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October 25th, 2014
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Business & Technology Real Estate Nakash Bros. Purchase of $100M D.C. Building Sheds Light on Vast Jordache Expansion

Nakash Bros. Purchase of $100M D.C. Building Sheds Light on Vast Jordache Expansion

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Avi and Ralph Nakash (standing) and Joe (seated in front) have succeeded at such diverse business ventures as designer jeans, oil and high-end real estate.The purchase of a $100 million office building in Washington, D.C. by Nakash Holdings is serving to highlight just how far the world-famous Jordache empire has expanded beyond its original mandate to sell high-fashion designer jeans. Nakash Holdings is the investment firm run by the three brothers – Avi, Ralph and family patriarch Joseph – who founded Jordache Enterprises in the late 1970’s and took the trendy brand to the height of worldwide acclaim.

According to Real Capital Analytics, a real-estate research firm, the Nakash Brothers’ purchase of the 175,000-sqaure-foot Bond Building at 1400 New York Ave. N.W., located near the White House, is one of the city’s biggest office transactions by price in 2013. The building’s outlook recently took a turn for the better when the Justice Department decided to sign a new lease and remain there for another 15 years after the expiration of its lease next year.

Although it is possible that federal budget cuts could cause some government agencies to break their leases as a means of reducing office space, Nakash executives are convinced that the location will protect them from any such difficulties. “If you look at the location, you’ve got major law firms and Fortune 500 companies who want to be there,” explained Jonathan Bennett, Nakash’s director of real estate. “I don’t think there’s anybody who was involved [in the deal] who hasn’t made some kind of comment like, ‘Wow, you’re never going to have any problems leasing this up.’”

The history of Jordache Enterprises reads like a classic American success story. In 1962, twenty-one year-old Joseph Nakash moved from his native Israel to New York City to get away from his poverty-stricken background. With just $25 in his pocket, Joe slept on park benches and in subway stations until he found a $40-a-week job wheeling racks of merchandise for a discount store. Nakash saved his money and in 1966, when he was making $110 a week, he brought over his brothers Raphael (Ralph) and Abraham (Avi). The three saved $150 a week from their earnings and opened a discount store by 1969, selling brand-name jeans at cut-rate prices. Within a few years they had expanded this enterprise into a four store chain in Brooklyn and Queens.

The Nakashes’ largest store was torched and looted during a city-wide blackout in 1977. This proved to be a bonanza for the brothers, who collected $120,000 on their insurance policy, enabling them to enter the business of manufacturing jeans. The Nakash brothers had long been casting their eyes on the European jeans market, where denim products were tighter and more fashion-conscious than in the United States. The Nakashes’ “Jordache” jeans--a loose acronym of their first names plus a French-inspired ending (pronounced “ash”) taken from the end of their last name--was fashioned from a $4 piece of Japanese fabric and feature triple stitching for strength, reinforced buttons, and a double elastic waistband hugging the small of the back.

The moment could not have been more propitious for the Nakash trio, as consumers were turning their attention from standard brands like Levi’s to designer jeans put out under labels such as Gloria Vanderbilt, Calvin Klein, Sergio Valente, and Sasson. Even so, there was nothing major to distinguish the brothers’ Hong Kong-made samples from those produced by other contender until they launched an aggressive television and print advertising campaign in January 1979 with $300,000 of their own money and a $250,000 loan from an Israeli bank. This leap into the unknown represented about one-fourth of their annual sales volume. In particular, a television commercial featuring cutting-edge imagery and the catchy theme song, “You got the look I want to know better,” created a major buzz, and within weeks Jordache was a hit among teenage girls.

Incredibly, start-up Jordache had sales of $72 million in 1979 by selling more than three million pairs of its sole product--jeans selling at retail for between $29 and $34. In line with their skyrocketing success, the Nakash brothers became the second-largest shareholders in one of the fastest-growing banks in Israel. They began establishing Jordache International retail outlets throughout Asia and negotiated licensing deals for the Jordache name for products ranging from sunglasses to women’s sportswear. In 1980 Jordache signed a licensing deal with Burlington for home furnishings.

