Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.ibd From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: Executive Update Date: Thu, 5 Nov 92 12:43:43 EST Message-ID: <9.1992Nov5.124344@AmeriCast.com> 11/5/92 TITLE Executive Update What Will It Take To Polish Up Genesco's Results? After Cutting Debt, Firm Has Put Revival In Hands Of P&G Market- ing Vet Marilyn Much In New York E. Douglas Grindstaff has a knack for using marketing acumen to wake up sleepy companies. As president of Procter & Gamble Inc. in Toronto, Grindstaff oversaw a rapid expansion program that resulted in the acquisition of Canada's second- largest paper towel and tissue company. During his four-year stint, the Canadi- an unit of U.S. consumer goods Marketing giant Procter & Gamble Co. doubled its size, to $1.5 billion in sales in 1991, and quadrupled profits. Now the 51-year-old con- sumer products marketing maven is attempting an even greater feat. He wants to breathe new life into Genesco Inc., the tired, old footwear and men's apparel company that limped through the 1980s. The company's performance continues to be shaky - sales dipped 1% in the fiscal year ended Jan. 31 on earnings of just $461,000, or one cent a share. But William S. Wire, Genesco's chairman and chief executive since 1986, has taken several steps to place the company on more solid financial footing. Wire has downsized operations and restructured the balance sheet. The new- ly shaped company is focused on two core operations - footwear wholesaling, retailing and manufacturing and the manufacture and sale of tailored clothing. Now, Grindstaff, who is five months into his new job as Nashville, Tenn.-based Genesco's president and chief operating officer, is on a mission to double company sales to $1 billion within five to seven years while earning a reasonable margin on sales. "When I talk about doubling the company's size or creating brands, I'm not just talking expecta- tions, I know how to do it," insisted Grindstaff, pointing out he was in charge of 110 brands at P&G. Still, his plans are quite aggressive considering Genesco's shape in recent years. Rough Decade Once a $1 billion footwear and retail conglomerate with posh operations like Henri Bendel department stores in New York, Genesco's fiscal 1992 sales came to only $471.8 million. The com- pany teetered on the brink of bankruptcy on several occasions in the past decade after it overextended itself through acquisitions and failed to properly integrate its distribution and marketing. While the company is now in better shape, with a much improved credit rating and total debt of $22 million at the end of fiscal 1992 compared with $79 million five years earlier, earnings are starting from a low base. The company managed to eke out a profit of $634,000, or two cents a share, in the six months ended July 31, compared with a year-earlier net loss of $2.6 million, or one cent a share. Sales for the 1992 period increased 8%. Craig T. Weichmann, an analyst with Morgan Keegan & Co. in Memphis, fig- ures the company will turn a modest profit of 30 cents a share for the entire year and double that figure to about 60 cents the following year. "We have the infrastructure in place to build up our operations," said Grindstaff. "Now, we have to be able to train a large number of people in critical functional areas such as marketing, retail, distribution and product design." With management paying so much attention to reshaping the company financially, the company has fallen short on marketing. That's where Grindstaff fits in. He plans to sharpen the company's marketing and brand management programs by increasing spending and introducing fresh, contemporary promotional campaigns. "Genesco's business has changed from one that is focused on offshore sourcing and quick turnaround into a marketing game of creating images and brands," said Grindstaff. Prestigious Brands The company makes such prestigious footwear brands as Johnston & Murphy, Jarman, Laredo, Code West, Dockers, Mitre and Nautica. Its tailored men's apparel business operates under the name The Greif Cos. and markets such labels as Ralph Lauren's Chaps and Polo University Club and the Perry Ellis Portfolio and America lines. The Dockers brand of footwear, which Genesco began manufacturing last year through a licensing agreement with Levi Strauss & Co., has an annual sales potential of $100 million by itself, figures Grindstaff. But meeting the potential of Dockers and other brands will require some maneuvering. Grindstaff aims to lower operating costs by creating synergies among the company's manufacturing and retailing units. He will use the cash flow freed up by these efficiencies to develop advertising cam- paigns that enhance the image of Genesco's brands. Grindstaff has already begun to implement that program. A few months ago, when the decentralized Genesco was out of production capacity for Western boots, he pulled together a matrix team of all of the company's manufacturing units to make the boots. "Now every shoe factory at Genesco is making Western boots, so this year, when we will finish about 50% over last year in terms of volume (for Western boots), we can supply the market with these products without spending more money to add to our capacity," he said. Grindstaff is fine-tuning the ad campaigns for all of Genesco's existing brands and putting the finishing touches on programs for newly acquired labels. But he is zeroing in on the fastest- growing brands by providing them the most support. He plans to jack up the ad budget for the popular Code West brand of Western boots by 50% this year. In all, he figures Genesco will spend $1.2 millon on advertising all its cowboy boots this year and another $2.5 million next year. New Ad Campaign Code West's current print ad campaign is a major departure from Genesco's previous work. The "attitudes" theme runs throughout the copy. One ad, for example, pictures two women, one donning a fashionable hat and sporting Code West boots. The tag line reads: "I think if a woman hasn't met the right man by the time she's 24, she may be lucky - Deborah Kerr." In addition, Genesco will test a Code West television ad campaign in January, against using the attitudes theme. It will reinforce the print ads by flashing them on the screen. Grindstaff's game plan includes a new marketing team. He just hired one marketing manager and is looking for three more. By the same token, howev- er, he wouldn't hesitate to downsize operations further, if necessary. Said Weichmann: "Grindstaff plans on taking decisive action on any division that is losing money and therefore is draining the resources of the corporation." This article is copyright 1992 Investors Business Daily. Redis- tribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM