RANDOLPH — There would be no happy ending to the Chadwicks of Boston story — at least that’s the way it appeared in 2011.
The classic Chadwicks blazer was put on the sartorial endangered species list as the local apparel company faced plummeting revenues, misguided attempts at reinvention, and rotating ownership through the 2000s. Unable to reverse its wobbly course, Chadwicks filed for bankruptcy.
This is where the story could have ended. However, as Chadwicks was collapsing, a new investor swooped in at the end of 2011 to salvage what was left. Today, Chadwicks’ CEO says its fortunes are turning, but in a new world of fast fashion and discount department store collaborations with high-end designers, can the 30-year-old company compete?
Chadwicks, once the largest off-price catalog retailer of women’s clothing in the US, has dramatically streamlined operations to stay afloat. It’s a far cry from the days when Christie Brinkley, Paulina Porizkova, Kathy Ireland, even Brooke Shields appeared as Chadwicks cover models, enticing customers to buy $19 shorts and $12 boatneck tees.
“I don’t think we realized what a challenging situation it was when we came into the company,” said Aldus Chapin II, the CEO of Chadwicks since November 2011. “But it was also a huge opportunity. I grew up in Boston and I’m sure my mother was a customer. But I hadn’t appreciated how far the company had intentionally moved from it’s core customer.”
Though they built their brand on low-priced basics for the 40- to 65-year-old set, various Chadwicks owners — and there have been several over the past decade — tinkered with the company’s formula, trying to lure younger customers by trotting out glitzier designs. Chadwicks core customers responded by tossing their catalogs in the recycling bin.
As Internet shopping grew, Chadwicks’ focus remained on catalog sales. Less than half of its pre-acquisition business came from online.
Chadwicks has gone into its archives to update customer favorites with new colors and silhouettes.
As the company went into a tailspin, poor customer service further damaged Chadwicks’ credibility. During bankruptcy proceedings, nearly 700 angry customers logged complaints with the Better Business Bureau when their orders failed to appear.
“It wasn’t pretty at the time we came in,” Chapin said. “You could Google the company’s name and all you would read about was customers not being treated well. We didn’t know if it was too far gone.”
In 1996, sales had approached $451 million. But by 2011, revenues had skidded to $172 million and the company owed creditors more than $58 million, according to PrivCo, a provider of financial data on privately held companies.
More than 100 jobs were cut as a judge ordered a liquidation of the company’s assets to pay investors. The company was left with 32 employees. At its height, it had 600.
The Maryland-based private equity firm Blackstreet Capital Management bought Chadwicks for $11.25 million in bankruptcy court. Blackstreet, known for snapping up companies on the verge of collapse, now operates Chadwicks under the parent company Distinctive Apparel. Chapin, a Cambridge native, was appointed CEO.
As the company works to come back from near-death, the challenge for Chadwicks is not only reclaiming the lost customer base turned off by changes in the styles, but also repairing the damage caused to its reputation.
“They’re coming from a very difficult bankruptcy and a lot of negative publicity,” said Mike Tesler, founding partner of the consulting group Retail Concepts. “People gravitated elsewhere. Chadwicks is no longer on a lot of people’s radar screens.”
Part of getting back on the radar includes increasing the company’s Internet presence. Chadwicks now conducts 70 percent of its business online, while 30 percent remains catalog phone orders. This fall, the company will introduce a revamped website and is working on an e-catalog.
Chapin, who walks around the company’s modest Randolph office in stocking feet, has brought back Cindi Shapiro, Chadwicks’ merchandiser from 1986 to 2005. It was under her eye that the company’s growth exploded during the 1990s.
“It wasn’t until January 2012, only two months after we acquired the assets, that I realized that we actually had something here,” Chapin said.
Perhaps the most important thing the company did was to start marketing to its core customer group: Women in their 40s, 50s, and 60s whom Chapin refers to as “the forgotten woman.” To better compete against retailers like Chico’s and J.Jill, Chadwicks has brought back favorites that were top sellers during its golden years.
Some retailers, like Talbots and JC Penney, have been chasing younger customers with mixed results. Chapin say that women of a certain age have been brushed aside by many retailers.
“When I got involved, I realized that there were very few people still playing in this arena,” said Chapin, who has worked with faltering businesses as varied as Christmas ornament manufacturers to commercial heating and air conditioning companies. “Everyone wants a younger customer. Everyone was jumping on the latest bandwagon. That wasn’t the right direction for us.”
Shapiro has gone into the archives to update Chadwicks customer favorites with new colors and silhouettes. She’s also adapting designs she sees elsewhere that are aimed at the Chadwicks demographic.
Chapin says the company is slowly coming back. They are up to 58 employees, and he says it’s now run like a start-up. Previous in-house jobs, such as the call center and order fulfillment, have been outsourced to other companies to cut costs. Chadwicks is now seeing double-digit growth, he said. Because Blackstreet is a privately held company, he declined to offer specifics.
Whether or not the company is on track to turn itself around, some retail analysts are not impressed by Chadwicks, or its current plan to return to its fashion glory days.
“Chadwicks of Boston is basically ‘Mommy Jeans Inc.’ They sell their jeans without waist sizes,” said Sam Hamadeh, founder and CEO of PrivCo. “Can any private equity firm turn around ‘Mommy Jeans Inc.’? I tend to doubt it.”
Mike Telser of Retail Concepts also sounds skeptical. He said women in their 40s, 50s, and 60s are savvy shoppers who have moved beyond catalogs and are at ease buying clothes from Internet flash sale sites, online retailers, or non-age-specific boutiques. These women now shop for younger fashions than they did just a generation ago, he said.
“They’re very agile in the ways that they shop,” he said. “I don’t think it’s underserved market.”
Hamadeh sees additional obstacles for Chadwicks. While an aging brand such as Liz Claiborne snapped up younger fashion companies such as Juicy Couture
“In contrast, it’s hard to see how Chadwicks can have a successful turnaround plan that is still based on the Chadwicks brand and not new ones,” Hamadeh said.
But back in the office park in Randolph, Chapin feels confident that his plan will help Chadwicks reclaim its retail crown. “Our customer has always been there,” Chapin said. “She’s just been waiting for us to come back. Well, we’re back.”
Quick history of Chadwicks of Boston
•Founded in 1983 by retail chain Zayre.
•Revenue 1988: $43 million. Zayre sells Chadwicks to TJX, parent company of T.J. Maxx.
•Revenue 1996: $451 million. TJX sells Chadwicks to Brylane for $328 million.
•Revenue 2011: $172 million, with $58 million owed to creditors. Blackstreet Capital Management buys Chadwicks’ assets for just $11.25 millionChristopher Muther can be reached at email@example.com. Follow him on Twitter @Chris_Muther.