Schwartz & Benjamin Milestone: Q&A With CEO Danny Schwartz

Danny Schwartz is enthusiastic about commemorating Schwartz & Benjamin’s 90th year, but the company CEO and third-generation footwear executive is hardly nostalgic.

“I want to celebrate all the milestones we’ve hit throughout the years, [but I also] want people to see that we are a modern, vibrant company,” he said. “Maybe we are looking back [for a moment], but it really is all about going forward.”

Indeed, New York-based Schwartz & Benjamin has set its sights on the future with a sharpened focus. Its strategy centers on streamlining product offerings and working with its existing partners that already have an international presence or the potential to go global.

To that end, the company recently inked a licensing deal with Derek Lam, which launched with footwear for spring ’13 and will continue with the introduction of the diffusion line 10 Crosby Derek Lam this fall.

“We expect substantial growth for all our current brands,” said Barbara Schwartz, director of product development and wife of Danny. “Each one is poised for expansion in all categories of footwear.”

Other shoe labels under the company’s umbrella include Diane von Furstenberg, Rebecca Minkoff and Seven for All Mankind’s women’s offerings, as well as Kate Spade New York, which also will add footwear under sister line Kate Spade Saturday starting this fall.

But maintaining success doesn’t just hinge on current business — it’s also about the brands no longer on the books.

Earlier this year, the Schwartz & Benjamin team parted ways with one of its licensors, Juicy Couture, and closed in-house label Daniblack. In 2013, it also ended its short-lived joint venture with contemporary label Matiko. All three moves were aimed at homing in on the company’s strongest assets.

“Right now, less is more,” said Schwartz & Benjamin President Steve Shapiro.

“You have to make a conscious effort to watch all the development that you make and the products that you go into, and to not spread yourself too thin,” Schwartz added, reiterating that both he and Shapiro continue to take inspiration from the late Apple mogul Steve Jobs, whose biography they’ve praised several times in previous interviews. “If you have fewer products, you can devote more time to engineering each one of those to be the best it can be. We think we can do a better job of focusing on key patterns. We are working hard at that and we’ve improved.”

The firm’s licensors and other partners say the formula works.

“Schwartz & Benjamin has been an essential part of our company’s growth,” said designer Rebecca Minkoff, who introduced footwear to her eponymous label in 2010 and signed a production deal with Schwartz & Benjamin in 2011. “They are great, collaborative business partners.”

In addition to its branded lines, Schwartz & Benjamin also has a thriving, 4-year-old private-label business that creates footwear for a handful of large clients. “It’s a nice way of diversifying the company [in a way that ensures] we don’t compete with ourselves,” Shapiro said. “It’s a different arena, and we are meeting with great success [in that division].”

Here, Danny Schwartz sounds off on measuring success, the significance of 90 and what the next decade might bring.

What does the 90th anniversary of Schwartz & Benjamin mean to you?
DS:
We’ve had a very long history of manufacturing, importing, designing and delivering products that satisfy all the needs of our licensors, our wholesale clients and the consumers’ needs. There aren’t that many companies in our industry that hit 90 and are privately owned.

To what do you attribute the company’s longevity?
DS:
First and foremost, it is that we are very serious about the jobs we take on. It comes down to the job that we do and the products we are delivering. Then, I would say [we’ve been successful because] we treat people the way they would like to be treated. We try to live by the golden rule. It’s not that difficult to be nice to people, and we also don’t believe that nice guys finish last. We work hard and keep our heads down and keep focused on what we are trying to do.

Where would you like to see Schwartz & Benjamin at 100?
DS:
In 2023, I see a bigger, more diversified version of the company you see today — still a great place to work where our employees are productive, but continue to laugh a lot. In 10 years, I see a younger, vibrant management team — perhaps including the fourth generation — leading us to new successes.

Do you envision the company remaining privately held, or would you consider an acquisition as you look toward the future?
DS:
We’ll probably make it to 100 [as a family-owned firm]. We’ve spoken to companies through the years that were interested in acquiring us or merging us into their organizations. We never say never, but I don’t know if that will ever come to pass for us. We like to believe we are very nimble because we’re private. We don’t have to have board meetings, and we can put our heads together and make decisions pretty quickly.

