-IT WAS REQUESTED:  WILLIAM C. LEONE 






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Business Week

                       April 18, 1977, Industrial Edition

SECTION: EXECUTIVE SUITE; Pg. 52

LENGTH:  600 words

HEADLINE: The dust starts to settle at Farah

 HIGHLIGHT: An executive shakeup followed some severe financial setbacks

 BODY:    "We're finally settled down," says a relieved William J. 
Conroy, president and chief executive of Farah Mfg. Co., and El Paso 
apparel maker.  But Conroy's relief may be only temporary.  After three 
weeks of tumultuous management shakeup, the new CEO must now stitch the 
troubled company back together.  In the course of the upheaval, William 
F. Farah, the mercurial and autocratic chairman, stepped down, four 
directors resigned, three new directors were installed, and Conroy was 
elevated to the top post.

   At stake is Farah's survival.  Though Conroy is hoping the company 
will be profitable this year after losing $24.4 million on sales of $137 
million in fiscal 1976, many in the industry are dubious.  Although 
Conroy denies it, there are rumors in the industry that the company is 
seeking to be acquired. Cutting back

   Some of Farah's problems still stem from a bitter 22-month strike by 
the Amalgamated Clothing Workers of America, which ended in 1974.  "They 
lost shelf space for their slacks," says a Midwestern retailer, "and it's 
always tough to get that back." Even more important, however, the company 
grossly overcommitted itself to the leisure-suit and double-knit markets, 
both of which collapsed last year.  In addition, under Farah, who built 
the sales of a tiny family-owned business to a peak of $151 million in 
1971, the company went on an expansion binge in the late 1960s, 
integrating backward into fabric manufacturing.  But since 1974 the 
company has had to cut back drastically.  It has reduced its domestic 
plants from 10 to 3, and cut its labor force from 9,000 before the strike 
to 4,000 now.

   Early last year, when leisure-suit and double-knit sales tumbled, the 
company's alarmed bankers -- principally Continental Illinois, Republic 
National Bank of Dallas, and the State National Bank of El Paso -- 
persuaded William Farah to relinquish the presidency to  William C. 
Leone,  a board member who had been president of Rheem Mfg. Co. in Los 
Angeles.

   As it turned out, Farah and Leone did not get along.  Some company 
sources say Farah was upset by Leone's Draconian pruning, and that Farah 
sometimes countermanded Leone's decisions.  For example, early this year 
Leone dismissed the treasurer, Richard Jaeger, only to have Farah rehire 
him as his personal financial adviser. Rebuilding



                                                                       
PAGE    2               1977 McGraw-Hill, Inc., Business Week, April 18, 
1977             


   The feud boiled over last month when Leone and three directors 
resigned, protesting "Willie" Farah's activities.  Leone retained the 
presidency, but a day later the remaining board members elected Conroy 
president, and Farah stepped down as chairman.He will remain on the 
board, but, says Conroy, "he will not be involved in the operations or 
decision-making."

   According to industry sources, Farah managed to push Leone out by 
using the power of his family's holding -- some 47% of the stock.  In the 
end, Farah and the banks managed to agree on Conroy, but the price of the 
deal was that Farah would remove himself from active management in the 
company.

   Conroy, a financial man who has spent 22 years with Farah in a variety 
of jobs, insists "the company is now in a turn-around position." Although 
the company lost $3.5 million in the first quarter of fiscal 1977, he 
says, "We haven't yet felt the benefits of many of the moves we made last 
year."

   Some retailers are impressed by recent changes in the company's 
marketing techniques.  Farah is now shipping many orders with prepaid 
transportation.  It also now guarantees five-day delivery on a number of 
slacks styles, and it has begun cooperative advertising programs with 
stores.

GRAPHIC: Picture, Conroy: "We haven't yet felt the benefits of many of 
the moves we made last year." John Costello

LANGUAGE: ENGLISH

                                                                       
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