The Los Angeles Times from Los Angeles, California • 77

Nov. 18. 1979 Part IV 3 Cos Anjjetea Suites 4 4 SL 1 nyr mm ii to: Mwk rH-Ti? m- Si HP I CO i 5s ON WHEELS A dictionary, left, in the front of Joseph Magnin's Costa Mesa store highlights the word "wheels." All shelf units and counters are on wheels for flexibility in arranging merchandise, above, while lighting is placed on interchangeable ceiling tracks. Times photos by Con Keyes it iiwmmuui. ll if New Joseph Magnin Chief Hopes to Pump Some Old Life Back Into Firm ny where a former colleague describes him as a marketing man with ideas "way ahead of his JM offered a personal arena for Gorman's belief that a retail store "can't simply offer merchandise for sale, it has to offer excitement and education It was my idea to buy JM; I wanted to run the company, and I thought I could do it." Though JM's "marvelous name and image was deteriorating," says Leonard Green of Gibbons, Green, van Amerongen, "we were impressed with most of the locations and leases, and we felt in late '77 that there was job, income, but by attitudes, interests and values, with a higher than average awareness of what's going on in the world, a higher than average interest in fashion and desire to express herself in what she wears, and a higher than average ability to do something about it." What JM will sell her is "forward fashion," but within price limits that make it "value fashion" as well, eschewing the so-called high fashion that to Gorman "simply means high-priced fashion." JM therefore "contracted its price range, concentrated its merchandise buying, and consoli- BY SUSAN J.

DIAMOND Timti Stiff writer "The first thing we have to do is clarify what business Joseph Magnin is in," says Edward Gorman, chairman and chief executive officer of the 66-year-old, San Francisco-based chain of stores that would seem to have a well-established identity already. What Joseph Magnin is getting is a new lease on life. More accurately, "JM" is trying to get back its old lease on life after a decade of conglomerate ownership that, according to company releases, "altered the direction set by the Magnin family and distorted the Joseph Magnin image." The management, however, has changed once more to a group of private investors who are taking the $100 million chain private and entrepreneurial again. The Magnin name they want to resuscitate is one of its most valuable assets. JM was started in 1913 by Joseph Magnin, who thus went into competition with his father, I.

Magnin. Under Joseph, and then his son Cyril (now chairman of the board), JM "became so refined and distinc-, tive," Gorman says, "that retailers, including me, used to come out here in the 60s just to see what was going on. Edward Gorman, chairman of Joseph Magnin, had been retired. But he'd always admired the 66-year-old JM chain, so in 1977, he and a group of private investors bought it from Amfac Corp. Considered a consumate retail marketing expert, especially in the youth market, Gorman, 62, was formerly marketing assistant to the president of Penney's, and before that, vice president and marketing director of Melville Corp.

He hopes to take JM back to its entrepreneurial days with a new "forward fashion" image for today's woman. Times drawing by Pete Bentovoji LEADERSHIP NEEDED View, Eastridge shopping center near San Jose, Canoga Park and Santa Barbara. Other stores will be changed. In all its years, Gorman says, "JM never had a prototype store, ranging instead from a six-floor building with 77,000 square feet to a hotel lobby unit of less than 1,000 square feet. When people asked me, 'What is a JM I couldn't describe the look." The Costa Mesa store remodeled and reopened last month, is that prototype.

Its 27,000 square feet were designed by New York architects Massimo and Leila Vignelli to reflect JM's focus on the unique and contemporary, with shelf units, counters, even dressing rooms on wheels for flexibility in arranging merchandise, lighting on interchangeable ceiling tracks, and a "meandering" path laid out through departments instead of in the standard grid pattern. Finally, new stores are being opened, although so far the only JM is one in Reno. The others are Gucci stores, under a licensing arrangement that permitted JM to operate Gucci boutiques within JM stores an "unexpected kicker" in the JM purchase, investment banker Green says. Cyril Magnin and Gucci have renegotiated the contract so that JM can open free-standing Guccis as well, starting with three this past year-in San Francisco, Waikiki, and in Caesar's Palace in Las Vegas. However JM may expand, "everything that happens in this company will happen in this building," says Gorman, gesturing around his harbor view offices an insistence on centralization he believes crucial for a management that wants to take a store back to the magic of its entrepreneurial days.

