“Business can be turned around. It’s not about splitting atoms. The company’s prime could still … [+] be ahead, ”says Lyndon Lea, Lion Capital, who owns Alex and Ani. (Photo by Cindy Ord / Getty Images for ALEX AND ANI) getty Last month, Alex and Ani filed a “major financial and operational restructuring” support agreement with their creditors and financiers. The first step in the restructuring process was filing Chapter 11 proceedings with the Delaware Bankruptcy Court. When announcing the restructuring, the company also said it was looking for a buyer. In the filing, the company claims between $ 100 million and $ 500 million in assets and an equal amount in liabilities. About 17 of the top 30 creditors have rental debt, including nearly $ 4 million in Simon Properties and $ 3.3 million in Brookfield. Currently, Alex and Ani hold just over 70 leases, but the company also maintains sales through its ecommerce website, which accounted for about 45% of sales in 2019, and wholesale accounts, which accounted for 43% of sales this year. Founded in 2004 by jewelry insider Carolyn Rafaelian, the company saw a spectacular rise – valued at $ 1 billion in 2016 – and an equally spectacular decline. Rafaelian has a lot of credit, but more to blame for where the company is today. Alex and Ani’s missteps are legion, including severe mismanagement, excessive manager turnover, and numerous lawsuits. Dysfunctional operations made it unable to adapt to changing consumer preferences and increasing competitive collapses. Then the pandemic broke out and sales plummeted from an estimated $ 400 million in 2019 to about $ 240 million in 2020. A 40% decline last year, however, isn’t remarkable for a brand that is almost entirely sold in non-essential retailers that are closed for most of the year. Lion Capital, based in London, is the current majority shareholder in the company, which acquired a 40% stake in 2014 and increased its stake to 59% in 2019. At this point, Rafaelian was appointed CEO and Robert Trabucco, former CFO of Sterling Jewelers, a. removed division from Signet, took command with Rafaelian as chief designer. But that didn’t take long and in May 2020 it was over. And according to the restructuring agreement, Rafaelian has to sell her remaining shares in the company. Alex and Ani almost single-handedly dug their way into a deep hole and now have to dig themselves up. Despite the past battles, it still has a lot to do. The value is not in the company, but in the brand. Looking back into the future Alex and Ani have an eventful history for such a young company, but looking back, the company can see a way forward. Here’s what history shows and how you can apply its findings to today: Simple, Scalable Design Model During the founding years from 2004 to 2009, Rafaelian sharpened the brand. She secured a patent for the design of the wire bracelets and refined the charms that allow wearers to express themselves. Made in Rhode Island from recycled metal, the original appeal was the personal meaning given to each design. The company offers a wide variety of stylized charm designs and licensed images. And every bracelet comes with a “meaning card” that tells the story of the bracelet. NEW YORK, NY – JUNE 25: A look at the atmosphere at the Alex and Ani CHARMED BY CHARITY event and … [+] Bangle Launch Party to celebrate partnership with Team Red, White & Blue at ALEX AND ANI Soho on June 25, 2015 in New York City. (Photo by Cindy Ord / Getty Images for ALEX AND ANI) getty The charms are enough for almost any personal or gift-giving occasion and any emotional feeling, with a touch of mysticism. The website explains: “The universe speaks to us in signs and symbols. Find yours. We are designed to connect you to every single part of the destiny of your soul. Your life is made up of the connections you create – with yourself, your loved ones, the spirit, nature, humanity and the universe itself. Our jewelry is designed to help you express your unique self. ”The designs are simple and addicting , as the bracelets are worn for collecting and stacking. It’s an extremely scalable design model. Rafaelian created it, but any good brand marketer with a team of designers could take it forward. However, Tiffany Toval, whose Atlanta West Jewelry store has been running the line for years, says the recent designs have gotten too mundane and mundane. “Some of the designs look like they were made by children for children, like a snowman or a candy cane. If they brought out a really pretty snowflake with crystals now, it would sell well, but not the children’s chess pieces, ”she advises. Meaning is what customers buy, and Alex and Ani can draw on an ever-growing range of meanings. Price points perfect for uncertain times The years after the 2008/2009 recession were the brand’s heyday. Sales rose from $ 20 million in 2011 to $ 350 million in 2015. Alex and Ani opened their first store in Newport, RI, and the line was owned by Bloomingdale’s, Nordstrom, and a rush of independent jewelry and gift stores accepted. In addition to taking on the stage with a meaningful, fashionable new look in jewelry, Alex and Ani were affordable with individual bracelets for an average of $ 30. The price was perfect for recession-weary customers who wanted an emotional pick-me-up without spending too much money. Fast forward to today and customers who are tired of pandemics still need the same boost. And notably, Alex and Ani have kept their prices affordable, which makes them perfect for our time with impending inflation. “Where