LA Gear

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L.A. Gear Inc.

Athletic shoes, apparel

1982

In the mid-’80s, its fluorescent-colored high-tops were the shoes that every teen-aged girl just had to have. But a decade after being the choice of, like, everyone, the Marina del Rey-based manufacturer filed for bankruptcy and reinvented itself as a licensing company.

The rise, fall and rebirth of L.A. Gear shows the cutthroat competition among makers of athletic footwear and the pitfalls of trying to predict the fashion whims of the public.

By 1990, L.A. Gear, which was started as a shop on Melrose Avenue, had become the nation’s No. 3 athletic shoemaker, behind only Nike Inc. and Reebok International Ltd.

Some analysts believe the rapid growth came too quickly for management to handle. But others put the blame on a key marketing decision.

In 1989, the company made an endorsement deal with pop superstar Michael Jackson, who was guaranteed $9 million over the first two years of the contract in exchange for help creating the “MJ” line of shoes and wearing them in his music videos.

A major promotional push was tied to a greatest hits album that was expected to be released by Jackson. But no such album was ever done, and Jackson made just one, 30-second commercial for L.A. Gear that cost $700,000.

Without a strong push from Jackson, the high-tops had trouble competing against traditional athletic shoes because they were designed more with fashion than function in mind. With numerous buckles and straps, some critics even derided the shoes as making kids look like “junior Hell’s Angels.”

Sales were horrible, and L.A. Gear eventually discontinued the line. Then in September 1992, the company filed a breach of contract suit against Jackson seeking damages of $44 million. Jackson countered with a lawsuit alleging fraud. The legal battle was resolved two years later, with both parties agreeing to dismiss their claims.

Meanwhile, the Jackson debacle and disastrous sales across several product lines led to shakeups among top management.

In 1991, co-founder Sandy Saemann resigned. Mark Goldston, the man behind Reebok’s marketing campaign for “The Pump” shoe, came on board and bumped Robert Greenberg, another co-founder, from his post as president.

After several failed restructuring attempts and hundreds of layoffs, L.A. Gear filed for bankruptcy last year. Except for one executive, the entire old guard that led the company through its heyday has left the organization.

The one exception is David Gatto, who ran L.A. Gear’s international business from 1991 to 1996 and then was named chairman and chief executive in 1997. He believes the firm’s new focus as a licensing company will pay off.

L.A. Gear now licenses its trademarks and trade names to about 20 manufacturers worldwide including producers of shoes, workout apparel, watches and eyeglasses.

“There is still a huge recognition of the L.A. Gear brand not just around the country but around the world,” Gatto said. “People look to it as a symbol of the Southern California lifestyle.”

Ann Donahue

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