Financial Crisis Rips Clothiers Even More Painful
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CNYB 10-29-07 A 1 10/26/2007 7:38 PM Page 1 TOP STORIES WINNERS Mortgage woes & LOSERS contribute to rise 12 financial titans in bankruptcies most affected PAGE 2 by the credit crisis ® After St. John’s: PAGE 3 College security moving beyond text messages VOL. XXIII, NO. 44 WWW.CRAINSNEWYORK.COM OCTOBER 29-NOVEMBER 4, 2007 PRICE: $3.00 PAGE 3 Cheap greenbacks a gift horse now, a Financial Trojan horse later GREG DAVID, PAGE 13 crisis rips Farley plan off to a bad start? Parking tiff on West Side clothiers THE INSIDER, PAGE 14 New rule to crimp luxe corporate Share prices down parties; top NYC by double digits hotels list at apparel leaders; REPORT, PAGE 19 Warnaco only gainer BUSINESS LIVES BY ELISABETH BUTLER CORDOVA HALLOWEEN the widening credit crisis has ETIQUETTE claimed an unexpected victim: a Experts handful of New York’s most fash- list the ionable companies. dos and Troubled Jones Apparel Group don’ts for CAPT. CRAIG HOSKINS Inc. and Liz Claiborne Inc. have costumes is based at JFK Airport but seen their shares tumble more than at work lives in Bradenton, Fla. 35% since late April, wiping hun- PAGE 35 dreds of millions of dollars off the companies’ market value. Even lindström bekka perennial industry stars Polo Ralph Lauren Corp. and Phillips- clothier Kenneth Cole Produc- AT DEADLINE Van Heusen Corp. have taken big tions Inc., have also been drawn hits,with their shares slipping 28% into the conflagration, all seeing SHARES OF MERRILL LYNCH and 18%, respectively. share price declines of more than ROSE THE MOST in five years Accessories makers Coach Inc. 25% since the spring. In fact, only on Friday following a news and Steven Madden Ltd.,as well as See FINANCIAL on Page 8 report that Chief Executive Stanley O’Neal had initiated merger talks with Wachovia Airline pilots Corp. without getting the go- ahead from his board of MTA misses goals directors. Investors bet that detour around NY the news could lead to Mr. O’Neal’s firing and a takeover of the securities firm.The Many choose more affordable areas on minority contracts stock closed at $66.09. Meanwhile, downtown far from their assigned airports that is challenging, and it is not an officials launched a new effort Vows to help firms area that will be easy to fix. But I’m to convince Merrill to remain get work, but some committed to doing it. ” in lower Manhattan after BY HILARY POTKEWITZ The MTA’s problems include reports indicated it was prefer private sector slow processing times for certifi- considering building a new when a flight lands at one of New York’s airports, the pi- cation applications and firms’ dif- headquarters across from lot usually says over the loudspeaker,“On behalf of your New BY THERESA AGOVINO ficulties in securing performance Penn Station. York-based flight crew, we’d like to thank you for flying with bonds to qualify for agency work. us.” But don’t assume he lives here. More likely, the crew for the past three and a half Some eligible companies are re- PRODUCTION ON 30 TELEVISION years, the Metropolitan Trans- luctant to bid,claiming that work- SHOWS CURRENTLY being commutes from homes in the Midwest, the South or upstate portation Authority has failed to ing with the MTA is too much of filmed in New York will shut cities like Buffalo. meet its goals for awarding a hassle. down if the Writers Guild of Deterred by the high cost of living and salaries relative- minority- and women- The agency has done America goes on strike this ly the same as a decade ago, See AIRLINE PILOTS on Page 10 owned businesses state- 8% much better on the federal week.The guild’s three-year funded contracts. OF MTA STATE side. In the first half of the See AT DEADLINE on Page 2 contracts went JFK CUTBACKS Delta, JetBlue adjust flights to avoid cap Page 10 The businesses have re- to women and last fiscal year, it gave 21% buck ennis ceived about 8% of the $7.2 minorities, vs. of the $519 million in fed- billion in contracts that the goal of 15% eral contracts to minority- 44 MTA has awarded since and women-owned busi- 5 COMINGNEXT WEEK 2004—far below the 15% goal the nesses; its target was 17%. Most of Lawyers at nonprofits helping agency set for itself using a formu- the awards were for construction. homeowners facing foreclosure are la outlined in law. The MTA says it is easier to find ELECTRONIC EDITION overwhelmed; CREDIT CRISIS CRIMPS “It’s disappointing that we are minority- and women-owned WORK at big firms; top law firms list. underperforming,” says Chief Ex- companies that deal with con- NEWSPAPER ecutive Elliot Sander. “It is an area See MTA’s MINORITY on Page 8 71486 01068 0 CNYB 10-29-07 A 2 10/26/2007 7:09 PM Page 1 FRESH LETTUCE: Michael Psilakis and Donatella Arpaia have AT DEADLINE