Fresh from the sale of teen clothier Rampage Clothing Co., turnaround specialist Buxbaum Group has set its sights on new targets.
The Calabasas-based firm recently plowed a few million dollars into City of Commerce-based knit products company Indosheen Inc. and acquired L.A.-based manufacturer Richter Furniture. Though operating in different sectors, these companies share a common problem: they expanded too fast for their infrastructure to sustain.
Speaking generally of companies that Buxbaum looks to invest in, Paul Buxbaum, the firm's chief executive, said, "Most of the deals are companies that either had explosive growth and made mistakes or they had misguidance and some of the management needs to go."
At Indosheen, the company grew to $25 million in sales but had the capacity to handle only about $15 million. The Buxbaum Group will help shore up the company's infrastructure, including possibly taking over a cut-and-sew operation in Honduras.
In three years, Buxbaum estimates Indosheen will generate $60 million in revenues. David Gren, the company's founder, will stay on as a partner. "They had a nice customer base. They just did not have a good infrastructure and a good production operation. We saw there was opportunity for growth," Buxbaum said.
At Richter Furniture, sales totaled about $55 million in 2005, outpacing founder Braden Richter's ability to churn out merchandise. Richter Furniture's customer base includes retail chains Crate & Barrel, Restoration Hardware, Pottery Barn and Williams-Sonoma Home.
The Buxbaum Group acquired Richter Furniture's assets after the company filed for bankruptcy last year when its cash flow failed to cover its mounting debt. Richter will remain the creative director of the company, while David Ellis, president of the Buxbaum Group, will serve as the company's chief executive.
The Buxbaum Group, a long-term liquidation and appraisal expert, has been active of late pouring its resources into underperforming middle-market companies. Depending on the similarity of the targeted companies, Buxbaum expects to be involved in a maximum of five to 10 companies at the same time.
"With our expertise and history of understanding the value of assets, we think that we can create more value out of assets through this process," he said.
It worked for L.A.-based Rampage. After an overhaul in which Buxbaum improved Rampage's inventory management and accelerated its delivery schedules, the company sold for $45.9 million last year to Iconix Brand Group Inc., a New York-based brand manager responsible for Candie's, Bongo and Badgley Mischka.
Michael O'Brien believes that if his tailored suits work for 325-pound, 7-foot 1-inch NBA star Shaquille O'Neal, they can work for everybody.
O'Brien, co-founder of Van Nuys-based menswear company elevee Custom Clothing, is taking elevee's made-to-order clothes, a favorite of professional athletes, to the masses. This year, he plans to make the clothes available to high-end department store and boutique shoppers.
"I am hoping that the general public follows what the celebrities do," said O'Brien. "We can only get to so many people directly. If we have retail doors, obviously we can get to a lot more."
O'Brien sees a sales opportunity in shoppers' expanding physiques. As men get heavier, he said it's harder for them to pluck suits off the rack. "It doesn't look right. They pretty much need custom clothing," he said.
Now, the elevee suits are sold direct to customers, ranging from comedian George Lopez to pumped-up baseball player Jason Giambi. The company produces the suits at its vertically integrated operation in Van Nuys where 22 designers and 60 tailors patch them together. Most suits by other companies are made abroad to keep costs down.
O'Brien said domestic production gives elevee an advantage: Its turnaround time can be as little as one day, although it's more typically two to three weeks, compared to the industry standard of six to eight weeks. For television appearances or the unexpected party, elevee can speedily outfit its celebrity clients in a special tuxedo.
Celebrity interest propelled the company to 50 percent growth in 2005. O'Brien wouldn't disclose yearly revenues at the privately held company, which he founded in 1999 with high school friend J.T. Wiegman and Wiegman's wife Jhoanna.
But elevee will have to find customers with fat wallets. Celebrities with seven-figure paychecks don't have a problem paying for the expensive duds, which cost from $1,595 to $15,000 each, depending on the quality of the fabric. At retail locations, O'Brien said the suits would cost the same amount.
*Staff reporter Rachel Brown can be reached at (323) 549-5225, ext. 224, or by e-mail at email@example.com .
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