Angelica Corporation Business Information, Profile, and History

Company Perspectives:

To attract and maintain superior associates who are committed to building a results-oriented culture by providing customers with quality products and services in a timely fashion which will, consequently, add value over the long term for our shareholders.

History of Angelica Corporation

Angelica Corporation is a major manufacturer and retailer of uniforms to service businesses and their employees in the United States. It also rents and launders linens and other textiles, primarily to the U.S. healthcare industry. The company operates in three business segments: Textile Services (which provides laundry and rental services primarily to the healthcare sector); Manufacturing and Marketing (which makes and sells uniforms and business apparel to the healthcare, hospitality, and other service industries); and Life Retail Stores (which sells uniforms and shoes, primarily to individual healthcare professionals).

1878–1903: Origins

From its entrepreneurial beginnings in the late 19th century, Angelica established itself as a trendsetter, a characteristic that would describe the company more than a century later when it ranked as a dominant uniform apparel manufacturer and marketer. The company evolved from a fledgling upstart into a diversified, multinational concern by developing styles that became standard attire for service industry employees. Success in one market spawned entry into another, eventually creating a multifaceted company with a chain of retail stores, a textile rental and laundry service business, and uniform apparel lines in a host of markets. However, it all began with one garment—the company's first original creation—a cook's uniform sewn by the wife of railroad chef, Cherubino Angelica, in St. Louis, Missouri, in 1878. From this first uniform, scores of original, trendsetting designs followed, making the Angelica label a pervasive fixture in the American workplace.

The cook's uniform created by Angelica's wife was distinctly different from his usual chef's attire, and unlike the garments worn by other cooks in St. Louis and, presumably, anywhere else. The white hat was tall, resembling a crown with a pillow seated on top. The white coat was double-breasted, cloth buttons sewn to the sides, with two reversible layers of cloth in front to protect the wearer from direct heat and spattering grease. The cuffs, split on the sides, functioned as potholders when turned down. Although the white chef's uniform tailored by Cherubino Angelica's wife would become a ubiquitous, traditional garment worn by chefs a century later, in 1878 it was distinctly new and quickly drew comments from other railroad chefs, who were intrigued by its design and functionality. Cherubino Angelica attracted enough attention with his novel uniform to leave his job with the railroad and start his own company, an entrepreneurial venture that marked the beginning of Angelica Corporation's existence.

With his wife supplying the uniforms, Cherubino Angelica began soliciting orders from cooks for outfits identical to the one he had modeled while working as a cook himself, recording sufficient success to keep his small business afloat. By the 1890s, the Angelica family business had reached a respectable level of prominence, having created the uniforms worn by the glamorous Harvey Girls, the waitresses who worked at the Fred Harvey Restaurants located in train stations across the nation. In 1897, while en route to his native Italy, Cherubino Angelica was killed in the shipwreck of the S.S. Burgoyne off the coast of Newfoundland, leaving a firmly established business that was nearing its twentieth year of operation.

1903–45: Diversification

Following Angelica's death, the company continued under the control of the Angelica family. In the early years of the new century, the Angelica family business diversified for the first time when it began competing in the nascent linen supply industry; then, in 1903, after 25 years of stewarding the company, the Angelicas sold their small enterprise to Alfred J. Levy. Levy paid $2,500 for the company and its six sewing machines; he then recruited his brother Mont, a recent graduate of the University of Michigan, to join him in managing the business.

Together, the Levy brothers endeavored to transform the image of uniforms from a "Badge of Servility" to a "Mark of Service," as their early advertising proclaimed, and toward this objective the pair were successful, at least in promoting greater attention to the garments worn by workers in the service industry. After incorporating their company as Angelica Jacket Company in 1904, the brothers expanded their production capabilities, amassing 32 sewing machines by 1910, when Angelica Jacket's roster of customers included employers in the hotel industry, the restaurant industry, the food processing industry, and the railroad industry. By this point, the innovative tradition first established by Cherubino Angelica's wife had remained alive within the company under the tutelage of the Levy brothers. Angelica Jacket had pioneered bandettes, tea aprons, and large wrap-around aprons worn by waitresses, and had promoted the adoption of white jackets instead of black coats for waiters.

