all of its debt payments, Merrill Lynch and GKH brought in turnaround specialist Robert A. Gregory from Gitano Group to head the company. In March 1995 Gregory negotiated a debt restructuring, avoiding bankruptcy. He stretched out loan payments and had the banks forgive one-third of the $317 million debt in exchange for control of the company. Merrill Lynch and GKH gave the banks 88 percent of London Fog's preferred stock and 80 percent of the common stock. As CEO, Gregory closed the children's clothing divisions and established a mission to refocus London Fog and Pacific Trail on making and selling outerwear. He also invested $2 million in the sole remaining manufacturing plant, in Baltimore.
In 1996 the company relaunched its FOG (Functional Outerwear Gear) label as a new line of performance outerwear for men and women in their 20s. Marketed as "functionality with a fashion twist," the line included light outer shells in a variety of styles, insulated vests, and jackets made from fleece, goose down, and nylon.
November saw the introduction of a new retail venture, with the opening of two Weather Stores. Located at Union Station in Washington, D.C. and in the Pittsburgh (PA) Airport, the stores sold London Fog raincoats and weather-related accessories and were aimed at the travel-oriented customer.
In his first year with London Fog, Gregory reduced the operating loss to $13 million, and in his second year produced a profit, the first for the company since 1991. But the price paid for the ongoing recovery included the closing of the last London Fog manufacturing plant.
Leadership Continuation: 1997--98
Gregory expanded the company's retail concepts during 1997, opening seven London Fog superstores of 25,000 square feet. Featuring all the London Fog merchandise and accessories, the stores were located in strip malls in New York and Ohio. In addition, the company operated some 120 outlet stores. That same year London Fog signed licensing agreements with the Stride Rite Corp. to produce Sperry Top-Sider casual and performance outerwear. The company also introduced a new proprietary insulation technology called nrg 2000, which had been developed by Thermore Technologies of Milan. London Fog claimed nrg 2000 was lighter, less bulky, and more flexible than Thinsulate and Thermoloft, products by 3M that London Fog (and most other outerwear manufacturers) had been using. For the fiscal year ending February 28, 1998, London Fog had annual sales of $335.6 million and earnings of $155.7 million.
During 1998, Gregory again restructured London Fog's long-term debt, giving eight million shares of newly issued stock to several dozen creditors. He discontinued the FOG label, folding its activewear styles into the core London Fog line, and introduced a new label, W for London Fog. This line offered rainwear in luxury fabrics lined with Thermostat 37, another new proprietary climate-control insulation. He also signed a new distribution license in China, opening some 25 in-store shops in major department stores in Beijing, Shanghai, and other major cities, and entered the shoe business, teaming up with Atsco Footwear Inc to introduce London Fog brand foul-weather shoes and boots in department stores.
Meanwhile, Pacific Trail, under the presidency of Bill Dragon, Jr., was having sales of nearly $100 million. The subsidiary designed and distributed women's outerwear and women's and men's performance outerwear for skiing and snowboarding under the Inside Edge and Black Dot labels. It also produced Dockers men's and women's outerwear under license for Levi Strauss & Co. and had Pacific Trail stores in Japan, selling men's and boys' clothing.
At the end of 1998, Gregory introduced a new chain of stores called Weatherwear Clothing, selling casual outerwear and sportwear, including khakis, polo jackets, and shirts. Some of the company's superstores were converted into Weatherwear Clothing shops.
1999 to the Present
Having completed the final year of his four-year contract, Gregory resigned in March 1999, as did President C. William Crain. Bill Dragon, Jr., who headed Pacific Trail, was named president and CEO of London Fog Industries. Crediting Gregory and Crain with having stopped the bleeding, Dragon told the Baltimore Sun, "There was a need to put more emphasis on outerwear as opposed to rainwear. Today, we're in a much better financial position."
Dragon indicated he wanted to stay true to the London Fog brand and improve internal sourcing and customer service functions. But financial problems still existed for the venerable raincoat and outerwear maker. The company remained highly leveraged, with outstanding debt of $224.4 million, and Gregory's hoped-for public offering had not yet materialized. Relatively warm weather also contributed to a dismal outerwear market. Only time would tell whether Dragon's experience at Pacific Trail would be enough to continue London Fog's rebuilding.
Principal Subsidiaries: Pacific Trail, Inc.
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Source: International Directory of Company Histories, Vol. 29. St. James Press, 1999.