Bringing a Business Back to Life
In a credit-starved economy, a 105-year-old company stayed afloat by knowing when to buck tradition and when to stay the course.
Upscale luggage maker J.W. Hulme Co. of St. Paul, Minnesota, was on the financial ropes in 2008. Principals Chuck Bidwell and Jennifer Guarino had borrowed aggressively when credit was readily available. But the recession slashed credit limits, leaving the company with inadequate funds to pay suppliers. Catalogs -- the focus of Hulme's sales strategy -- were printed late.
The two had to make personal sacrifices to meet expenses, with Bidwell selling his collection of classic cars and Guarino contributing cash out of pocket.
Ultimately, Olympus Capital Investments LLC in Morristown, New Jersey, put up a lifesaving 49 percent stake in the company. Bidwell and Guarino's willingness to blend the new with the old, and their obvious commitment to the business, were two driving reasons behind the $550,000 investment.
"I remember thinking what a shame it would be for another old American company to fall by the wayside," says Olympus CEO Dean Vanech, who learned about the company from a newspaper account about its struggles.
"But we needed to know the management team wasn't just interested in 'business as usual,'" says Vanech. "Certain things needed to change and certain things didn't. What also caught my attention was their incredible dedication. They had sacrificed personally and financially to try to make this thing work."
First was a sweeping change in the company's outdated technology infrastructure. Thanks in part to Olympus' stake, the company introduced an automated ordering system and updated its website.
"We're unusual in that we're a manufacturer, wholesaler and retailer," says Guarino. "We're about to install an enterprise system so that all three pieces will be able to talk to each other, so manufacturing can meet demand better."
Olympus also urged the company to consider more trendy products to augment its stalwart line of leather and canvas luggage. Case in point: Hulme is developing a leather case for Apple's iPad. The company is also looking to feature products in a variety of new colors, a departure from its brown-leather look.
"We're slowly bringing in color," Guarino says. "We're never going to be a fuchsia company -- we're a classic company -- but there are blues and greens that are evergreen colors."
Change is coming in other ways, too. In a departure from catalog-focused sales, Hulme's wares are slated to be sold in 30 Barneys retail stores this year. Hulme is also winning its share of celebrity buzz -- its products will appear in several upcoming movies, including "Rabbit Hole" with Nicole Kidman (Olympus' sister company, Olympus Productions, is producing the film).
For its part, Hulme embraced Olympus' appreciation of its tradition. Other investors who approached the company, says Guarino, suggested wholesale changes, such as departing from the company's "Made in the USA" brand.
"We had equity firms come in and ask, 'How would you feel if you made all this in China?'" Guarino says. "But Olympus had an affinity for what we did, our legacy. We liked their due diligence -- they took the time to understand our business model. So many investors called and just wanted to look at the bottom line -- they didn't take the time to look under the hood."
"[Olympus] brought so much more than finance to the table," adds Guarino. "They were quickly able to see how to promote this investment."
From suggesting color changes to arranging motion picture photo ops, is Olympus' involvement with Hulme an out-of-the-ordinary aftereffect of a challenging recession? Vanech says no: "Our focus is to build long-term value in the company. We are long-term investors, and that's there whether we're in good times or bad."
The approach is beginning to pay off. Hulme estimates sales will top $2.5 million this year, and the company also expects to turn a profit.
While a willingness to change was a requisite to gain Olympus' backing, not everything about Hulme was expendable. A case in point was the company's longstanding focus on using mail catalogs to prospect for customers. Although Hulme welcomed a shift in marketing, such as an easier-to-use website, it wasn't about to shred catalog sales completely.
"We had possible investors say, 'A catalog model is old -- shouldn't this all be online?' We had seven years of historic return on those investments to show that it worked," says Guarino. "Could we reduce our use of them to prospect for clients? Yes. Strip it away? Absolutely not."
She adds: "We're intent to turn around the company, but not at the expense of the core of what we do."