A decade later, still pressing for the elimination of black mohair coats for waiters, which the company rightly charged were unsanitary because they were not washable, Angelica Jacket launched a campaign to promote its washable white uniforms with the slogan, "Sliding to Success on a Cake of White Soap." Two years later, in 1922, the company embraced a full spectrum of colors, offering for the first time a line of garments in fast-dyed colors and made from synthetic fibers. Concurrent with the introduction of this lively panoply of uniforms, the company opened an office and warehouse in New York City, as the breadth of its operations expanded.

As business grew and the demand for uniforms intensified, Angelica Jacket's marketing and distribution reach extended with the establishment of warehouses in Chicago in 1928 and in Los Angeles in 1932. With operations spread across country, Angelica Jacket moved forward through the 1930s, its progress fueled by the momentum generated by more than a half century of business. However, by the beginning of the 1940s, events outside of the company's control precipitated sweeping changes throughout its operations, bringing its traditional business shuddering to a temporary halt. By 1941, the United States was at war, bringing to a formal end the decade-long Depression and ushering in a period of sacrifice and concerted action by the American people and by American businesses. At Angelica Jacket, the manufacturing and marketing of uniforms gave way to a different product line, as the company did what it could to contribute to the war effort. During the war years, Angelica Jacket ranked as one of the largest manufacturers of combat jackets for the armed forces and served as a supplier for the Red Cross. On the domestic front, the company designed a line of uniforms called "Plantswear" for women thrust into manufacturing jobs previously held nearly exclusively by men.

1945–58: Growth

After the conclusion of the Second World War, when annual sales for the company reached $3.5 million, Angelica Jacket faced the postwar years with renewed vigor, its sights set on fulfilling ambitious plans. Embodying this irrepressible optimism was the company's new objective: "to have our label on the back of every uniform used in the country." Though an unrealistic goal, the proclamation motivated employees and management to pursue the unattainable, giving the company the driving spirit to capitalize on the unprecedented prosperity to come in the decades ahead. In the late 1940s, the company strengthened its position in one of the markets that would enable it to take advantage of the lucrative economic times ahead when it bolstered its involvement in the health care industry. For years, Angelica Jacket had manufactured and marketed a line of hospital staff uniforms, but beginning in 1949 its participation in the growing health care market was entrenched with the introduction of a line of patient and operating apparel, foreshadowing its foray into the production of specialized protective apparel for contaminant-free environments 15 years later.

The 1950s, 1960s, and 1970s witnessed the explosive growth of service industries in the United States, a phenomenon that had a definitive effect on the magnitude of Angelica Jacket. More service personnel meant a greater need for uniforms and, not surprisingly, a greater demand for Angelica Jacket's line of men's and women's washable service apparel. The company broadened its marketing scope during the maturation of the service industries to include a variety of occupations, but it did so with a different corporate title. In 1950, as it prepared to meet the mounting apparel needs of service industry employers across the country, the company changed its name from Angelica Jacket Company to Angelica Uniform Company, then moved forward, expanding its manufacturing capabilities and increasing the ranks of its production personnel for the bright future ahead.

1958–90: Acquisitions

By the end of the 1950s, Angelica Uniform was a publicly-traded company, having made its initial public offering in 1958, when seven factories, eight warehouses, and 1,000 company employees comprised the growing Angelica empire. As the company entered the 1960s, with annual sales exceeding $10 million, it was regarded as the largest manufacturer of men's and women's washable service apparel for hospitals, restaurants and hotels. Angelica Uniform's enviable industry ranking became more domineering during the decade as it diversified its business, evolving into a well-rounded concern supported by burgeoning markets. The company entered the textile rental field in 1961, began production of protective apparel for "clean room" environments in 1964, then made several pivotal moves in 1965 to respond to the changing nature of its industry.