"The old-time merchant could hold it all in one hand and run it himself," Gorman says. "As you grow, running a large number of stores in several states and carrying more lines, you have to find a whole new way to make a coherent statement about what you're doing, because it has to be understood by other people." The resultant emphasis on "backbone documents" and clarifications so far is moving the company along its investors' 5-year plan. JM's new management says it has already turned the company around, with an operating profit of $3.1 million on 1978 revenues of $93.5 million. Projected sales for 1979 are $102 million, with income before taxes of about $2 million. According to Green, who is one of JM's new directors, the company is expected to bring in a minimum 7 to 8 annual profit before taxes after five years under the new management; Gorman aims higher for at least 10 or 12.

U.S. Can Recover Its Drive Henry Ford II JM gathered a reputation for being trendy as well, very different from I. Magnin, though some people confuse the names. I. Magnin, by contrast, is more sedate, and, says one shopper, "more establishment." In 1969, when there were 31 JMs in California and Nevada, the Magnin family sold its profitable little chain to Amfac, the Honolulu-based conglomerate, for a reported $31 million more than $21 million over the book value, according to Amfac.

The conglomerate built JM up to 49 but the division was increasingly unprofitable. As analysts point out now, Amfac's only comparable retail experience and most of its retail management came from its Liberty House stores, which were "terrifically successful," says one analyst, but unique because they have little competition in the Hawaiian Islands. In December, 1977, Amfac sold JM to a group of private investors for an announced price of $33 million, simultaneously writing off $21 million in good will on a pre-tax basis. The purchase group, whose majority partner in Pittsburgh-based Hillman was put together by the New York investment banking firm of Gibbons, Green, van Amerongen Ltd. Gorman, 62, had just retired from a long career as "one of those guys in a retail machine turning a crank" first for Melville Corp.

and then J. C. Pen I am very fearful about what is happening in this country. I'm just not comfortable when I'm fearful of so many things all at the same time. The list starts with inflation and energy and continues on to unemployment, an anemic dollar, a balance of trade that is way out of kilter, programs to help the poor that don't work, and an educational system that needs a lot of improving.

I'm distressed by the trend toward socialism in this country. And, on top of it all, most of the leadership I've seen has not done a thing to bolster my opinion on any score. I get terribly concerned when I hear the President of the United States say the American people are suffering from a malaise of spirit. I believe he has completely misdiagnosed the situation. What we are suf- dated departments.

Large sizes are not carried at all, and few outfits climb into the hundreds of dollars, partly because JM "de-emphasizes established designer names, instead emphasizing young designers for a customer sophisticated enough not to need a label to tell her something's fashion." Like any new owner, JM's management reviewed its store locations and undertook what Gorman calls "a health-making process of pruning." The six JMs closed so far are in areas that didn't seem to offer a concentration of JMs target customers downtown Denver, Sun Valley shopping center in Concord, Mountain a definite trend of working women 25 to 45 opting to buy in such specialty stores. If we could focus the imagery and merchandise, it could be an excit-. ing situation." Following the "assumption that you can't be all things to all people," Gorman "posed the question, 'Who do you want to be what and got the answer written down in a backbone document so it could be clear not just in my head but in everyone else's." He narrowed JM's customer to "the contemporary woman, but since that's what every retailer says he's aiming at, you have to be more specific. We mean the truly modern-minded woman, defined not by her age, autocrats out of committee chairman, but before it was destroyed, we should have had something to replace it. With party discipline down the drain, the single-issue advocates have rushed in to fill the vacuum.

They make very simplistic cases for the solution to very complex problems, and the government caves in. Fortunately, at least one strong man has appeared on the scene. Paul A. Volcker, Federal Reserve chairman, has made a right move toward the control of inflation. As his action to tighten up the money supply takes hold, it will be painful.

Our people believe his move last month will cost our industry a million sales next year. If that's what it takes to cool the fires of inflation, then so be it. It's a price we'll have to pay. I have no doubt that we can have a change from economic decline to growth if we set our minds to it and use the tools we have at hand. And one of the country's greatest resources for effecting change is the great reserve strength "of business and industry.

