TAKING STOCK OF JOE BOXER
Byline: Karyn Monget
NEW YORK — Nick Graham wants to get back to non-basics.
The founder and chief underpants officer of San Francisco-based Joe Boxer Corp. may be able to do just that now that, as reported, Westpoint, Conn.-based Windsong/Allegiance Apparel Group has signed an agreement to purchase the operating assets, trademarks and trade names of Joe Boxer Corp.
That agreement, expected to close in two weeks, promises to lift the burden that has hounded the firm since December, when former licensee Van Mar won a $3.5 million judgment against Boxer that has yet to be paid.
In a telephone interview, Graham was excited about the prospects for his business but touchy about the acrimonious dealings with Boxer’s former licensee. “The Van Mar issue will be behind us as soon as the deal is signed,” he said. “The company had some issues last year in terms of our Internet business. I don’t want to talk about it.”
Boxer’s inability to pay had put the company’s future in jeopardy, a problem that industry sources say was compounded by Graham’s preference for the creative end of the business, as well as his penchant for costly and outlandish media and marketing events that drained the privately-held company’s cash flow.
Contacted at his Connecticut offices, Windsong president Bill Sweedler observed, “It comes down to Nick doing what he’s been doing in the past and removing himself from the day-to-day operations of the business. They got into trouble by licensing themselves in areas without an experienced licensing team behind them. That’s how they got into trouble with Van Mar — nothing was clear-cut, and that misunderstanding went to the licensees’ favor.”
Sweedler will take over the post of chief executive officer at the Boxer firm, succeeding John Short, who was appointed to the post in January. Short will remain for some six months during the transition period. In addition to its signature boxers, the firm produces women’s underwear, daywear, foundations and sleepwear, and men’s sleepwear, as well as related innerwear items for kids.
Windsong specializes in licensed men’s apparel with labels including Geoffrey Beene loungewear, sleepwear and underwear, Bill Blass loungewear and activewear, Ron Chereskin sleepwear and loungewear, and Alexander Julian sportswear.
Graham, who will retain an equity interest in the company, said he “will continue to focus on the design and marketing segments of the Joe Boxer business.”
While the Van Mar judgment may have forced his hand, he indicated that his interest in selling all or part of the company predated the December court ruling: “A partnership will be a good opportunity. This is a strong financial partner who will help in the back-end. I love what I do and I love the brand.
“I had been thinking of making a strategic move for a while. It will be great to get back and build a strong brand again. There is a 78 percent brand awareness of the Joe Boxer brand in the U.S. Our business in panties continues to be distributed to 1,400 doors. We have seven Joe Boxer outlets on the West Coast, and we plan to do more.”
Graham further noted, “We plan to continue expanding in licensing, and will eventually develop a full line of Joe Boxer clothing, whether it’s sportswear or ready-to-wear.” Overall distribution will continue to be aimed at 1,700 doors of major department and specialty stores.
Industry sources — retailers and manufacturers — place Graham’s equity interest and long-term payments close to $2 million. However, Sweedler noted that Graham will “receive substantially more than that. We’ll have a complete compensation package for him to drive the business.”
In January, Graham said men’s products comprised 60 percent of the mix and women’s accounted for 40 percent. At the time, Graham said he expected annual wholesale revenues in 2001 should be approximately the same as the prior year: $60 million through core products and $40 million through licensees.
A former punk rocker from Calgary, Canada, Graham founded Joe Boxer on a “wild hunch” in 1985, literally gambling on the idea that underwear — a basic commodity-type of business — could be spun into a “fun-filled” fashion category that, with the proper dose of the fabulous, could be marketed to a generation of young contemporary consumers as well as baby boomers.
Sporting a spiked, punk-inspired shock of blond hair, he often looks like he’s just pulled an all-nighter with pals like comedian Eddie Izzard and Virgin Air tycoon Richard Branson. His unabashed bravado and bon vivant approach to the business are similar to those of his celebrity friends, and some retailers at last week’s market privately said Graham occasionally went too far over the edge. They cited a “Weird Science” party and show at the New York showrooms that featured a cake in the shape of a cadaver on a stretcher, waiters in what appeared to be blood-soaked bandages, beverages served in urine specimen vials, and models in wheelchairs. A costly media junket several years ago to Iceland featured a non-stop flow of the country’s key export — vodka.
The parties helped build awareness, first within the industry and later among consumers. But, according to one department store executive who requested anonymity, “Graham went too far on the celebrity thing. It became too much over the edge. He wasn’t watching his business.”
Another retailer from a major buying group, noted, “The parties were fun. But levity aside — we’ve got a lot of serious work to do. It’s very competitive out there and we are very focused on growing our core brands.”
In early March, the Boxer firm said product design and development, marketing and licensing will continue out of Joe Boxer’s San Francisco offices, while sales will be based at the New York showrooms and around the country.
Added Sweedler, “The Joe Boxer sales team is a terrific team, and we have already alerted them we plan to go forward with their entire group as well as their coordinating group. We also will have a combination of their new licensing team as well as our own.” Beginning in mid-2000, there was a mass exodus of senior executives and sales employees from the Boxer firm. They included Tom Fanoe, president; Paul Friedman, vice president of licensing; Susan Larscheid, vice president of sales for the women’s division; Holly Price, national sales manager of the women’s division; Kathy Thomas, account executive for Federated Stores; Lisa Lauricella, account executive for specialty stores; Serena Swanke, account executive for the Midwest; Jean Marie Smith, director of in-store merchandisers, and Cherie Britton, public relations coordinator. In the men’s division, those departing included Dan Weiss, senior vice president, and three sales executives — Rochelle Harris, Jill Finkelstein and Lisa Anderson.