Online Extra: No Business Like Shoe Business
At the age of 63, shoe impresario Stuart Weitzman is not slowing down. When he started looking for someone to invest in his business, it wasn't so he could take out a chunk of cash to ease his ride into the retirement sunset. Weitzman still spends 7 months a year in Spain overseeing the manufacturing of his products. His factories are full of extended families and veterans who have been making shoes for 20, 30, and 40 years.
Last year, he sold a minority stake in the business to Bear Stearns Merchant Banking. They paid $120 million for 40% of the shoe company. In return, they got a slice of the largest supplier of footwear to Neiman Marcus, Saks Fifth Avenue, and Nordstrom (JWN ). Weitzman's outfit company that had gone from $15 million in sales in 1992 to more than $150 million when Bear Stearns bought in.
And Bear Stearns got Weitzman, too.
Senior Writer Nanette Byrnes reached him on his international cell phone in Alicante, Spain, in January. After answering several of his questions, including whether she wears his shoes (sadly, no), Byrnes got to ask a few of her own. Here's an edited version of that conversation.
Why did you consider a private equity investment? Why not just go public?
I did not want to go public. The red tape, public reporting, and the concern about every quarter instead of what the whole picture is. Everything I did, I did in an entrepreneurial way for 12, 14 years. I know the public road, I know friends who've gone that way. It was clear what it might entail, and it didn't appeal to me.
What did your friends say?
The people I know were small businessmen, like I am, and entrepreneurs. I can't think of one that didn't say, "Don't take this route. God, I wish I were private again." They said if you want to stay, don't sell out to a giant corporation either. I got some pretty good advice.
Did you need the money?
I didn't do it for capital. Everything we did was well financed by internal operations. What I didn't have was a team of people to continue to build the business into a bigger and more diversified company. I didn't have the time, because I'm so involved in the product. I'm head designer as well as running the company, and an engineer as well. Fit and quality are under my watchful eye.
If I'd gone public I wasn't getting any help from a team of experienced mangers. Instead I would be bogged down with a lot of things that I didn't have to do before.
So how did you pick the right firm?
I paid more attention to the people running these firms than the total amount of money they were willing to pay for a stake. It was critical to me that I still be the majority owner of the company. Bear Stearns doesn't typically do that. We danced around that for 18 months.
In the end they got to know me, the industry, and who I was and our team and our reputation. It protects them, protects me, and brings into my company a team of very experienced business leaders, in retail, in finance.
What's changing now?
We're launching new divisions. As a result, we need people. Since I'm in Spain seven months per year, they're screening people for me. Then I've got five to pick from. We started a new line of designer handbags. Just hired a head of retail. We had 14 stores when they joined, we should have 25 by end of this year, foreign retail in partnership with customers will go from 7 stores to 20 in next two years.
The thing...they spend week to week on is the financial end, reporting, accounting. We were a family business. We never had to worry about what we were doing as long as it was legal. These people turn their money as you know, so they like to see that reporting and auditing processes are put in place.
There's been so much consolidation in apparel, did you have offers from Jones Apparel (JNY ) and the other serial acquirers?
Oh yeah. But none would make a deal without majority control. I could have had a 20%-30% bigger payout for me and my family. But my daughter said, "Daddy, don't do anything where one day a guy will say to you 'Get me a cup of coffee.'" I wasn't going to give this away. This has been my hobby, my work, my love.
So you're not retiring?
Roberto Cavalli is Italian, 74, and makes the sexiest, hippest, coolest jeans and tops. Why should I?