By the mid-1960s, workers in the service industries were required with increasing frequency to furnish their own uniforms, a shift in the composition of the company's customer base that Angelica Uniform's management sought to mirror by acquiring James G. Fast Company, a Chicago mail order firm, and by entering the retail uniform business with the opening of the company's first Life Uniform Shop. Concurrent with these two signal moves, both of which were made in 1965, Angelica Uniform acquired Kansas City White Goods Company, strengthening its textile product line for health care institutions, and crossed U.S. borders for the first time with the acquisition of a uniform company in Canada. On the heels of these important additions to the company's range of operations, Angelica Uniform Company changed its name in 1967 to Angelica Corporation.

In 1968 Angelica returned to diversifying its interests, acquiring the California-based Environmentals Incorporated, a provider of laundry and linen services to hospitals and other health care institutions. Angelica's involvement in the medical market, which dated back more than 20 years by this point, was fast becoming the primary engine driving the company's growth, as hospitals and other health care institutions increasingly sought outside laundry and linen service assistance. Newly constructed hospitals were no longer outfitted with laundry facilities, while older hospitals turned to companies like Angelica to realize significant cost savings, providing a substantial boost to Angelica's business.

Although Angelica's strong position in the medical market represented its most promising avenue of growth as the 1970s neared, the company's other businesses by no means remained idle. Angelica's international involvement in uniform production was deepened in 1970 with the acquisition of Whitewear Manufacturing Company, a Canadian manufacturer of uniforms. Its retail business—the operation of a chain of retail stores stocking uniforms and shoes—had recorded explosive growth, giving the company 100 Life Uniform Shops by 1973. Annual sales by this point had more than doubled since the name change in 1967, eclipsing $80 million during the early years of the 1970s. By the mid-1970s, Angelica's involvement in the medical market was propelling the company, accounting for more than half of the company's total sales for the first time in its history. As annual sales reached and then surpassed the $100 million mark during the latter half of the 1970s, the company's three primary business segments were each recording resolute growth. The company's Life Uniform Shops, with more than 150 units located in nearly every major U.S. city, had quickly become the largest specialty uniform chain in the nation. Its uniform business, after a century of development, was widely regarded as a venerable giant by industry observers, and its growing presence in the health care market buoyed prospects for the future, fueling optimism as Angelica entered the 1980s.

During the early 1980s, Angelica was the market leader in each of its three business segments: the rental of textile and garment services, the manufacture and marketing of uniforms, and the operation of a national chain of specialty apparel retail stores. Its linen rental business for the health care industry continued to be regarded as the company's major growth vehicle, helping Angelica generate more than $200 million a year in total sales by 1982. In the decade ahead, the company relied heavily on strengthening its resources through acquisitions, absorbing, in seven separate transactions between 1982 and the end of the decade, rental service facilities in Texas, Arizona, California, Connecticut, Pennsylvania, New Jersey, and Rhode Island. Annual sales swelled as a result, increasing from roughly $200 million at the beginning of the decade to nearly $330 million by the decade's conclusion.

1990-Present: Challenges

During the early 1990s, Angelica acquired a substantial number of laundry facilities in Florida through its purchase of Service Control Corp. It also established a presence overseas with its 1991 and 1994 acquisitions of uniform companies based in England.

At the same time, the company began to encounter external circumstances that hindered its continued ability to grow. The recession of the early 1990s adversely affected its revenues, beginning in 1991 when sales of uniforms both to its service industry customers and to its individual retail customers either declined or remained flat. Sales of its dominant (about half of revenue) hospital rental and laundry services nevertheless increased, due to the company's previous acquisitions and the addition of several new hospital customers.