What plans are on the horizon for the more immediate future?
DS:
We’re ratcheting up the intensity and expanding our international businesses with each of [our existing] brands. We also just got the green light to sell Kate Spade in Europe, and the U.K. [will be] our first endeavor. We sell to a lot of Kate Spade stores in Japan, too, but we’re close to announcing a [plan] to open some [shop-in-shops] in department stores [there]. We have a pretty strong Diane von Furstenberg business in Europe and we are looking to expand that as well.

What is your personal definition of success?
DS:
There can be different kinds of success. Personal success for me has been achieved by marrying Barbara and raising two wonderful children. Success in business is sometimes measured by who has more money at the end of the day. While we always want to be profitable and we compete every day to achieve that goal, I believe we also are successful due to the way we work, how we deal with our employees, our clients [and] our collaborators. That is measured by what others think about you and your organization, [so] you’ll have to ask the industry if they think we are successful. We still have many goals that we would like to accomplish.

Your growth strategy is centered on your existing partners, but what attributes do you look for when you add a new label?
DS:
It has changed over the years. We have some criteria we like to use, but sometimes we break our own rules. What’s happened today, with the profile of footwear — really since “Sex & the City” and the emergence of brands like Manolo Blahnik, Christian Louboutin and Jimmy Choo — is that the profile of footwear is so large that everybody is doing shoes. You walk down a major avenue in a major city and practically every [retailer] has [an in-house label for] shoes. The companies that have been in the shoe business have expanded the number of lines they produce. Ready-to-wear companies that meet with some success love to expand by getting into handbags and shoes. Ten or 20 years ago, buyers would line up when you came out with a new license, but today they don’t get so excited because they don’t need another line of shoes. Oftentimes they’ll tell you, “We have trouble funding the lines that are doing well now in our stores.”

[Because of that], we are very particular. One thing we will look at, for example, is if a ready-to-wear company has 30-plus of their own stores, because then you have the possibility of having an initial business pretty much from the start. You have that instant mix of company-owned retail stores, and then you can layer on the wholesale clients. But, as I said, we break our own rules sometimes for a brand we think is about to ascend or become stronger.

Is there a certain category that looks strong right now that you’re emphasizing?
DS:
The market right now is reacting to casuals, so [we are deciding] how each of our brands attacks that category. There are a lot of sneakers in the marketplace, so you have to ask the question, is that category going to be saturated? What will be next? I think that designer casuals [with] some dressed-up versions will continue and will be a good adjunct. It gives our brands an opportunity to jump in there. Kate Spade and Keds have a collaboration that seems to be working. In addition to that, we are trying to infuse more casuals into the [overall] Kate Spade collection, but a little dressier, more whimsical.

What’s the hardest part of juggling multiple designer labels?
DS:
One of [the challenges] is making sure you don’t give all your focus to the really hot brand and not to the brand that’s struggling. You have to give equal attention to all your brands so you can help each one attain the growth it should and get to the [right] volume level.

Fall ’13 will be your first season without the Daniblack line. What has been the most difficult part of disbanding that label?
DS:
The hardest thing for me is my friends asking me about it: “How’s Daniblack doing?” They all liked the name. But listen, it was a realistic decision we had to make. It was not performing up to our expectations and it was taking too much of our time away from brands that we should be devoting our time to. It was the right decision to make.

What are some of the biggest issues facing your company today, as well as the footwear industry at large?
DS:
Sourcing is probably the biggest challenge today in our industry. We’re in several different countries. We don’t like to have all our eggs in one basket. You’ve got different problems in every country, and most of them are caused by price. You’ve got a euro in Europe that causes your Spanish and your Italian product to be more expensive than it could be. Even with all the turmoil that is going on in Europe today, the euro is still over the dollar. You’ve got labor problems in China escalating the cost of product there. In Brazil, you have an economy that has been strong for quite some time, which has elevated their currency, so it makes it more expensive for us to buy Brazilian product. The worldwide economy is also a challenge right now. As we’ve taken our business from basically wholesaling our shoes in North America to selling our shoes all over the world, it has become more [complex].

Are you feeling optimistic about the market in general?
DS:
I am. I think 2013 will be a good year.