I sent out several emails to retailers and brands in the industry to see how the credit crunch is impacting them. I also asked about other issues, such as vendors paying more slowly or stores sales declines.
Here’s a sampling of the responses from seven companies. It’s a mixed story – some are seeing slower sales in stores as news of the banking crisis spreads. For others, their banking relationships are fine but they are worried about the financial health of their retail customers.
Cliff Haddadin, CEO, Beach Bums
How is business? Things are getting worse with time, we are trying our best to weather this storm of bad economic news and hoping that we will have a good Christmas.
Are you having any difficulties producing your private label? Our private label is very limited from overseas and it is not effecting us at this time.
How are sales at stores going? Customers got another reason to shut their wallets tight and we definitely felt it last week and on to this week, this is one tough October for retailers.
Michael Pratt, No Fear, Executive Vice President, Corporate Development
“The credit crunch is certainly impacting us as I imagine it is impacting other retailers and wholesalers. You may not know but we actually are more of a retailer these days with 50 stores that we are a wholesaler. Given that, it is hitting us from all fronts – customers, suppliers, financing sources.
“Suppliers are less likely to extend credit regardless of the size of the customer and, when they do, are sticking to terms closer than they have in the past. Customers are dramatically being impacted as you have seen in the retail numbers that just came out. Shoppers are being much more discerning with their dollars and retailers are responding by being heavily promotional to maintain sales/traffic.
“We have implemented targeted promotions in the last several weeks in the face of deep discounting by peers. On the lending side, a number of participants have simply exited the market. Where capital is available, financing sources including banks are being more cautious with financing/lending decisions.
“We have an existing facility with a bank but have certainly ratcheted up the dialogue in the last several months to keep them up to speed on how we are weathering the storm. Like most companies, we are taking the steps necessary to control costs and make sure we are positioned conservatively in a challenging market.”
Paul Migaki, Sole Technology, Chief Operating Officer
Pierre’s vision for Sole Technology in regards to its growth and financial stability has always been about making the right long term choices that have sustainable growth in mind. That being said, our financial strength has accumulated over the years with great banking partner relationships. We prepared for the credit crunch by making sure our resources were lined up as we saw the economy heading into a tough time. We’re on point to continue to operate smoothly, despite the tight times that many banks are facing.”
Dave Hollander
Dave Hollander, co-owner, Becker Surfboards
“The bank just renewed my line of credit so we are good to go. It was a bit touchy, right down to the last minute, but they did it. We asked for an increase and they did decline that.”
Mark Price, CEO, Firewire Surfboards
We’re factored through Wells Fargo and do not have any credit lines outside of that. Given the line is secured with receivables and there is a healthy reserve, Wells has made no changes. The biggest hurdle we face are late receivables from specialty stores which may be tied to their inability to access credit lines.
Jay Wilson, Executive Vice President, Osiris Shoes
Are you having an trouble getting financing to fund production? We are financed by our overseas partner.
Are your accounts still keeping up with payments in general? It’s slowing and some are going out of business. We are up overall. We made up the PacSun business ($4 million) and added another $4 million.
(For more about the resurgence of Osiris, see my previous story about the skateboard shoe brand.)
Ted Wueste, co-owner, Factor54
Ted Wueste, right, with Factor 54founder Todd Miller.
“The credit issue has not affected us as we run everything off cash. I want to grow this business before we look at taking on any debt so perhaps in the sense that we would require credit we are just not in that boat.
“I will say that this environment makes Todd (Miller) and grateful that we have always forced ourselves to run an ultra tight program and don’t blow tons of money on silly stuff. Our little garage might not be sexy but it’s FREEEE! Funny, we almost leased a spot but reconsidered when some of the first indicators of a contracting market really started to come out.
“Overall, our business is cranking in terms of new doors and over all vibrancy with a ton of great new retailers out coming on in the last three months. We are averaging a new door every other day even adding three new shops just last week.
“One interesting note is that our skate only focused shops are seemingly doing great. All of them. United, Shelter, Asylum, Eternal, etc. Even North Georgia Board shop did a huge order for fall/Holiday line with a massive run on our denim line as we were delivering better price points than some of the other brands. So, the skate business seems to remain strong as best we can tell.
“We are offering flexible terms to help folks while stuff is tight. We know it’s tough and are in a position to do our part. No requirement for minimums, and have (in some cases) extended payment terms although we look at each deal individually. Everyone does seem to be paying their bills, though there are always the sluggish payers, but some deals you just expect to get paid slow.”
