New York–No, not THAT Madonna: Geralynn Madonna, CEO of New York-based multititle merchant Spiegel Brands, who spoke at the Direct Marketing Association’s Catalog and Multichannel Marketing Council’s annual networking dinner.
Madonna, who detailed the company’s bounce back from bankruptcy, began her presentation with a look at some of the negative press headlines from the company’s darkest days a few years ago. (Her “favorite” headline? “Dead Man Walking: Spiegel Sell-off Begins,” from MULTICHANNEL MERCHANT’s May 2004 issue.)
The company was indeed making a lot of headlines during that period. Downers Grove, IL-based Spiegel Group had filed for Chapter 11 bankruptcy protection in March 2003. It certainly wasn’t a happy time for Spiegel, Madonna recalled. “I could feel the fear as I walked the corridors—and I did just that” because people needed to see her out and about rather than hiding.
Spiegel Group eventually sold women’s apparel title Newport News and the Spiegel Catalog business to Spiegel senior management and San Francisco-based private equity firm Golden Gate Capital. (The Eddie Bauer business, formerly owned by Spiegel Group but not part of the current Spiegel Brands, is rumored to be back on the selling block.)
Spiegel came back with a vengeance. Madonna moved the two titles to New York and began a program of transition, restructuring, and rebranding. She outlined several points for leading a company through a transition: Be visible, be positive, be involved, be accountable, and be truthful. “Good or bad, tell the people the way it is,” she said.
Madonna pointed out that “our cost structure was out of control,” and the business model was not competitive. “We needed to get away from the credit-dependent model.” When it shut its credit-card division in March 2003, Spiegel’s credit penetration went from 57% to 4% overnight. Alliance Data Services is helping the company build back its credit, she said.
In discussing the rebranding, Madonna said that demographics don’t necessarily describe your customer. She pointed out that her 70-year-old-plus mother was one of Newport News’s best customers. “Customers’ perceptions are your reality,” she said. Rebranding has helped make Newport News the “go-to catalog for trend-seeking fashion,” Madonna said, thanks in part to its successful subbrands ShapeFX and Jeanology.
Since reorganizing the two brands and optimizing synergies, Spiegel has increased gross merchandising margins by 400 basis points, largely through improved sourcing. The company, which has had profitable EBITDA since the first half of 2005, also significantly improved merchandising and customer service, Madonna said.
What’s next for Spiegel? Don’t rule out retail, as Madonna announced that “my dream has been to open up stores.” The company likely plans to expand into retail at some point with both brands. But don’t look for Spiegel to expand overseas anytime soon, at least not in Asia. “We have a lot do to in America before we branch into India or China,” Madonna said.