Syms Corporation



Syms Way
Secaucus, New Jersey 07094
U.S.A.

Telephone: (201) 902-9600
Fax: (201) 902-9874
Web site: http://www.syms.com

Public Company
Incorporated:
1983
Employees: 1,749
Sales: $283.6 million (2005)
Stock Exchanges: New York
Ticker Symbol: SYM
NAIC: 448140 Family Clothing Stores

Syms Corporation operates a chain of off-price apparel stores under the Syms name, selling men's clothing and haberdashery, women's clothing, children's wear, shoes, luggage, and fragrances. The company operates 37 stores in 15 states, gearing its stores to the quality-minded but price-conscious middle-income buyer. Syms is unusual among discounters because it discloses future price changes, enabling customers to return at a later date for a larger discount. The company collects more than half of its revenues from selling men's tailored clothes and haberdashery. Syms maintains a 277,000-square-foot distribution center at its headquarters in Secaucus, New Jersey.

Business Launched in 1959

Sy Merns was a radio sportscaster in the early 1950s when he left this field to join his older brother George's discount clothing store, inherited from their father, on Greenwich Street in lower Manhattan. As Sy's daughter Marcy described the situation in her 1992 book Mind Your Own Business and Keep It in the Family, Sy Merns labored for six years to come up with $6,000, the agreed-on amount for 20 percent of the business. At the end of this period, however, George said 20 percent of the store was now worth much more, so Sy left, about 1959, to open, with a partner, a rival clothing store around the corner in 2,000 square feet of space, an enterprise that he named "Sy Merns." Since "Merns Mart" was the name of George's store, he went to court and forced his brother to change the name. Sy then abbreviated the name of his store to "Syms" and, eventually, took it as his legal surname, apparently in 1986.

Syms bought brand-name menswear irregulars at less than wholesale prices and, after removing the labels at the manufacturer's insistence, sold the merchandise at about 40 percent below retail, offering the widest selection possible. By 1967, there were five Syms stores, all in the rapidly developing low-rent area on the western fringe of Manhattan's financial district. Three of them were scheduled for demolition, two to make way for the giant World Trade Center. With a lease running through May 1968, Merns was refusing to vacate another of the five so that U.S. Steel Corp. could construct a 50-story office building unless he received a payment in six figures. According to his daughter, he "prevailed and became a real estate legend." Merns bought out his partner in 1968.

Syms opened a small Miami store in 1969, which moved to a larger location in Hallendale, Florida, in 1975. A small Buffalo store opened in 1970. By 1974, the single remaining Manhattan location was on Park Place, still on the western fringe of the financial district but now occupying 36,000 square feet. The company had opened its first suburban store in Bergen County, New Jersey, and in 1974 it opened another one, in Roslyn, Long Island. In 1978, it opened its first store in the Washington, D.C., metropolitan area, in Falls Church, Virginia.

Syms did not advertise its wares until 1971, when accountants told the boss that the money saved by not doing so would be lost to taxes anyway. As a former broadcaster, Merns announced his own commercials. The company broadcast its first television commercial, with Merns again as its representative, in 1974, the same year it adopted "An Educated Consumer Is Our Best Consumer" slogan that would become increasingly familiar to New Yorkers. It began selling women's clothing in 1971.

Syms had net income of $4 million on net sales of $72.1 million in 1979. The following year, when it had eight units, the enterprise purchased A. Sulka & Co., a prestigious retailer of men's haberdashery, established in 1895, with a store on Fifth Avenue in midtown Manhattan and another in London. There was also a second New York City store and a San Francisco one. In 1983, Sulka acquired a Paris operation. Leased Sulka departments were placed in Philadelphia, Houston, and Chicago department stores in 1983, 1984, and 1985, respectively. A Sulka store on Manhattan's Park Avenue became the chain's flagship in 1985, and a Troy, Michigan, outlet was added in 1988. The Sulka chain was sold in 1989.

More Stores, Bigger Profits in the 1980s

There were ten Syms stores in the fall of 1982. By now, manufacturer's labels appeared in all the clothing, women's as well as men's, accompanied by a tag listing both the nationally advertised price and the sharply discounted Syms price. Sy Syms, appearing in his own television spots and writing his own copy, would deliver messages such as, "If a garment doesn't have a recognizable name on it, it's not advisable to buy it." He was receiving goods from hundreds of manufacturers, one of whom told Walter McQuade of Fortune magazine, "You have to bite the bullet and get rid of mistakes. I called Sy and dickered. . . . A soft touch he's not, but he doesn't gouge. He keeps his commitments." Free of debt, Syms paid promptly out of cash flow, sometimes within ten days. In 1981, the chain sold more than 150,000 men's suits with more than 200 well-known brand names.

