When Liz Claiborne acquired prAna in November of last year, many in the industry assumed the brand would go down market and quickly evolve into a department store commodity shirt and short supplier. Today, eight months after the deal was formally announced, it appears that nothing could be further from the truth. Liz has a long history of acquiring specialty brands and allowing them to thrive, but not many people realize which brands are attached to the conglomerate.

With prAna, Liz seems to be allowing the same independence. “They didn’t just put us in this mold and say, ‘here’s an acquired company, here’s how we do it.’ They are listening to special requests and catering specifically to our market,” Beaver Theodosakis, prAna’s founder, told The B.O.S.S. Report. “What we make, how we make it, who we sell it to, what market we are in-those are all our decisions, 100%… Even with something like collecting money from our stores. Accounting efficiency would dictate that everything go through Liz’s A.R. department. We said, ‘No wait a minute, that’s a branding issue.’ The same voice has called them for six or eight or however many years-I mean, every once in a while Pam or myself call. So, those kinds of contacts and personal interaction are important to our marketplace. When we told them this, immediately they yielded and said okay.”

According to Theodosakis, Liz acquired prAna because they were doing business with retailers where Liz had absolutely no penetration. Bringing prAna down market in any way would be counter-productive to their desire to grow sales through the outdoor channel. Since the acquisition, prAna has been able to take advantage of several new tools and the increased access to capital inherent with joining a company the size of Liz Claiborne. Theodosakis said that his company is seeing benefits in sourcing, personnel, design, and I.T., while the access to capital is helping to grow the brand, which was limited by funding constraints before the acquisition.

In sourcing, the company is seeing benefits at home and abroad. “We’re still majority made in the U.S. 60% is manufactured right here in California, but the other 40% is sourced overseas. We would visit or send a production person over once a year or so to visit the factories. Now with Liz, they are such fair trade experts; they are leading the field in that…

“They have people on the ground in their factories every day,” Theodosakis said. “Even domestic sourcing-we are lined up with Lucky Jeans and those guys, with their denim and their nice lightweight cotton tees and that U.S. made stuff-sources that we never knew were right in our backyard in L.A. here. We are getting turned on to amazing quality and pricing in a lot of ways.”

prAna is seeing benefits on the personnel side on two different fronts. Since the deal, there has not been a single person to leave the company and “we haven’t had a single person from the east implanted in our office.” The only difference has been improvements in employee benefits like insurance and time off. On the other hand, prAna is finding it easier to find new talent with access to Liz’s headhunting resources.

One major benefit will come in the design department. prAna’s designers are now able to attend multi-day workshops put on by Liz in which every designer across all of the Claiborne brands is invited. “It’s kind of a creative gathering of ideas. Three- or four-day long intensives to inspire everyone and get the home team excited and to open their eyes and look outside of the box they are in,” said Theodosakis. “They bring in a nice panel of designers to share and make everyone better and we are getting a lot out of that.”

Perhaps the biggest change since the acquisition is the access to capital. “When we started prAna out of our garage in the beginning, it was very hand to mouth. We used our house as collateral on the loan. There were times it would be tight and we had to go lean and mean. You know the company needs the resources and we needed to tighten the belt at home,” Theodosakis said. “So that’s eased up. We need money to grow and for production and the response is, ‘What do you need?’ It’s kind of automatic… You know, some of our competitors have amazing buying power. That was one of the reasons to move and connect with someone with that mass. It should allow us to bridge that gap from a small garage climbing company to a more important force in the outdoor industry.”

prAna has identified several opportunities that should put this capital to good use, primarily in Europe. “So, we know we have a core following there. Amongst the climbers, we are a household name. Now, if we come in with a business model that will deliver the goods at the margins the retailers need over there and at the prices the climbers will pay, I think the groundwork is laid and there is a lot of blue sky,” he said. “We have distributors in 14 countries in Europe, but it has always been so expensive. Now, we are working on our own warehouse over there where re-orders will be quick, we’ll have much more reasonable pricing. It’s low hanging fruit for us-the market knows us and it’s ripe.”

It appears the benefits are flowing both ways for Liz Claiborne and prAna. Shortly after the deal was announced, Liz converted 100% of the electricity used at its corporate headquarters in New Jersey to wind power. Now Liz appears to be ready to take its environmental commitment one step further and incorporate organic cotton into some of its other brands.

While there were some doubts in the industry about whether prAna could keep their culture intact after they were assimilated into the Liz Claiborne family, the brand appears to be moving along under its original business plan.


Editors Note:
Go to www.theBOSSreport.com to read the full interview with Beaver Theodosakis.