By 1993, major changes in hospital operations began to affect the company's revenue. The Clinton Administration began to work on its major proposal to reform the U.S. healthcare system. At the same time, managed care emerged as a major influence on payments for health services. Both developments pressured all players in the industry to reduce costs. For Angelica, this meant that fewer patients were entering hospitals and that those who did enter stayed for less time. Consequently, the need for linens declined as did demand for the company's rental and laundry services.

As late as 1994, Money suggested that these cost-cutting pressures might help Angelica, which could launder linens more efficiently and cheaply than could individual hospitals. Hospitals did outsource their laundry services, but that did not help Angelica. The industry was fragmented, and Angelica saw its revenues decline, as it was forced to compete with companies charging lower prices for the same services. It had to decrease its prices or lose customers.

In 1997, after about five years of declines in revenues, profits and the stock price, the annual shareholders meeting voted to elect all directors annually and to eliminate the directors' and officers' golden parachutes. A proposal to explore the sale of the company was defeated. Two months later the CEO resigned.

The new CEO spent about 18 months trying to cut costs and raise prices. When these efforts were unsuccessful in improving the company's performance, he hired an investment firm to investigate other options for improving shareholder value, including a sale of the firm. Six months later, after approaching 160 domestic and foreign potential purchasers, Angelica halted the initiative. No company offered what the company considered a fair price.

As it entered the twenty-first Century, Angelica confronted the same problems that had afflicted it during the previous decade. Hospitals were still cutting costs, and competition was still formidable. The company had adopted some new strategies to improve its performance. It sold some poorly performing U.S. facilities as well as its United Kingdom acquisitions. It contracted about 60 percent of its manufacturing operations to companies in Mexico, Central America, and the Far East as a means of cutting costs. It cut its dividend by two-thirds in order to preserve operating capital. It also had some success in attracting new hospitals as customers for its laundry and rental services.

These measures improved Angelica's performance, at least temporarily. Revenues from the dominant textile services division continued a slow decline, but reductions in costs allowed the division to show an increase in earnings in 2000. But, manufacturing and marketing and Life Retail Stores showed little improvement.

In May 2001, the company again reported poor performance, as increased revenues were more than offset by increased costs, especially energy expenses. Competition in a fragmented industry, the consequent inability to maintain pricing at levels allowing the company to maintain margins, and increasing costs combined to keep the company in the weak position it had been in for the previous decade.

Principal Subsidiaries: Angelica Realty Co.; Angelica Textile Services, Inc; Angelica International Ltd.; Southern Service Company; Industrias Textiles El Curu (Costa Rica).

Principal Divisions: Textile Services; Manufacturing and Marketing; Retail Sales.

Principal Competitors: ARAMARK; Casual Male; Cintas; G&K Services; Healthcare Services; Sodexho; SSI Surgical Services; Steiner; Superior Uniform Group; UniFirst.

Chronology

• Key Dates:
• 1904: The company is incorporated as Angelica Jacket Company.
• 1922: The company introduces for the first time in the U.S. colored uniforms for waitresses. The company opens offices and a warehouse in New York City.
• 1941: Angelica Jacket converts to war production, manufacturing combat jackets for soldiers and uniforms for the women who fill manufacturing jobs at home.
• 1949: Angelica Jacket expands its healthcare business, supplementing its manufacture of uniforms with a line of patient and operating room apparel.
• 1950: The company's name is changed to Angelica Uniform Company.
• 1958: Angelica Uniform goes public.
• 1961: The company enters the textile rental business.
• 1965: The company enters retail sales of its uniforms by acquiring a mail order business and establishing its first Life Uniform retail shops. It also strengthens its healthcare textile line through acquisition.
• 1967: The company changes its name to Angelica Corporation.
• 1982: Angelica embarks on an acquisitions strategy over the next 12 years, designed primarily to bolster its hospital service business.
• 1991: Recession initiates a period of little or no growth.
• 1993: Cost cutting in the health care industry further harms Angelica's performance.
• 1999: Sale of the company is investigated, but quickly abandoned.
• 2000: Company reports increased earnings due primarily to cost savings.