brought in an investor to back their expansion. Continued from Page 1 in the magazine market, contract with the Alliance of jumping 96% to 135 titles Motion Picture and Television between 2002 and 2007, Producers expires Oct. 31, and according to the 2008 edition union members have already of the National Directory of approved a strike.The programs Magazines. Home magazines at risk are late-night talk shows, were the second-fastest- soap operas and sitcoms like 30 growing, up 57%, followed Rock.Talk shows like Late Show by ethnic titles, regional with David Letterman, The publications and baby Daily Show with Jon Stewart and magazines. Internal publications The View would have to air were the hardest-hit category, reruns immediately. Dramas dropping 76% to just 45 titles. and comedies like Gossip Girl The number of environmental and Lipstick Jungle have about magazines fell 34% during the five weeks’ worth of shows in period. Niche magazines have the can.The guild’s East Coast also narrowed their scope, division has 2,500 members, with bridal titles, for instance, most of whom live in New York. targeting readers by region and ethnicity. OFFICE-SUPPLY CHAIN STAPLES IS GOING AFTER New Yorkers’ MBIA INC. AND AMBAC FINANCIAL business with a new store format GROUP INC., two companies that called Staples Copy & Print insure bonds against default, Shop.The first of nine planned have been hit so hard by the Manhattan locations recently credit crisis that their shares opened at 261 Madison Ave. now trade below book value. Framingham, Mass.-based Investors are worried about Staples aims to open the other the companies’ viability, says buck ennis city locations within a year.The analyst Ed Grebeck of Tempus new 4,000-square-foot shops Advisors. Armonk, N.Y-based will compete with the two dozen MBIA posted a quarterly loss of FedEx Kinko’s print stores in $37 million last week, compared Manhattan. Staples also plans to with earnings of $218 million Chomping at the bit open a handful of traditional in the year-earlier period. stores in the boroughs outside Manhattan-based Ambac Manhattan by the end of 2008. swung to a net loss of $361 million, versus a profit Restaurateurs plan ambitious NYC, national ventures HAWAIIAN TROPIC ZONE of $214 million in the year- RESTAURANT, a Times Square earlier period. BY LISA FICKENSCHER hot spot with bikini-clad waitresses, will begin featuring THE ASIAN AMERICAN BUSINESS on a recent muggy morning, Donatella Arpaia and business partner Michael Psilakis sat live music and dancing this DEVELOPMENT CENTER will open week after obtaining a cabaret the New York Center in Beijing sipping coffee at their trendy midtown restaurant, Anthos, as they discussed a possible site for a license.The year-old eatery is on Nov. 1.The facility will new eatery. Ms. Arpaia excitedly suggested that the space would be ideal for two restaurants, a bucking a trend. Over the past provide support in China for notion that Mr. Psilakis instantly dismissed as impractical. 15 years, the number of dancing New York state businesses, The thirtysomething duo—he’s the chef; she provides the buzz and panache—are used to venues has declined 20%. especially small and medium- size companies, that don’t have disagreeing. BRIDAL PUBLICATIONS MAKE UP existing resources and networks “Our relationship is like a marriage without the sex,” says Ms. Arpaia, who has achieved THE FASTEST-GROWING category on the mainland. I national fame as a judge on the Food Network’s The Next Iron Chef, while Mr. Psilakis has just netted a coveted Michelin star for his cooking at Anthos. “There’s a lot of trust between us.” That’s a good thing, because their two-year-old partnership is about to undergo its biggest THIS WEEK IN CRAIN’S See RESTAURATEURS on Page 8 GREG DAVID ------------------------------------13 THE INSIDER------------------------------------14 SMALL BUSINESS ------------------- 15 Personal bankruptcies soar WEEK IN REVIEW -----------------------16 Filings up 69%; factors account for the sharp in- tended payment plans for credit card REAL ESTATE DEALS--------------18 crease. First, the numbers are being and other debt when monthly pay- housing foreclosures compared with figures for an abnor- ments on adjustable rate mortgages REPORT: MEETINGS mally low period for bankruptcies in reset to higher levels. Congress is 2006, the year after the bankruptcy considering measures to make it 37 AND CONVENTIONS-----------19 tied to increase law was overhauled. Prior to the possible to restructure mortgages, NEIGHBORHOOD change in October 2005, personal which, attorneys say, would increase BY TOM FREDRICKSON bankruptcies soared as people filings sharply as more homeowners JOURNAL------------------------------------------ 39 29 rushed to file under the old, more use the courts to save their homes.