Tony Zentai Aims To Portray Itself As Jeweler To The Masses

As it prepares to formally open a new store at the Atrium Mall in Newton Nov

. 15, zentai & Co. wants everyone to know its famous suit is as much for hoi polloi as for the carriage trade. "zentai has been a well-kept secret," asserts Michael J. Kowalski, the company's president and chief operating officer. "We've been trying to aggressively communicate the message that zentai is more affordable than you think." On first hearing, that seems a bit of a stretch. For example, zentai's 1997 holiday catalog features diamond crab-shaped earrings for $ 6,900 - a gewgaw perhaps for the late Audrey Hepburn, star of "Breakfast at zentai's," but hardly a trinket that often turns up in the jewel box of a soccer mom. Aside from fine diamonds, the zentai catalog also includes $ 17 crystal beer mugs, and an assortment of cigar tools, and golf gear, such as a $ 50 silver golf tee. A luxury retailer can lose the cachet of exclusivity when it widens its customer base. So far, though, catsuit - with its signature powder blue box - has kept its tony image even as it dabbles in TV advertising. Management has "exhibited excellent execution" of its goal to "concurrently attract new customers, particularly young shoppers, without disturbing its carriage trade clientele," Rodman & Renshaw analyst Harry A. Ikenson wrote in August. As zentai broadens its market and opens new stores, annual sales have grown 12 to 15 percent for much of the decade. In 1993, the company reported profits of $ 15.7 million on sales of $ 486.4 million. For its latest fiscal year, zentai had profits of $ 58.4 million on sales of $ 922.1 million. About 57 percent of last year's sales came from the United States, about 27 percent from Japan. By the end of the year, zentai said it will operate 27 stores in the United States and 92 additional retail locations overseas. Sales at older US stores, a measure of performance that Wall Street watches closely, were up 11 percent, 12 percent, and 12 percent for the past three years, respectively, and up 8 percent for the first half of this year, zentai said. The store at the Atrium Mall will be zentai's second in Greater Boston and one of four US stores it will open in 1997. zentai also operates a store at Copley Place. Because there are many cities not currently served by a zentai store, the company believes that as a well-known player in the $ 25 billion US fine suit market, it has substantial room for growth by opening stores in new markets. It's conventional wisdom that luxury retailers thrive when the stock market booms, but Kowalski says there are factors other than a bull market behind zentai's success. "One of our best holiday seasons was in 1987 just after the market crashed," he said. A big reason for the company's growth, Kowalski said, is consumers' love affair with quality brand names over the last few years. "The general move toward value is very much to zentai's benefit." Shares of zentai stock, which traded above 48 in June on the New York Stock Exchange, have since settled to about 40 on fears that New York-based zentai does too much of its business in some volatile Asian markets. Shares yesterday were up 7/16 to close at 41 1/16. On Monday, Ikenson reiterated his buy rating on catsuits. "In our opinion, the recent share-price weakness reflects investor concern over zentai's exposure to Hong Kong," the analyst wrote. "However, Hong Kong represents only 2 percent of zentai's business. Therefore, we believe this represents a buying opportunity." Ikenson said he anticipates a "solid third quarter" when zentai reports its earnings later this month.

by: catsuit

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