As People Magazine reported at the time, their great success in the world of flashy fashion did not have much of an effect on the personal behavior of the Nakash brothers. All happily married with children, they attended synagogue, held weekly Friday night Shabbat dinners together, avoided partying at discos with their fellow trend-setters, and made substantial contributions to Israeli charities. Preferring to keep somewhat of a low public profile as individuals, the brothers rejected such standard corporate perks as fancy limousines, while conceding that an aggressive advertising strategy was necessary. “We believe in PR,” Joe Nakash stated simply at the time.

By the fall of 1981 Jordache was producing 1.2 million pairs of jeans a month and selling them in 25 countries. The company also added divisions for children’s clothing, menswear, handbags and activewear. Additionally, the company was licensing its name and logo for 36 products. Joe Nakash said the licensees were taking in more than $100 million annually, while Jordache was earning $200 million a year in wholesale revenue for its jeans. The company also, by early 1983, had founded Yama Maritime Inc., an affiliate in which it had invested $40 million for eight cargo ships sporting the familiar horse’s head. By this time Jordache’s sales volume was $400 million annually.

The Nakash brothers had a very flexible style of running their business, doing most of their planning while commuting to Manhattan from their Queens residential neighborhood. They divided their duties on the basis of what they enjoyed doing the most and switched funds from division to division on a basis of daily need. They promoted young, inexperienced people from within, in the hope that they would contribute a feeling for the customer’s needs.

Jordache was still flourishing in 1986, when it was the largest privately owned U.S. jeans manufacturer, with annual sales estimated at more than $600 million. Meanwhile, Jordache’s list of company licensees reached 100, generating $300 million in wholesale volume.

With the end of the designer jeans craze, Jordache’s annual sales fell to an estimated $400 million-plus at the end of the 1980s. According to a Los Angeles Times story, the company’s jeans had lost their cachet, appealing mainly to inner-city youths and blue-collar workers and typically selling at discount stores.

Recognizing the imperative of remaining afloat by expanding their enterprise well beyond clothing and household items, the Jordache honchos paid $10 million a little over a decade ago to obtain a controlling interest in Arkia Israel Airlines, which they were able to transform within two years from a money-losing operation into a profitable venture. Over the years, the Nakash brothers have also purchased entities as varied as skyscrapers and a tomato processing plant in Tel Aviv that currently sells tomato paste to the Heinz company. The fearless entrepreneurs additionally market olive oil in both the United States and Israel under the Halutza brand name, and they sell electrical power to Israeli utilities that is generated from solar panels on the roofs of their hotels and resorts, which are located in trendy spots in Tel Aviv and Florida.

Joe Nakash is unquestionably the ultimate decision-maker in the operation of the family business, and he and his brothers have succeeded in maintaining harmony amidst the inevitable business tensions. “Each one of us has his own area of expertise in the company, and normally we don’t interfere with one another,” he explains. “There are of course important decisions that are taken after a tripartite consultation.”

The family patriarch proudly touts his company’s prescient ability to glide through the recent recession unscathed. “We knew to spread the risk among a wide variety of products,” he says.  “In addition, we market products that are sold in massive quantities in large retail outlets like Wal-mart and K-mart at affordable prices. Our marketing strategy has survived even during the downturn… even made us profits.”

Joe takes particular pride in the Nakash brothers’ Zionist endeavors. In addition to their Halutza oil venture, they are looking into the possibility of broadening their immersion in agricultural projects in the Negev. This expansion would potentially include investing in dates and almond plantations in kibbutzim located in the Ramat HaNegev area. And just recently, the Nakashes’ Papo Shipping Company obtained the exclusive rights to operate the Port of Eilat as a privatized franchise.

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