After punching the clock with Betsey Johnson for nearly 30 years, the designer’s longtime confidante and chief executive officer Chantal Bacon has exited the company.
The news was made official Monday, just a month after Steve Madden Ltd. revealed it had taken over a $48.8 million defaulted loan to Betsey Johnson LLC. Bacon first teamed with the designer when she was part of Andy Warhol’s underground scene and has stayed by her side since those early days. However, as of April Bacon was no longer “actively involved” with the company and started to scale back her day-to-day involvement, she said via e-mail Monday. “Going forward, I will not be involved at all,” she wrote.
For the time being, she is content to get away from Seventh Avenue. “I’m traveling now and my plans are to enjoy life to it’s fullest…and I’m loving it!” she wrote.
This spring Castanea Partners, which bought a majority stake in Betsey Johnson LLC in 2007, put in place a management team of mostly Johnson staffers, according to a source familiar with the company. Former Henri Bendel president Susan Falk is on board with the firm as a consultant. Johnson’s chief operating officer, Jonathan Friedman, said he assumed some of Bacon’s responsibilities a few months back. A new ceo should be named in the coming weeks, he said.
“The question that might be lingering is what this means for Betsey. She is totally committed and will continue to be integral to the intricacies of the business,” he said. “She is still very excited and energized. She obviously misses Chantal. But going forward she will continue to be the namesake of the brand, and will do what she does so well — design.”
Johnson did not respond to a request for comment, and a Steve Madden spokeswoman declined comment.
Industry sources familiar with the negotiations over the debt agreement said Madden will make a major announcement regarding its plans, possibly as early as this week.
The way things stand, should Johnson not repay the loan by Aug. 20, 2012, Madden would own the brand. Madden already licenses handbags, small leather goods, belts and umbrellas under the Betsey Johnson and Betseyville trademarks. The collateral for the loan includes the company’s intellectual property, so Madden could be in line for the labels it holds as licensee.
Frederick Schmitt, managing director for the Sage Group, which advised Johnson in the 2007 sale of a majority stake to Castanea Partners, said Monday, “It seems Betsey Johnson may have found a plan to execute its current and future business potential.”
He also said that neither Johnson’s nor Bacon’s personal finances are tied up in the Madden loan. Friedman confirmed that Monday, saying, “The loan is secured by the assets of the company. Betsey and Chantal are not personally liable for the debt of the company.” In its filing with the Securities and Exchange Commission last month, Madden said its loan agreement is secured by “the borrower’s personal property, accounts, deposit accounts and cash, equipment, fixtures, general intangibles, goods [and inventory] as well as the pledges of membership interests of each of Betsey Johnson and Chantal Bacon.”
Executives at Castanea Partners did not respond to requests for comment Monday.
With the exception of a few middle-management positions, Bacon’s departure was the first major one for the company in recent months, Friedman said. There are about 55 staffers in the Seventh Avenue showroom and about 10 or 15 more in its Secaucus, N.J., warehouse and offices. There are no plans for layoffs or significant cost cutting at this time, Friedman said. “Over the last two years we’ve done some of that already. Right now we’re looking forward to invest in the business and to grow the business,” he said.
Store closings are not anticipated either, according to Friedman. There should be 65 to 70 Betsey Johnson boutiques by the end of the year, with Miami, San Francisco and Boca Raton being the next ones on deck. Contrary to industry speculation, the company is not planning to introduce an apparel label for the mass market at this point, Friedman said.
But an industry source involved with the company said there is “a large possibility” that some stores would be shuttered in the coming months. “Initially, they are going to give the stores a chance. It is not news to anyone that we are still in a difficult [retail] environment,” he said.