Traditional toymakers are being pressured by the increasing popularity of electronic products and retail consolidation, so the new owners of Imperial Toy Corp. know they’ll have to make some changes.
Nonetheless, Peter Tiger, 43, and Art Hirsch, 47, have a great deal of faith in the key product of their company: bubble toys.
The duo took over in last month in a management-led buyout orchestrated by L.A. investment firm Sage Group LLC. Fred Kort, a Holocaust survivor, founded Imperial in 1969 with the high-bounce ball. He served as the company’s chief executive until his death in 2003, after which his family shopped the company to private equity firms and toy companies.
Tiger and Hirsch, who have put in a combined 25 years at the L.A. company, did some checks on the suitors and were dismayed by the plans some of the equity firms had.
“They were looking at the cash that they would be generating in the company,” Hirsch said. “Maybe on one hand pull out the cash and on the other hand, look to resell it.” In part to keep the company from that fate, Tiger and Hirsch declared their intent to acquire the firm last summer.
“We realized it was an opportunity that we could do ourselves,” Tiger said. “We always wanted to own our company.” Tiger said Imperial racks up annual revenues in the range of $85 million and $100 million, and he projects 10 percent to 20 percent growth annually.
“There is a legacy,” said Tiger. “We want to continue that and build on that.” But he is also looking forward to new challenges.
“We are all about change, and change in a global environment.” Tiger said, acknowledging that his industry was “not the healthiest.”
To that end, Imperial will aggressively pursue licensing opportunities and push the company’s products further into nontraditional retailing outlets, including grocery stores.
Imperial has had some success with licensing ventures. The company began selling Bubble Bellies animal-shaped toys that spew bubbles under its Little Tikes label. They are on sale for about $10 at the outlets of Target Corp. and Wal-Mart Stores Inc.
Currently, Imperial has 800 employees, and Tiger and Hirsch said there are no immediate plans to make cuts. However, the company is finding savings. It is eliminating a showroom at New York’s International Toy Center, which Imperial has had for decades.
New Bedfellows
Gallery Corp., the L.A.-based company behind leading sleep supply retailer Mattress Gallery, has entered a franchise agreement with Dial-A-Mattress Operating Corp., which sells online and via phone as 1-800-Mattress.
Prior to the agreement, Mattress Gallery had a Web site, but no e-commerce capabilities.
“In any business, you are looking for new channels,” said James Ristas, president of Mattress Gallery. “We are going to have a three pronged attack: shop by Internet, shop by phone or shop at one of our stores.”
For Dial-A-Mattress, Mattress Gallery provides a traditional retailing outlet for phone and online shoppers that prefer testing out products before shelling out for them. It also expands the firm’s reach into the Southern California market from its East Coast base.
Joe Vicens, an executive vice president at Dial-A-Mattress, said 5 percent of mattress shoppers on the Internet go to mattress.com, the Web site operated by the company. And in New York, the firm has a 10 percent market share with phone and the Internet combined.
Vicens predicted that the partnership with Dial-A-Mattress could increase Mattress Gallery’s share of the local market by 10 percent. “They have an existing sales base, and that sales base will grow dramatically,” he said.
Shoppers at Mattress Gallery’s 57 locations should see changes soon. Signs outside and inside the stores will include both the 1-800-Mattress and Mattress Gallery names. “We would co-brand the stores. It is similar to Kinko’s and FedEx,” said Vicens.
Mattress Gallery is planning to add about five stores annually. Ristas believes Southern California can sustain 100 locations, about 10 of which would be “battleship” locations, about two to three times larger than the rest.
Financial terms of the franchise agreement were not disclosed.
Ballet Bounce
The demand for ballet flats has soared at Santa Monica’s London Sole store.
Based on those sales, head designer and managing director Jane Winkworth is ready to take a leap. She’s looking to put at least one more London Sole shops in the L.A. area within the year. She pointed to Pasadena and Brentwood as possible sites.
In the last two years, the London Sole’s U.S. sales were $3 million, about $1.3 million of which were at the Santa Monica store. The remainder is through sales of ballet shoes at other retailers, including local outlets Fred Segal and Madison.
Winkworth said celebrity interest has helped the store catch on. “I was talking at length to a sweet girl called Mischa Barton. She bought about 12 pairs,” she said. “This is probably why Los Angeles has been so good for us. Celebrities adore them.”
London Sole is an American offshoot of French Shoe Shoes Ltd., which does business as French Sole and has marketed the delicate looking slipper-like shoes for more than 15 years. The company called itself London Sole when it entered the United States because anti-French sentiment was running high during the run-up to the war in Iraq.
In the Santa Monica store, the price of the flats ranges from $90 to $350, and there are hundreds of styles available. Winkworth said the selection is constantly changing, with shipments of shoes coming in every few weeks to keep up with shoppers’ desires for different designs.
Retailer Shopping
Clothing heavyweights BCBG and Wet Seal Inc. are duking it out for control of bankrupt G+G Retail Inc.
Wet Seal, based in Orange County’s Foothill Ranch, offered to buy most of New York-based G+G for $15.2 million in January. But Vernon-based AZ3 Inc., known for its BCBG women’s stores, has matched the offer and upped the ante with a $22 million five-year promissory note to unsecured creditors, an unspecified amount of working capital financing and delivery of $20 million in wholesale merchandise.
There’s a catch, however. BCBG’s offer would seem to bypass the customary Chapter 11 bankruptcy bidding process, while Wet Seal’s offer doesn’t. Depending on the opinion of the bankruptcy judge, that could be a deal breaker for BCBG.
“The creditors will be a little bit tempted to take the BCBG offer and possibly ask the court to accept it because it promises them almost a full payout,” said Kevin Starke, an analyst with Weeden & Co. LP. “But one objection from really any of the parties, including Wet Seal, may be enough to ensure that the (auction) process is what transpires.”
Acquisition of G+G would give BCBG or Wet Seal about 550 stores, many of which occupy prime mall real estate. G+G operates stores under the G & G;, Authentica, Rave and Rave Girl names.
AZ3, with about 130 BCBG stores worldwide, last year made key investments in European retailers Alain Monoukian and Don Algodon.
More Seven
Andreas Kurz, the former chief executive of pricey Vernon-based jeans maker Seven for All Mankind LLC, may be gone but he hasn’t been forgotten. Menswear publication DNR reports that he will consult for the company on its Asia-Pacific growth strategy. Kurz, an apparel industry veteran, was at the helm of Seven for less than a year after stints at Polo Ralph Lauren, Diesel and Hugo Boss.
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Staff reporter Rachel Brown can be reached at (323) 549-5225, ext. 224, or by e-mail at
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