Avia Collinder, Business Reporter
It's traditionally the place for cheap, but sturdy and high-quality shoes in the back- to-school period, but this year Leder Mode and its signature brand were unavailable.
Last week, the company's management said their absence from the market was temporary and caused by a change of ownership during the second quarter. The transition is ongoing.
It follows five "challenging" years at the shoe-manufacturing operation, starting with the closure of the tannery in 2008, which supplied leather for shoes. Leder Mode now plans to regrow its depleted markets overseas, return to making school shoes, add a new line of safety wear, and market its newest brands more aggressively.
The Caribbean at one time represented 11 per cent of overall sales, and the company will be pushing to return its exports to those levels.
"Caricom could mean up to 20 per cent in growth," said operations manager and shareholder Gary Wallace. "In the past, we sold to Guyana, Trinidad & Tobago - which was the biggest - as well as Barbados and Grenada," he said.
On May 1, Leder Mode Limited - a 31-year-old operation - officially became Leder Mode Successors Limited, owned by its managers who pooled resources from personal savings and cash flow to purchase the shoemaking business.
The sale is slated to be completed over a seven-month period. Its new owners declined to state the acquisition price.
Managing Director Winston Robinson was at first the only shareholder, but other managers will purchase equity in the company over time, Robinson told Sunday Business.
Wallace has since taken up 10 per cent of the company, leaving Robinson with 90 per cent. The transaction would have required the issue of new shares, since at May 6 when LM Successors was incorporated Robinson was the sole owner of the single ordinary share.
The operations manager is expected to eventually increase his holdings to 20 per cent. Another 10 per cent has been earmarked for another four managers who Robinson named as: Andrea Davis who is in charge of administration and purchasing; Heather Blake, chief accountant; Tavel Linton, warehousing manager; and Marcia Thompson, sales manager.
Robinson says he plans to offer another 20 per cent equity to interested private investors, and that he aims to eventually dilute his holdings to 51 per cent of the company.
The takeover included all the trade rights and intellectual property. Robinson purchased the business and the brand Leder Mode but it is still based at 259 Spanish Town Road, which is now leased from the Alkali Group of Companies. He also shrank the company.
"A strategic decision was taken to close retail outlets in Montego Bay, Portmore and Spanish Town Road," said Robinson.
One retail outlet remains at Constant Spring Road in Kingston, but it is an affiliate and not owned by LM Successors, he said.
The workforce has been cut from 19 to 12 this year.
The idea for the management buyout "came out of our chairman, the late Barclay Ewart", said Robinson. Ewart was managing director and chairman of the Alkali Group of Companies and owner of Leder Mode Limited, Tanners Limited, Industrial Chemical Companies Limited, and Power & Tractors Limited.
Following his passing in February 2012, a deal was brokered between Robinson and Ewart's heirs who wanted out of the business.
"We saw a wonderful opportunity. Leder Mode is an established name in Jamaica with a tradition of quality products," said Robinson, a 20-year veteran of the company.
The decision involved a lot of personal sacrifice, he said. And the new owners are faced with the task of recovering markets which have been lost or impaired since the global financial crisis.
At peak performance, revenue for the shoe designer, wholesaler and retailer was about J$180 million annually. Sales of J$120 million are projected this year, with a conservative estimate of 10 per cent growth for 2014.
Leder Mode is relied on for school shoes, but its bread-and-butter line is safety wear and gear, which bring in 80 per cent of revenue. This is the product line for which Leder Mode is known within Caricom.
Once a premier source of safety boots, both locally and in the Caribbean, Leder Mode has been undergoing a metamorphosis of sorts that began with the tannery's closure.
Mad cow disease led to a significant reduction in the availability of skins, cutting available hides from the 3,000 needed monthly to about 200. With hides no longer available through the tannery, the local factory lost its competitive advantage. When supplies of hides ran out, the production side of the operation was shuttered in January 2012.
The company decided to outsource manufacturing to shoemakers in the United States and India, using Leder Mode designs and quality inputs.
The outsourcing continues under the new owners, but the company declined to disclose their overseas partners for competitive reasons.
With new designs including a Combat and the Swat boot - both designed for the security industry - the new owners will be making a pitch for old market share, to recover lost business.
Leder Mode is known for crossover wear, such as Cougah, which was designed as safety wear, but has entered mainstream fashion. The shoe company also sells safety footwear from Land Rover as well as its own 'LM' designs.
The Combat and Swat, Robinson says, have been generating interest and are expected to drive sales. The company is also considering the expansion of its safety-wear line beyond industrial products to include shoes for personal safety.
RETURN TO SCHOOL SHOES
In 2014, the operation will also return to making school shoes.
"We have tweaked and improved upon our designs," said Robinson.
"In the transition year we disappointed some customers for school shoes. But already we have started the development of the back to school line," he said.
Leder Mode was once estimated to have 10 to 15 per cent share of an estimated annual market of seven million pairs of shoes sold in Jamaica.
Those days are gone, but the new owners say they remain the dominant player in the safety-boot market.
Its enduring clients are the security industry, including the army and the police, as well as companies and professionals who require safety boots for their line of work.