Gramicci under new ownership and looking forward

Contrary to a report that appeared in another trade news service recently, Gramicci is NOT in bankruptcy. As we stated previously in our Jan. 7, 2005, article "Sole Survivor under Ch. 7 bankruptcy…what of Gramicci?" Gramicci was not under bankruptcy protection, near bankruptcy, or otherwise going under.
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Contrary to a report that appeared in another trade news service recently, Gramicci is NOT in bankruptcy. As we stated previously in our Jan. 7, 2005, article "Sole Survivor under Ch. 7 bankruptcy…what of Gramicci?" Gramicci was not under bankruptcy protection, near bankruptcy, or otherwise going under.

Questions regarding Gramicci's health surfaced in late 2004, following SNEWS® revealing that Sole Survivor had been forced into Ch. 7. Don Love, president and CEO of Gramicci, at the time, and the president of Sole Survivor Inc., a California corporation, told us that Gramicci was just fine and that he would be able to tell us more by mid-May to early June.

After speaking with Arnold Rubenstein, president of Gramicci, and Don Love, who is no longer listed as an officer at Gramicci Inc. or at Gramicci but dubbed the company's "mainstay" and director of design, marketing and branding for the company, here is what is going on at the company:

1. Sole Survivor Inc. is dead, and Gramicci is not a part of that corporate entity. Gramicci Inc., formed in November 2004, owns the rights to the Gramicci brand and assets and operates Gramicci as a DBA.

2. Don Love is no longer listed as an officer of the company on corporate papers filed with the state of California. He has also confirmed he is not an executive (currently) with Gramicci. He is, however, very much involved in the day-to-day operations of the company in terms of managing the marketing, branding and overall direction of the brand.

3. Arnold Rubenstein is the new president of Gramicci, and is working at the company full time -- a departure from his former position working as a closeout specialist with the Buxbaum Group (www.buxbaumgroup.com).

4. Gramicci will be back at Summer Market, in a larger room than in Winter Market (this time next to The North Face's large room), though still not on the floor.

5. Under the new team of investors and new management, and tapping into the expertise of the Buxbaum Group, Gramicci is now manufacturing all of is product offshore in either China or India -- with the company maintaining an office in China. For the cotton product, we've been told the vast majority is being made in India, in factories that are visited regularly by Rubenstein and other key production folks from Gramicci.

6. On-time delivery for Gramicci in the first quarter of 2005 is significantly improved, though it is not lost on Rubenstein that Gramicci had nowhere to go but up.

7. Gramicci is in the process of assembling an entirely new sales force, under the direction of new National Sales Manager Joe Dessinger.

8. Rubenstein tells SNEWS® that Gramicci will not be taken downstream to achieve growth, and that while the new investors certainly desire growth and profit, it will be very controlled with a focus more on being profitable than seeking double-digit expansion. Rubenstein also told us that the company would remain focused on the authenticity of the brand, but that it would also be seeking to place Gramicci in as many larger outdoor and sports chains as possible as the company seeks to find more customers "who want to wear our goods." At the same time, Rubenstein stated that he does not want Gramicci to be sold in any store that did not have "well-trained staff who could represent our brand with integrity."

SNEWS® View:
We suspect there is much more here than is viewable from the surface in all the name, investor and corporate juggling. Not that it really matters what happened to Sole Survivor and forced the situation resulting in Don Love losing (at least on paper) control of his company. The bottom line is that Gramicci is under new management and under the control of folks who appear to understand the value of the Gramicci brand to the specialty market. Love is also still very much at the company, and it appears very involved and that is a good thing. Gramicci has a long way to climb as a brand though to restore past luster and help retailers forget the image of a company that kept tripping over its own growth time and again -- something neither Love nor Rubenstein deny. From reviewing our notes over the last few years, Gramicci slipped from over $26 million in sales in 2001/2002 to likely no more than $14 million to $17 million in 2004 -- in large part to do an abysmal delivery record and lousy sourcing. It appears the company is doing the right things to restore faith and inspire confidence. However, the company has tripped over its own feet so many times in recent years, it will be interesting to watch to determine if Gramicci can gain the trust of an outdoor specialty retailer, especially with a strategy to grow sales by looking to the chains. While some brands can manage such a distribution strategy -- we're not sure Gramicci has the "must-have" branding anymore in a market where retailers are trimming lines, not expanding them.

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