In a 1985 Forbes article, however, Richard Behar wrote that Syms was "sometimes hoodwinking its 'educated consumers' and sometimes selling them inferior-grade garments that can be mistaken for top-of-the-line goods." Behar reported that, for example, although Syms was the largest customer in the United States for "leftover" Givenchy suits, these were "visibly of lower overall quality than the Givenchys that are sold in department stores." He added that Syms had agreed to remove the Givenchy label before the customer was allowed to take the suit out of the store. "On balance," Behar concluded, "it seems clear that a good deal of Syms' merchandise is, in fact, manufactured specifically for it and is not 'leftover' in the accepted sense of the word."

This challenge to Syms's credibility did not go unanswered. Interviewed by Jay Palmer of Barron's in 1988, the founder's feisty eldest child, by now second in command to her father, insisted, "Despite what you have read elsewhere, the suit that you buy from Syms is made by the same people from the same fabric and the same patterns at the same factory and with the same workmanship as the suit with the same label sold at much higher prices in other stores. We are talking fabrics, not finished suits, when Syms buys from the suit maker. . . . We always ask them to make the suits up into the more conservative, lower-priced lines because that is what does best at Syms. Critics who look at our suits and compare them elsewhere don't compare like with like."

Syms, like other off-price retailers, saved its customers money by not putting up a front. There were no mannequins to display the merchandise; the dressing rooms had no separate stalls and were dimly lit; alterations, gift wrapping, and deliveries were extra; only Syms's own credit card was accepted; and the stretched-thin sales staff received no commissions. Syms maintained it held no sales, but its stores frequently announced "dividends," especially on rainy and snowy days, and certain women's garments were marked down every ten days until sold. Some 64 percent of Syms's $179.2 million in 1983 sales was generated by men's tailored clothes and haberdashery and 32 percent by women's dresses, suits, separates, and accessories. A small portion of the merchandise, mostly sweaters, jackets, and shirts, was being sold under the company's own "S" private label, but by 1987 brand or designer names were on all garments in Syms stores.

Syms made its initial public offering in 1983, clearing nearly $30 million in selling shares of its stock. Sy Syms, according to Behar, pocketed about $25 million and also retained control of 80 percent of the stock. To the 11 existing Syms stores, the company added, in 1984, new ones in two Chicago suburbs, Niles and Addison, and a Philadelphia suburb, Cherry Hill, New Jersey. By this time the Hallendale, Florida, store had moved to Fort Lauderdale, the Buffalo store had moved to nearby Williamsville, two outlets were in Boston suburbs, a second New Jersey store had opened in Woodbridge, and Westchester County, New York, also had a Syms store.

Expansion continued at a rapid pace in subsequent years. A second Philadelphia-area store opened in 1985 in King of Prussia, Pennsylvania. New Syms stores were established in 1986 in Monroeville, Pennsylvania, and Secaucus, New Jersey. In 1987, the chain opened stores in Norcross, Georgia; Southfield, Michigan; Brentwood, Missouri; and North Randall, Ohio. The following year, new stores opened in Hurst, Texas (outside Dallas), and in Charlotte and Henrietta, New York. The company moved its headquarters and warehouse from Lyndhurst, New Jersey, to Secaucus in 1987. That year was Syms's tenth consecutive year of record sales and net income. Its operating margin before taxes (once, at 14 percent, the highest of any U.S. retailer) remained at a comfortable 12.5 percent. The chain, in 1988, was no longer cutting out famous-name labels before buyers left the stores, but it continued its policy of not mentioning manufacturers' names in its advertising.

Company Perspectives:

For over 40 years SYMS has been committed to giving Educated Consumers real bargains on real designer clothes. SYMS is the Off-Price representative of over 200 authentic designer and brand names . . . Names You Must Know . . . in clothing and shoes, for men, women, and children. We offer an impressive selection of styles and sizes.