Business always has served as the conntry's engine of change and it can do it again, provided, of course, we get some cooperation from government. The first step in that cooperation should be a change of attitude. Government must understand that business is an ally in the search for solutions rather than an adversary to be blamed for the problems. Second, government must get its regulatory agencies under control and put an end to burdensome over-regulation that is not cost effective. Third, we need a change in tax policy that encourages capital formation.

With the funding required to meet the legitimate desires of our people for a cleaner environment, business and industry have very little left over to finance the new facilities and processes that could boost productivity. Improved productivity could go a long way toward making us competitive enough abroad to alleviate our balance of payments problems. In addition, we very obviously must get going on programs to produce alternate fuels to run our automotive fleet, heat our homes and turn the wheels of industry. We cannot continue to depend on petroleum imported from countries that can interrupt Please Turn to Page 4, Col, 1 Newsman Has Trouble With Ailing Chrysler Adjectives on the cards ranged from A (accelerating, active, aggressive, astute and astounding) to (zealous, zestful and zippy). You might say someone in AMC's public relations department was enterprising, humorous and imaginative.

New Firm Is in the Chips Southern California has been the birthplace of several specialty food shops that have later become national chains, such as those that sell only chocolate chip cookies or frozen yogurt. Now Ron Kaiser, president of the Great L.A. 77its was excerpted from remarks made by Henry Ford II, chairman of Ford Motor at the annual meeting of Ford management with members of the Newspaper Advertising Bureau in Dearborn, earlier this month. fering from is a crippling malaise of leadership, a failure to set realistic goals and implement plans to achieve them. We are adrift on a sea of indecision.

We are told that the American people should accept a lower standard of living, that we will have to cut back on this and do without that. We don't need a voice of despair at the head of our government 8t anywhere in its highest councils. We don't need a program of defeat and retreat. We need to be told how we can advance and to be offered programs that can help us rebuild our damaged society. We shouldn't be cataloging our weaknesses; we should be counting our strengths and making full use of them.

I don't want to lay all the country's ills on the President's shoulders. Congress also has failed to come to grips with the problems that confront us. It gave the President no help at all on his energy program and in general is acting like an army company made up of 535 generals going off in 535 different directions. Party discipline appears to be practically non-existent. I know that at times we all have complained about the old seniority system that made of Szechuan and the flavor of produced on the premises.

Customers also will be offered a variety of dips including tarragon and mustard, Katmandu hot curry and sweet and sour dill. Gourmet potato chips could become the hottest national food fad since the kosher burrito, also something of a misnomer. Hotdogs Are Less Deadly Last month, the Agriculture Department sent a news release to the media entitled "Watch It! That Hotdog May Be Different." It described precautions consumers should take when using frankfurters, bacon and other prepared meats not cured with nitrite. Last week, the USDA sent a correction stating that they meant to say consumers shouldn't let those meats stand unrefrigerated "because food left at room temperature for more than two hours including preparation time can result in food poisoning, such as salmonella. This (the correction) eliminates the word 'botulism' from the sentence." But does it eliminate botulism from the hot- d8s? It-Was-Bound-to-Happen Department: For the past year or so it has become automatic when the news media refers to Chrysler Corp.

to call it "the financially ailing auto maker" or the "financially troubled auto maker." Last weekend, KNXT news anchorman Mike Parker told viewers that Alfred Kahn, chairman of the Council on Wage Price Stability, was unhappy with the 10 annual wage increase negotiated by the United Auto Workers with "Chrysler, the financially ailing trouble maker uh, auto maker." AMC Offers Adjectives For years, American Motors Corp. had the same image problem. The firm was called "ailing American Motors" for so long that investors reading stock tables in newspapers began looking for AMC's quotes under "Ailing" instead of under "American." When the company got back on its feet this year, it sent an index card box to auto writers around the country, saying it was presenting them the "Adjective Selector" because it believed the "adjectival reference to American Motors Corp. is in need of reevaluation." SIDELIGHTS I 2 Chip Dip is opening a store in West Los Angeles that will deal exclusively in gourmet potato chips. The store, Kaiser's Lips Chips, will feature hot, natural-style potato chips in three varieties: salted, unsalted and Hot Lips taste.