else can you buy a set of three bracelets for under $ 100?” Asks Toval. “For yourself or as a gift, it’s so easy to walk in and bam, you’re at the door with something that looks like it costs a lot, but it isn’t.” Alex and Ani might not be beautiful jewelry, but it is jewelry and it offers great value at a price that is perfect for impulse or add-on purchases. Disciplined Management Required Then around 2015/2016 when sales reached about $ 500 million, the company’s fortunes began to turn. During their heyday, Alex and Ani had a two-person team at the helm with Raphaelian, the inspired and inspiring creative visionary, and Giovanni Feroce, a die-hard former army major who ran the business. It was a formula that worked. As his name suggests, CEO Feroce was a passionate managing director who took care of all operational details and left the design side to Rafaelian. Feroce brought discipline and military precision into company operations and invested early in business intelligence, consumer data and e-commerce. But in early 2014, Feroce left the company, and not long after that, many of his top employees went with him. Highly skilled Harlan Kent, former President and CEO of Yankee Candle, took over the helm, but it only lasted a year. And that marked the beginning of the end for Alex and Ani when the maddened Rafaelian took full control. “Alex and Ani were our best line ever,” says third-generation Jennifer Tell, owner of Poughkeepsie, NY’s Sierra Lily gift shop. “We made over $ 1 million in 2014 in this line alone, then it started to evaporate,” as the space dedicated to Alex and Ani shrank from five cases to one today. Atlanta West Jewelry’s Toval tells the same story. “We used to have three meter showcases for Alex and Ani, basically a shop-in-shop concept. Now it’s only two meters. When the CEO left I saw a huge difference. “After meeting Raphaelian many times over the years, Tell says she was magical and inspiring, but it takes more than vision to make a successful business. It takes disciplined management. Lion Capital has now brought an experienced business manager to Trabucco, but whether he will stay after the restructuring is still questionable. And whether one person alone can inspire employees, give customers new energy and manage operations is a different matter. The team approach of sharing and dominating at management level has proven itself and can work again. Controlled Distribution Is Key As business stalled, distribution became more and more random. The number of company-owned stores rose to over 100 and the company leaned aggressively towards direct-to-consumer e-commerce, effectively disenfranchising its wholesale partners. “Around 2017/2018, they did a terrible disservice to brick and mortar retailers by getting that insane 40% off their website,” says Sierra Lily’s Tell. “Customers brought emails or called us and asked for the same discount. When a company does that, it’s no longer a partnership. You don’t want to promote the line because it has become your biggest competitor. ”And when Alex and Ani started showing up at discounters, it was a double blow to independents. “The worst thing that happened to us was when it showed up at Marshall’s and Nordstrom Rack,” says Toval of Atlanta West Jewelry. “When it was being sold there for less than we can buy it was hard to swallow.” For specialty brands like Alex and Ani, managing their wholesale business effectively while trying to grow directly to the consumer is a delicate balance. It doesn’t have to be an either-or decision, but the brand’s marketing needs to attract customers and attract sales across the distribution network. Bringing back wholesale partners and finding new ones will ultimately strengthen the brand and the company. They were critical to success in the beginning and can be again. Its affordable price makes it especially attractive to independent retailers, even high-end jewelry stores like Toval’s. “We are a fine jewelry store. We sell diamonds and Rolexes, but Alex and Ani go well with that. It brings in customers. A buyer makes a small purchase for themselves or as a gift and then goes to the diamond box and looks at something they want, like an anniversary ring. She goes home, tells her husband and he comes in immediately and spends $ 3,000, ”she explains. Alex and Ani Can Come Back When I heard the news of Alex and Ani’s bankruptcy, I was ready to write it off as a company whose time has come and gone. After Raphaelian was out of the picture, I believed that the creative spark behind Alex and Ani’s amazing success came from her. But after more research, I am convinced otherwise. Raphaelian left behind the intellectual property that powered the brand in the early days. And the company found an organizational structure that worked with business leaders like Feroce and Kent who were responsible for running the business. But after 2015 the company began to implode as Raphaelian couldn’t or wouldn’t run the company effectively on his own. I share the vision that Lyndon Lea, Head of Lion Capital, expressed in an interview with Medium. He said that Alex and Ani’s challenges stemmed from “several years of mismanagement due to the failure to implement adequate systems, controls and processes within the company as it grew. Despite Covid, I believe business can be turned around if we can do some simple things, proven processes that are widespread. It doesn’t split atoms. The company’s best times could still be ahead of him. ”
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