Allen Edmonds sold...should we be worried about a decline in quality?

Discussion in 'Classic Menswear' started by mikeynyc, Nov 4, 2013.

  1. mikeynyc

    mikeynyc Well-Known Member

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  2. MyOtherLife

    MyOtherLife Senior member

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    Thank you for posting this mikeynyc. I am rather suprised to read this and need to collect my thoughts.
     


  3. GBR

    GBR Senior member

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    Why should you immediately think that the worst will happen?
     


  4. ethanm

    ethanm Senior member

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    What makes you think AE had any quality before?
     


  5. lwmarti

    lwmarti Senior member

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    The several pairs of their shoes that I own and wear on a regular basis?
     


  6. Dashaansafin

    Dashaansafin Senior member

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    It was sold to a PE shop. What makes you think there would be a decline in quality?
     


  7. lwmarti

    lwmarti Senior member

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    As someone who once worked with PE funds on several deals, I can vouch for the fact that they can do things from time to time that many people probably wouldn't approve of.

    On more than one occassion I was asked to run the numbers to see if they could shut down a potential acquisition profitably. If you're a manufacturer of circuit boards, for example, and have several design wins, you'll typically keep getting orders for those for at least a few years, so it can actually be profitable to lay off all engineering, sales and marketing, and keep just enough people to fill the incoming orders. If your manufacturng is off-shore, that's even easier. I dreaded doing this, and felt lucky that in every case it didn't make sense to pursue this strategy. In another case, we were looking at a company for nothing else than its corporate structure (tax-sheltered HQ off-shore, etc.) and really didn't care about what it actually made.

    So there can definitely be reasons to be wary about PE funds buying your favorite company, but in this case, I'm not too concerned. And that's as someone who has several pairs of AE shoes and plans to buy more in the future.
     


  8. jrd617

    jrd617 Senior member

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    :D
     


  9. jrd617

    jrd617 Senior member

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    MikeDT, can you comment? Chinese like Gucci, Prada, Armani and.... AE?

    From the article:

     
    Last edited: Nov 10, 2013


  10. Reevolving

    Reevolving Senior member

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    Yes, that is pretty much guaranteed to happen.
    Do you know what private equity firms do?

    That is why it was bought it the first place.
    This is now a carcass that will be flogged for value and flipped.
    Game over.
     


  11. Blackhood

    Blackhood Senior member

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    Only two reasons to sell a business:

    1) It is so profitable that the board wants to cash out and retire.

    2) It is so unprofitable that the board cannot fund it's decline.

    Only one reason to buy a business:

    1) To increase its profitably.


    It seems unlikely that a PE firm would buy a business with an aim of improving profitability, and not have to streamline production by reducing fault tolerance or lowering material cost.
     


  12. Hetzen

    Hetzen Member

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    It was owned by a PE firm before this for the past ~5 years. Has seemed fine during that time.
     


  13. JubeiSpiegel

    JubeiSpiegel Senior member

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  14. HRoi

    HRoi Senior member

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    An AE executive used to post here - don't know if it was Paul Grangaard himself, but I'm curious if they're still active on the forum.

    Although I imagine that he would be pretty busy these days...
     


  15. Dashaansafin

    Dashaansafin Senior member

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    I hope this was sarcastic, otherwise you're a complete idiot.
     


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