The licensee becomes the licensor as the downturn in skate claimed its first major victim on Friday.
Tare7, the parent company to the airwalk and and andy mac skate brands, made the strategic decision to license its brands to either another manufacturer/brand marketer or retailer.
The story hit the streets hard over the weekend as the company cut loose its sales organization (always a quiet bunch) and gave much of the staff in Golden their walking papers. Estimates are that 57 company people were let go before the weekend.
In an exclusive interview Tuesday morning with SPORTS EXECUTIVE WEEKLY, Tare 7 president and CEO Bruce Pettet said that the management team had been working diligently to dig out of the hole they inherited, but that working capital “came up short” in the end.
He plans to keep “about 20” people in place to help through the transition, but would not confirm if the number would move lower. The talk on the street-and in the building-is that a core team of ten people will stay to run the business.
Mr. Pettet said that the remaining personnel would be focused on product and brand marketing only.
The CEO did say that retailers will still get product in the pipeline “if they want it” and that the company “anticipates” getting product from their factories to fulfill current orders.
Pettet walked into a tough situation three years ago and made personnel and operational adjustments to build revenue, improve margins and get the credit process in line, resulting in reduced DSO.
He bolstered the product team with Reebok alum Dan Brown and brought former Brooks president Eric Dreyer in to handle development. Scott Cain also came over to run sales. Former HIND and Reebok exec Dave Chandler has been running the international business since Peter Goehrig ran the company.
Pettet likened the move he is making in the U.S. to the international business two years ago. They moved from subsidiaries to licensees and saw a much broader business develop.
The challenge here will be a bit different as the company-primarily the airwalk brand-struggles to clarify a brand positioning as it attempts to service its broad base of customers from core skate shops to athletic specialty stores and mid-market/family footwear stores.
Mr. Pettet said the company needs to get “a strong licensing partner on board”, but did not specify if that meant a retail partner or another footwear/apparel firm. He did say he would prefer someone in the same space, but a retail partner is possible.
Pettet said the andy mac license with Payless would stay in place.
The speculation around the industry is that this is a perfect Mossimo-type deal to take to a Target or Kmart. The volume would be huge and the VC owners, Sunrise Capital, could sit back and collect royalty checks all day. The airwalk brand would extend nicely to multiple categories in footwear, apparel and accessories as well as snowboard and other “action” sports.
If a retailer takes the license, Pettets personnel strategy makes total sense.
However, if this goes under another brand umbrella like GBMI, K2 or Phoenix, they wont need anyone to run the business — except maybe an accountant to tally the checks…
