Which would be harder: reviving a has-been heritage brand so everyone from hipsters to boomers can buy in? Or turning around a business tipping dangerously toward bankruptcy? Turns out Paul Grangaard did both.
The current CEO of Allen Edmonds footwear company was a board member and partner in the private equity firm that had a majority stake in the business when Grangaard was tasked with taking the helm in 2008. It was a last-ditch move for the Wisconsin-based company, founded in 1922, which had seen revenue plummet from $94 million to $72 million between 2007 and 2009. Not to mention that the company was still manufacturing its wingtips, oxfords, and brogues in a pastoral setting on Lake Michigan 20 minutes north of Milwaukee, while nearly all its competitors had their products made more cheaply overseas. Over 98% of shoes bought in the United States last year were made internationally, according to the American Apparel and Footwear Association.
“We had fallen by 25% in revenue,” Grangaard says. “I looked at what we weren’t doing as well and imagined how much better we could do if we improved things around here.” He laughs softly at the memory before continuing. “Vision is absolutely essential,” he explains, “You know what they say, if you don’t know where you’re going, any road will get you there. I saw that we needed to be the great American shoe company.”
To get Allen Edmonds there, Grangaard reached deep (really deep) into his personal playbook. When he was in third grade, Grangaard remembers going out after blizzards when the snow had developed an icy crust and cutting the frozen stuff into shapes with his mom’s coffee cans. Then he’d load his geometric bounty onto his sled and try to sell them door to door. Not surprisingly, there weren’t any takers. “I learned there has to be need for the product,” he says chuckling a bit louder. “I also learned the disappointment of rejection.”
With Allen Edmonds shoes, Grangaard was convinced there was a need. And not just because he’s spent the last 30 years in the company’s target customer base–though seeing what buttoned up executives wore daily didn’t hurt. Billing himself “a Scandinavian extrovert” (he tends to look at other people’s shoes when they talk), he had a strong feeling that Allen Edmonds’s product portfolio could be relevant to a whole new generation of buyers. “I have 22-year-old son, and I see how much more often [he and his friends] get dressed up. They’re constantly networking.”
Armed (or shod?) with that knowledge, Grangaard dove in. The company laid off about 8% of its existing staff. The executive team was reshuffled according to Grangaard’s principles of managing within a partnership culture. “I don’t think modern organizations are served well by hierarchy,” he says, “But a series of interlocking circles, where you may be in the lead once in a while.” He gave himself a pay cut, in addition to cutting the entire expense base for the company. Thankfully, the recession didn’t last as long as he’d originally thought. Though Grangaard did make some course adjustments in that first year, he stayed on track. A devoted golfer, Grangaard says, “If you worry to much about what could be bad, you never make anything good happen. Just pick your club and commit.”
Grangaard reintroduced four of the company’s top sellers and launching a whole new collection of casual styles for after work and weekends–all while maintaining the stringent adherence to quality the brand’s venerable history demanded. Though the preponderance of the shoes are still produced here, Grangaard saw the benefit of having some styles, the less expensive casuals, manufactured at their facility in the Dominican Republic. “You can’t charge $200 and get market share,” he maintains, so the boat shoes and driving moccasins are assembled in the other plant to keep the retail price between $95 and $100.
Grangaard led Allen Edmonds to diversify beyond shoes, too. Now the brand is stamped on everything from shearling coats, to jeans, ties, and socks. Says Grangaard: “We are a lifestyle brand, we lead with shoes. We want to do what Coach did through purses for women.”
With triple the products, revenues began to tick up after the first year. In 2011 Allen Edmonds logged over $100 million in sales for the first time and, this year, Grangaard expects that figure to be around $145 million. Staff now numbers over 600 stateside and counting. No wonder Allen Edmonds was quickly snapped up by an affiliate of Brentwood Associates, a L.A.-based private equity firm a few weeks ago.
Grangaard insists it’s all because they’ve upheld a history of quality.
Planned obsolescence isn’t for Allen Edmonds, says Grangaard. He’d rather the shoes be repaired than thrown away. For those who live far from a local cobbler, the shoemaker encourages them to pack them up and send them to Allen Edmonds’s team of master repairers, who will replace the heels or refurbish the entire shoe and ship it back in a custom bag, complete with a fresh-smelling pair of cedar shoe trees inside.
But the brand’s turnaround story is also one of exquisite timing. With urban hipsters now embracing all things heritage and sporting 100-year-old brands like Barbour, Pendleton, Shinola, and Stetson, Allen Edmonds is poised to grow even more. Indeed, there’s an entire thread on Reddit dubbed the “ridiculously comprehensive guide to buying used Allen Edmonds.” Grangaard understands the power of that kind of word of mouth. “Once we get their attention, we can [outfit them] for everything except sports.” That’s good news for a company that used to spot a hearse and mourn the loss of another customer. With the brand now coveted by Millennials, it’s likely Allen Edmonds will be on the hoof for another 90 years.