Pumping No Iron Slacks

This year's hot men's fashion houses: Armani, Gianni Versace, Ralph Lauren. And Haggar Corp. True, Haggar isn't exactly cutting edge. The Dallas-based company has made its name with solid, dependable duds for The Average Guy. But this year, while Seventh Avenue flaunts spring lines remarkable for their designed-in, unironable wrinkles, Haggar is cleaning up by selling Middle America just the opposite.

Haggar introduced its line of cotton slacks, treated with a baked-on chemical finish to resist wrinkling after washing, late in 1992. Now, wrinkle-free is exploding. It's no mystery why: The new material saves ironing time and cuts the cost of dry cleaning. "I think this is fantastic," raves retired schoolteacher Jo Paschall, 64, shopping with her husband George at the Dillard's department store in Mesquite, Tex. She picked a pair of wrinkle-free Haggar's simply "to keep from ironing."

Indeed, wrinklelessness is very, very big for Haggar. No-iron slacks sent the company's profits soaring eightfold in the first fiscal quarter, ended Dec. 31, to $4.5 million. Sales, at $110 million, were up 34%. In the year ended Sept. 30, profits rose 33%, to $15 million, on $394 million in sales.

It could get much bigger. Americans buy some 90 million pairs of men's cotton slacks annually, and retailers say the wrinkle-free portion of that pile represents the fastest-growing segment in men's apparel. "Consumer demand has been huge," says Jack Fleischer, director of men's merchandising at J.C. Penney, where no-iron brands now account for more than 30% of men's casual-pant sales.

Last year, Haggar shipped 2.1 million no-iron pairs. Analyst Brenda Gall of Merrill Lynch & Co. figures the company will sell 10 million pairs in fiscal 1994. It already has rushed no-iron versions of its corduroy and gabardine slacks to stores, and will produce shirts and boys' pants later this year. That, Gall says, will help push Haggar's 1994 profits up 65%, to $24.8 million, on a sales gain of 19%, or $470 million.

Competitors Levi Strauss & Co. and VF Corp.'s Lee unit both "completely missed the boat on this innovation, and now they're playing catch-up," says Alan G. Millstein, a New York apparel consultant and editor of the newsletter Fashion Network Report. But they're catching up fast. Lee, which produced its first wrinkle-free pants last summer, expects to sell some 6 million pairs this year. Levi will roll out no-iron versions of its popular Dockers line nationally for Father's Day. Robert Hanson, Dockers' director of marketing, insists that the $6 billion apparel giant "will get our fair share of the market."

Haggar has fought this battle before. It quickly lost the top spot in the $3 billion casual-slacks market when Levi created the first Dockers in 1986. "Levi forced us to look for a competitive advantage," says Frank D. Bracken, Haggar's executive vice-president. The company found it in the wrinkle-free concept introduced by apparel maker Farah Inc. in 1989. Farah lacked the cash to market its innovation effectively; Haggar put $20 million into advertising, and the slacks flew. Now, Farah is catching some of the windfall. Its fourth-quarter profits grew 184%, to $3.4 million, on $59 million in revenues.

Haggar hopes to protect its early lead by spending an additional $25 million on advertising this year. It's also pushing aggressively into Japan, Canada, Mexico, and Britain. But Levi Strauss boasts that it will account for 70% of all marketing dollars spent in the wrinkle-free segment around Father's Day. Plus, big-time shirtmakers Phillips-Van Heusen Corp. and Arrow Shirt Co. plan heavy advertising for the lines they will launch in June, starting what could be an even bigger battle in men's upperwear. With the wrinkle-free business so crowded, Haggar will have to press to stay on top.

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