Comeback Brands: Ten Famous Brands Coming Back to Life
Yet brand loyalty is a strong force. For the 10 companies listed below, a combination of customer trust and management smarts have given them a second (or third, or fourth) life.
When Sharper Image filed for Chapter 11, in February 2008, its decline made sense: a high-priced '80s mall brand, the company was ill-equipped to weather the economic storms of the late aughts. But financial problems notwithstanding, the brand had market value and, within a year, its new owners were licensing the Sharper Image name to HoMedics and luggage maker EnE. Some of the company's most popular products -- along with a new, more reasonably-priced line -- soon cropped up in stores, including Best Buy, JC Penney and Office Max. It's not clear that the recession's lessons have really sunk in. In August 2009, Camelot Venture Group, which runs Sharper Image's online and catalog-based business, announced plans to open new Sharper Image shops. Here we go again...
After paying $600 million for half of Saab in 1989, General Motors' (GM) 2000 decision to buy the rest of the company for a cool $125 million probably seemed like a bargain. But Saab never turned a profit for GM, and the company's fading fortunes in 2008 made it one of many brands that the automaker placed "under review." In early 2009, Saab went into "administration," the Swedish version of bankruptcy, while GM searched for a buyer to take the problem off its hands. Chinese automaker BAIC bought the rights to two sedan designs for $197 million and, in January 2010, Dutch automaker Spyker bought the rest for $74 million. GM retained $326 million in shares in Spyker/Saab and will continue to make the Saab 9-4x model at its Mexican plant. Production has resumed at Saab's Swedish factory and plans are underway for a new Saab 9-3.
The name said it all: a high-end department store, Fortunoff appealed to consumers who were hungry for high-quality merchandise and a swanky brand. In November 2004, the descendants of founders Max and Clara Fortunoff sold 75% of the company to private investors for an estimated $250 million. Just over three years later, in February 2008, the company filed Chapter 11, citing $60 million in debt. Sold to NRDC Equity Partners, it was then bundled with Lord & Taylor, the Hudson's Bay Company, and other retailers. Following a weak 2008 Christmas season, the new Fortunoff once again declared bankruptcy in February 2009 and was liquidated. Four months later, the Fortunoff descendants bought back the rights to the company's name, brand and intellectual assets. In September, they announced the launch of Fortunoff Backyard Stores, brick-and-mortar stores which will sell Fortunoff-branded patio furniture. Currently, seven of the outlets are open, with more planned.
In late 2008, amid plunging consumer spending and the near-ubiquity of digital cameras, Polaroid declared bankruptcy for the second time in less than a decade. Purchased the next year by bargain shoppers Hilco Consumer Capital and Gordon Brothers Brands for $88 million, the company abandoned self-developing film production (choosing instead to go into business with Lady Gaga, a move that has yet to bear much fruit). Almost immediately, however, the Impossible Project, a Netherlands-based group, re-opened an old Polaroid factory and began putting out handmade packs of the film. The new Polaroid prints are popular with artists. The Impossible Project plans to make 1 million packs in 2010 and ultimately hopes to expand to 10 million per year. And, lest Polaroid fans be left without cameras to use, the Impossible Project has also announced plans to produce its own revamped version of the Polaroid One-Step. While a battle seems to be brewing between the Polaroid corporation and its Dutch splinter group, self-developing film will be around for a while.
Another victim of recessionary belt-tightening, Circuit City announced it would liquidate when it was still the second-largest consumer electronics chain. In January 2009, Circuit City was operating over 550 superstores nationwide; by March 8, all of its outlets were closed. Yet, even if the chain was done for, its brand still had value. Within three months, Systemax had bought the rights to the Circuit City name and was operating a website. Alongside fellow moribund brand CompUSA, which is also owned by Systemax, Circuit City has found a virtual second life on the internet.
Crabtree and Evelyn
Premium soaps are a tough sell at the best of times, but during a recession, they can quickly become an unjustifiable expense. For Crabtree and Evelyn, the combination of tightened belts and reduced mall traffic led to a Chapter 11 bankruptcy filing in July 2009. But in a rare happy ending, the company seems to have bounced back. After closing 35 stores, launching a new website and expanding its wholesale business, it was able to exit bankruptcy in January 2010. Of course, it didn't hurt that Kuala Lumpur Kepong Berhad, Crabtree and Evelyn's Indonesian parent company, provided $40 million in debtor-in-possession financing to keep the business going during Chapter 11, as well as an additional $26.3 million infusion to help it pay debts and emerge from bankruptcy.
Waterford Wedgwood is more than a collection of high-end brands: it's an English/Irish institution. So, when falling sales in 2008 pushed the company to ship its crystal manufacturing to Eastern Europe and Indonesia, customers rebelled. As the company went into "receivership" (anglo-English for "bankruptcy"), share price plummeted and it looked like Waterford crystal, Royal Doulton porcelain and Wedgwood pottery were all on the brink of oblivion. In late February, KPS Capital Partners, a U.S. private equity firm, bought the company's branding, but not its manufacturing. Today, the three premium brands have new management teams in place, are (in many cases) made in new countries, and are selling on newly re-designed e-commerce sites. New Waterford Wedgwood's products have already drawn kudos and look to benefit greatly from contracts to produce memorabilia for the 2012 London Olympics.
While dozens of prominent magazines have closed their doors in the last few years, Conde Nast's decision to shutter Gourmet in October 2009 was devastating to epicureans everywhere. At 68 years old, it was the most prominent cooking magazine in the country. In the immediate aftermath, an argument ignited over the nature of news media and the blogosphere's responsibility for the death of the storied brand. But the technology revolution that once spelled Gourmet's demise may also be its redemption. While there are vague rumors of a hardcopy relaunch, the company is loudly touting its plans for a Fall 2010 "Gourmet Live" program that will be custom-made to work on the iPad and other electronic media devices. The thought of a portable, image and video-heavy online application with Gourmet's impressive archive and famed editorial expertise already has foodies licking their chops.
Linens n' Things
A popular brand during the housing boom, Linens n' Things looked like a good deal in 2006 when Apollo Management bought it for $1.3 billion. Two years later, with the real estate market sinking and homeowners pinching pennies, the big box retailer faced stalling sales and a dire outlook. Bankruptcy in May 2008 was soon followed by liquidation. In the ensuing fire sale, Hilco Consumer Capital and Gordon Brothers Brands bought rights to the name, re-launching the brand online at lnt.com, where it's currently hosting -- you guessed it -- a bedding sale.
For most of the country, leather clothing is a seasonal purchase, making leather boutiques a tough business proposition in the best of times. So when Wilson's, a mall-based leather retailer, announced extensive closings in 2007 and 2008,it wasn't all that surprising. In July 2008, the company sold its 160 remaining stores, brand name and online presence to the G-III Apparel group. Rebranded as Pre-Vu, it lasted just over a month before shutting its doors for good. However, surprisingly, the Wilson's name, which endured online, continued to draw customers. Today, Wilson's Leather, like other Lazarus brands on this list, survives as an internet retailer.
Of course, it remains to be seen if the resurrection of these brands is a permanent condition. Much will depend on their ability to lure back the customers of their former incarnations. If not, their return from the dead may only be a brief reprieve on the road to oblivion.