Sticking to a Successful Formula in the 1990s

Syms moved its Roslyn store to Westbury in 1989 and opened new stores in Baltimore, Houston, and Tampa in 1990. In the recessionary fiscal year ended February 28, 1991, profits slipped for the first time since 1977. The chain, which in 1992 owned, rather than leased, 18 of its stores, compared with only one in 1983, found itself overstocked with merchandise and was forced to slash its prices. Almost a dozen new Syms stores opened during the next few years, but revenues remained stagnant and net income dropped in 1994 to the lowest level since 1982. Industry observers noted that retailers like Syms were facing increased competition from other off-price stores, discounters, and department stores.

With company stock selling in late 1995 for only $8 a share, compared to $15 a share in its initial public offering a dozen years earlier, Sy Syms explored the possibility of taking his company private, although he ultimately rejected the idea because of the need to take on a major debt load. In the fiscal year ended March 1, 1997, Syms recorded its highest profit level in seven years. The company opened a second Manhattan outlet in midtown, on high-rent Park Avenue, in late 1996. Despite the location, a retail consultant, Alan Millstein, told Beth Fitzgerald of the Newark Star-Ledger that Syms "runs the homeliest looking stores in retailing," adding that even the new Park Avenue store "looks like a used airplane hangar—but it's jammed full of people."

Its momentum restored, Syms announced in April 1997 plans to open 19 new stores over the next four years, including four in Los Angeles and two each in San Francisco, Seattle, and Toronto, thereby establishing a presence on the West Coast and in Canada for the first time. The Atlanta, Baltimore, Detroit, Houston, and Miami metropolitan areas, plus the Princeton, New Jersey, area, were slated to receive second units. For Atlanta, Detroit, and Miami, this was accomplished in 1998. A Syms opened in Boston in the same year, and similar downtown outlets were scheduled for Chicago and Washington, D.C. In April 1999, Syms opened its twelfth store in the metropolitan New York City area, in Lawrenceville, New Jersey. The chain's stores were averaging 40,000 square feet in size and holding some 8,000 suits on average.

Marcy Syms, president since 1983 and chief operating officer since 1984, succeeded her father as chief executive officer in January 1998. She vowed not to make any major changes, retaining the chain's large selection of merchandise and its no-frills ambience, telling Jean Palmieri of DNR/Daily News Record, "We see no need to fool around with a successful formula." Two younger brothers were serving as vice-presidents. At 71, Sy Syms retained the position of chairman and continued to come into the office every day. He owned about 41 percent of the company's shares of stock at this time, and members of his family held another 11 percent.

In the fiscal year ended February 28, 1998, the company registered record net income of $23 million, sending its stock price to the $15-a-share level. The fiscal year ended February 27, 1999 was not as rosy for Syms as the previous one, however. Net sales fell $9 million, to $343.9 million, and net income dropped $5.5 million, to $17.5 million. Men's tailored clothes and haberdashery accounted for 53 percent of sales; women's dresses, suits, separates, and accessories, for 31 percent; shoes, 8 percent; children's wear, 6 percent; and luggage, domestics, and fragrances, 2 percent. The company blamed the downturn on an undersupply of the lower-priced brands that its customers were seeking. Syms's stock dropped back to the $8-a-share level. The chain continued its record, however, of never losing money in a quarter, much less a year. Always conservatively financed, it had a long-term debt of only $400,000 in early 1998.

A Lackluster Start in the 21st Century

Syms's disciplined attitude toward debt and the fact that it owned most of its stores, rather than leased them, ranked as arguably the chain's strongest qualities at the turn of the 21st century. Instead of expanding its chain, Syms retreated during the first years of the decade, closing stores as a way to restore the financial vitality once exuded by the company. In 2000, when there were 48 Syms stores in operation, the company's net income plunged from $17.4 million to $2.2 million, an 87 percent decline, on a slight decline in revenues. The financial difficulties continued as the company faced stiff competition from other discount retailers such as Men's Wearhouse, leading some critics to wonder whether the company's strategy needed to be altered. Marcy Syms, despite the lackluster results reported by the company, remained steadfast to the concept developed by her father. "Our message has remained consistent, and we've stayed true to our original concept," she remarked in a May 10, 2002 interview with the Dallas Morning News . "We sell a name you know at a price that will knock your socks off."

