Maurice “Corky” Newman long has been one of the L.A. garment industry’s most prominent players the man many say was responsible for turning around CaliforniaMart, the nation’s largest apparel and textile showroom.
Now, he appears to be at the center of a corporate meltdown.
Newman was fired last week from his post as chairman and chief executive of swimsuit maker Sirena Apparel Group Inc. The move came as the Vernon-based company announced plans to restate its earnings for the last three fiscal quarters, and appointed a special committee of its board to undertake a review of reported earnings and financial statements.
Sirena’s board also fired Chief Financial Officer Richard Gerhardt.
Upon news of the firings and financial review, Sirena stock fell 47 cents, or 19 percent, to $2 a share, before Nasdaq halted trading on June 8. The exchange said trading would not resume until the company responds to a request for additional information.
A Nasdaq spokesman would not disclose what type of information the exchange is seeking. On June 7, the day before Sirena’s announcement, the stock fell 17.7 percent in heavy trading.
In addition to restating earnings for the last three quarters all of which originally showed improvement over the like year-earlier periods Sirena said it will take a charge in one of the restated quarters for a write-down of inventory and certain deferred expenses. The charge will also include $700,000 related to retailer Loehmann’s Inc., which filed for bankruptcy protection in May, according to a company press release.
News of Sirena’s problems took many in L.A.’s fashion community by surprise largely because the 66-year-old Newman has been such an industry presence.
Newman did not return calls for comment last week. In a 1998 interview with the Business Journal, he said he returned to Sirena in October 1997 after being asked to help improve the financial performance of the company, which had lost $2 million that year.
“The board asked me if I would come in and get a bottom line together and get it profitable,” he said.
Newman helped turn the swimwear manufacturer into a year-round company by orchestrating the purchase of Jezebel, an intimate-apparel maker. Sirena now produces lingerie and sleepwear for Anne Klein, one of its swimwear clients.
Before rejoining Sirena where he worked for more than a decade in the ’60s and ’70s Newman was president and CEO of CaliforniaMart, downtown’s massive fashion showroom.
Newman is credited with turning around the troubled showroom, which had been foreclosed upon by Equitable Life Assurance Society. He helped boost occupancy from 67 percent to 78 percent, coordinated a $14 million renovation of the building, and added new trade shows and departments.
Newman, whose father was in the millinery and men’s pants businesses, briefly attended law school before breaking into apparel by selling Maidenform bras in New York.
He first joined Sirena in 1964 as vice president and national sales manager. After leaving, Newman worked at a number of companies: Cole of California, where he eventually became president and CEO; Calvin Klein Industries, where he was president and CEO of the company’s jeans division; and the Cherokee Group, where he was president of corporate marketing.
Asked about rejoining Sirena at 64, Newman said last year, “If I ever stop enjoying what I do, then I will leave. But I’d like to stay here for another three years or so, then maybe consult. I would never stop working. It’s just not something that is in my make-up Right now I am content in my life and am very, very happy here at Sirena.”
With Newman fired, Sirena will be run by the company’s president, Douglas Arbetman, who worked with Newman for 11 years at Cole of California and Calvin Klein and who is a close friend of Newman’s. Arbetman did not return calls for comment last week.
The special committee studying Sirena’s financials is being headed by William J. Welch, newly appointed director and chair of Sirena’s audit committee, who was a partner at Coopers & Lybrand LLP for 14 years. The committee is reviewing Sirena’s financial results with the company’s auditors, Ernst & Young LLP.
“We will report additional findings as soon as we have made an accurate assessment,” Welch said in a prepared statement.
Meanwhile, analyst Jennifer Black of Portland, Ore.-based Black & Co. Inc. downgraded Sirena’s stock from a “strong buy” to “not rated.”
“At present we don’t have enough information to comment because we don’t know what the restructuring will result in,” said Fernanda DeClercq, an associate analyst with Black & Co.