The downtown clothing brand has since quadrupled its annual sales to approximately $ 200 million
Downtown Endeavor Capital acquired a majority stake in 2015 from founder Eli Levite.
“It worked out very well,” said Leland Jones, managing director of the private equity firm’s Los Angeles office. “Covid was a little tough on them for about six months, but they immediately recovered and are remarkably well. At first we asked ourselves if it was the (after the shutdown) revenge expenses that everyone was talking about, but it just goes on. “
Strikes of opportunity
Levite, a local clothing manufacturer, founded the company in 1987 and focused on women’s clothing in “boho chic” – relaxed outfits with mixed patterns, colors and layers.
When Endeavor took over, Johnny Was had nine stores, including a flagship location that opened at the Santa Monica Place Mall in 2010. Most of the sales came from wholesale customers with high-end department stores and hundreds of boutiques across the country.
Today the brand employs more than 300 people in 57 company-owned stores and a warehouse and fulfillment location downtown. According to CEO Robert Traub, wholesale consists of a “strong business” with the Neiman Marcus Group, Saks Fifth Avenue and Bloomingdale’s Inc. and a “smaller business with Nordstrom”. as well as in Australia and Germany.
Traub, who helped Endeavor woo Johnny Was before assuming the position of CEO, noted growth potential in the brand’s direct customer business – it had a small but “very strong consumer base” and few but profitable businesses. It also had an underdeveloped website and small customer database, both of which were ripe for expansion through various marketing and customer acquisition strategies.
“When we got there … wholesale was about 70% of the business, and we changed that, (but) we didn’t shrink wholesale,” he said. “Wholesale continues to grow, but direct-to-consumer is growing much faster, and now direct-to-consumer is 75% of the business.”
His team “focused on integrating the omnichannel approach,” where the stores serve as showrooms and warehouses.
“If you shopped online two to three years ago, we were sold out and you had to go to a store to get something,” said Traub. “If you go online today, you will have 57 door access to our inventory, no matter where the product is. … We can use the inventory much better, and that was wonderful for us. “
There was also room for expansion in product categories that focused on woven tops.
“It was a great opportunity to build the bottoms business and get into new categories, even if it was tops – more sweaters or knitwear that weren’t really there, even some home decor and accessories,” said Traub said. “We really made it a head-to-toe lifestyle brand.”
While product design and marketing are done in-house, Johnny Was outsources most of its manufacturing to factories abroad. Sewing and embroidery is done in Shanghai, cashmere and other knitwear come from Peru, while leather handbags and shoes are made in Italy.
Calmé, the brand’s sustainable loungewear line, is made locally from Tencel, hemp and organic cotton.
The Johnny Was collection list also includes JWLA, 3J Workshop, Biya, Pete and Greta, Love Johnny Was, and Jade, each of which caters to a specific subset of the brand’s lovers.
“The target consumer is a mature, middle-aged customer,” said Carrie Tanzman, who joined Johnny Was from Lucky Brand two years ago to serve as senior vice president of merchandising, merchandise planning and purchasing. “She definitely has the bohemian spirit. I think the idea is that our product should be a mix-and-match offering to create your own unique outfit. “
Product prices range from $ 58 to $ 2,600, which explains why the age of the target customers is “a bit older because 20-year-olds won’t be spending as much money as it costs for Johnny Was, even though it would be attractive.” aesthetically to her, ”adds Traub. “We’re trying to expand the product hierarchy and pricing approach so that more people can access the brand.”
Titzel, who was President of Trina Turk for three years before joining Johnny Was in 2015 and another three years as Chief Financial Officer and Chief Operating Officer of Juicy Couture, plans to add more businesses “where the economy makes sense”.
In addition, there are plans to expand the company’s presence in the stationary sector to Australia.
When it comes to Endeavor’s playbook, Johnny Was may be ready for the market. But the private equity firm, which also has a majority stake in Whiplash Inc., based in City of Industry and Visual Data Media Services in Burbank, doesn’t have a mandatory holding period, according to Jones.
“I would say in the vast majority of cases the trigger for leaving one of our companies is usually when (its) management … (s) is interested in raising liquidity or reaping some of the value it has created “, he said. “We always listen to the management when we hear that, which is often the trigger.”
Traub does not seem to be in a hurry.
“There is no active process at the moment, but it would be reasonable to think that (Endeavor) would consider an exit strategy for himself in the next few years, not for me or my team,” he said. “I just love Johnnys. We (have) a great group of people. … It’s a happy brand. “
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