Key Dates:

1959:
Sy Merns opens his first clothing store in New York City.
1969:
The first Syms store outside New York City opens in Miami.
1971:
The chain begins selling women's clothing.
1974:
"An Educated Consumer Is Our Best Customer" is first used as the Syms's slogan.
1980:
A. Sulka & Co. is acquired, giving Syms one more store in New York City and one in London.
1983:
Syms completes its initial public offering of stock.
1987:
The company records its tenth consecutive year of record sales and net income.
1997:
Syms announces plans to open 19 stores by 2001.
1998:
Marcy Syms succeeds her father as chief executive officer.
2005:
After closing more than ten stores during the previous five years, Syms reports its first profit in four years.

When Marcy Syms made her remarks, the number of Syms stores had been reduced to 42, but the closure of unprofitable stores did little to change the company's overall financial state. The end of 2002 marked the company's second consecutive year of posting an annual loss. Sales for the year dropped substantially, falling from $342 million to $287 million. The financial slide continued until 2005, when the pattern of four consecutive years of losses and three consecutive years of declining revenues came to an end. For the year, sales were up 3 percent to $283 million, still well below the $342 million collected in 2001, and earnings reached $2 million, up markedly from the nearly $5 million loss posted the previous year. The company's store count by this point had been whittled down to 37 after three closures during the year in North Carolina, Maryland, and New Jersey. Looking ahead, Marcy Syms and her management team hoped the year's financial totals augured the beginning of better times at the company, as they guided Sy Syms's business toward a half-century of existence as a discount apparel retailer.

Principal Subsidiaries

Generic Products Inc.; The Rothschild's Haberdashery Ltd.; SYL Inc.; Syms Advertising, Inc.

Principal Competitors

Federated Department Stores, Inc.; Filene's Basement Corporation; The May Department Stores Company.

Further Reading

Behar, Richard, "Hi, This Is Sy Syms," Forbes , September 9, 1985, pp. 30–32.

"Company Spotlight #194: Syms Corp.," Crain's New York Business , May 23, 2005, p. 22.

Fitzgerald, Beth, "Syms Stays Ahead of the Retail Pack by Meeting Customer Expectations," Newark Star-Ledger , April 9, 1997, pp. 37–38.

Furman, Phyllis, "Sy, Marcy Outrun Apparel Downturn," Crain's New York Business , January 27, 1992, pp. 1, 41.

Gellers, Stan, "Syms Schools Consumers on Better Suits," DNR/Daily News Record , April 23, 1997, pp. 2, 14.

——, "Syms Set to Embark on Major Expansion," DNR/Daily News Record , April 25, 1997, cover, p. 1.

Kaplan, Don, "Syms Steps Out on Park Avenue," DNR/Daily News Record , November 22, 1996, p. 3.

——, "Syms Sticking to Its 'Values,' " DNR/Daily News Record , December 12, 1994, pp. 10–11.

Lasseter, Diana G., "Sy Syms Wants to Take Syms Private," BUSINESS News New Jersey , October 4, 1995, p. 8.

Lipowicz, Alice, "Retail's Slow Summer Tests Syms' Fiber," Crain's New York Business , October 5, 1998, p. 40.

"Marcy Syms Discusses How Retail and Her Family Business Are Entering a New Era," BUSINESS News New Jersey , November 29, 1995, p. 25.

McQuade, Walter, "The Man Who Makes Millions on Mistakes," Fortune , September 6, 1982, pp. 106–08, 110, 112, 116.

Palmer, Jay, "Fancy Labels, Plain Prices," Barron's , September 26, 1988, pp. 18, 20, 47.

Palmieri, Jean E., "It's Marcy's Turn to Educate the Consumers," DNR/Daily News Record , April 29, 1998, pp. 4–5.

Prial, Frank J., "Small Haberdashery Upsets U.S. Steel's Skyscraper Project," Wall Street Journal , September 18, 1967, pp. 1, 21.

Quinn, Steve, "Clothing Store Has Tentative Deal to Take Old Plano, Texas, Homeplace Site.," Dallas Morning News , May 10, 2002,p. B2.

Syms, Marcy, Mind Your Own Business and Keep It in the Family , New York: Mastermedia Ltd., 1992.

"Syms Profits Freefal 87 Percent in Year," Daily News Record , May 5, 2000, p. 24.

Wipperfurth, Heike, "Stock Watch: Syms Racks Up Hefty Gain," Crain's New York Business , August 12, 2002, p. 35.

—Robert Halasz —update: Jeffrey L. Covell



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