Frontier -- Features
Saving a Troubled Brand
Caswell-Massey, the history-rich toiletries company, owes its life--and its new glow--to Anne Robinson
Something was terribly wrong. It was the summer of 1995, and as Anne E. Robinson, 41, the new head of Caswell-Massey's wholesale division, took inventory at the toiletry company's cluttered Edison (N.J.) warehouse, she was shocked at the "disorderly mess" before her. A junkyard was more like it. Boxes of returned goods stretched out "three pallets deep and three pallets wide. You needed scuba gear to get into it," recalls Robinson. In another section, there were huge quantities of discolored and half-evaporated bottles, years past their expiration dates. Robinson began to wonder what she'd gotten herself into.
She had barely rolled up her sleeves at the now-$20 million purveyor of soaps, lotions, and potions, which dates from 1752. Her mission was to breathe new life into a famous old brand that had grown as obsolete as a powdered wig. But just now, a mere product makeover seemed a bit frivolous. She might as well have been offering a haircut to a heart attack victim.
Truth was, privately held Caswell-Massey had been quietly losing buckets of money, and now it was on the verge of collapse. Suddenly, the marketing challenge of a lifetime looked more like a career-killer for this Harvard Business School grad, who had worked as a buyer and store manager for Filene's and Lord & Taylor and most recently worked for one of Caswell-Massey's suppliers. "I was the cleanup queen, and honestly, within three months of joining the company, I was looking for a new job," says Robinson. She was, after all, a mere employee--not an entrepreneur with a stake in Caswell-Massey's survival.
But Robinson never left. Instead, she wound up leading Caswell-Massey's painful restructuring effort. Ultimately, she fell so deeply in love with this history-rich business that she bought the company and made it her own. It was a long journey, from running an enterprise to owning it outright. Along the way, Robinson has helped the 87-employee company rediscover the strength of its past. It has learned to stay true to its brand and attentive to its customers. And in an entrepreneurial spirit, Caswell-Massey is learning to do more with less. "There are more resources at your fingertips than you think," says Robinson.WAY BACK WHEN
Robinson isn't engaged in marketing hype when she says that George Washington shopped here. He really did, buying his favorite Dr. Hunter's No. 6 cologne as a thank-you gift for the Marquis de Lafayette for assisting the American revolutionaries.
In the centuries that followed, Caswell-Massey would only add to its star-studded clientele. Show-biz legends such as sharpshooter Annie Oakley and actress Sarah Bernhardt bought its products, as did Presidents Dwight D. Eisenhower and John F. Kennedy.
During the first 185 years, the apothecary changed hands in a simple tradition: Each retiring pharmacist passed along the keys to his assistant. And so it continued, until 1936, when the company was purchased by brothers Milton and Ralph Taylor. They would own it for a half-century.
As with most troubled companies, it's easy with hindsight to see where the wrong turns were made. Like the Taylors' decision three decades ago to reject an offer of help from Cyrus I. Harvey Jr., a Cambridge (Mass.) specialty soap retailer, who wanted to redesign and update their packaging to boost sales. Unable to join them, Harvey decided to beat them. In 1972, he founded retailer Crabtree & Evelyn Ltd. It may have lacked Caswell-Massey's authentic pedigree, but the products captured consumers' imaginations with beautiful, old-timey packaging. Crabtree began expanding rapidly. Desperate to compete, the Taylors plunged into franchising, expanding their base to 100 stores so rapidly they couldn't keep them stocked. Angry franchisees clamored to get out of their agreements, and the Taylors were forced to buy many of them out. They then started opening more company-owned stores, nearly bankrupting themselves in the process. At Christmas, 1987, they stocked the shelves with empty boxes.
By 1989, the brothers had had enough. They sold their nearly bankrupt company for an undisclosed sum to Sally Aw Sian, head of Hong Kong publishers Sing Tao Holdings. Managing from afar, Sian burned through a series of U.S.-based CEOS, and, in 1992, sold a 40% stake to W.R. Grace & Co. At that juncture, owned by two conglomerates, Caswell-Massey strayed further from its elegant image: It launched sales of cheaper, albeit still pricey, versions of its products in chain drugstores. The plan flopped, and the company lost a "truckload of money," says Robinson, who later dumped those failed products at fire-sale prices to raise cash.
As if the inventory problems weren't bad enough, just one month after Robinson came on board, W.R. Grace pulled out, selling its stake to Caswell-Massey's then-CEO Edward Hung. Soon after, Bank Austria declined to renew its $3 million revolving loan. Robinson could see the company was fading fast. Caswell-Massey stores weren't making money; neither were the catalogs. Only the wholesale division she managed was showing a profit.
By March, 1996, Sian, who could not be reached for comment, had pretty much exhausted her patience--and an estimated $20 million--trying to build up the company. For the last time, she mustered a team of consultants and implored her top execs, including Robinson, to come up with a rescue plan. Robinson, figuring she was about to quit anyway, didn't mince words. "My response was I could cut however far and wherever they wanted cut, but it was not going to save the company," she recalls. "The company needed the right product in the warehouse when the customer wanted it." BE CAREFUL WHAT YOU WISH FOR
Within a day of presenting her plan, Robinson was named executive director. It was now up to her to save Caswell-Massey, and that meant doing the unthinkable: The very next day, Robinson fired more than 25% of her 113-person staff. "I visited them in their offices one by one," recalls Robinson. "No one knew who was next." At day's end, she gathered the remaining shell-shocked employees in her conference room for a tearful pep talk. "It was the single hardest day of my life," she says.
Robinson logged 100-hour weeks as she struggled to meet payroll, renegotiated supplier contracts, and killed off failing stores and ailing products, including 28 soaps and several old perfumes and colognes. Stress took its toll. She gained 40 pounds, drank too much coffee, and was always exhausted. "My greatest fears were of failure," she says.
By fall, 1997, Robinson had begun to rein in expenses and could finally focus on building up sales by remaking those dear but fuddy-duddy products. She developed beautiful period packaging to evoke "old-fashioned and wonderful premium-priced products," says Robinson. The strategy worked wonders for Caswell-Massey's rosewater-and-glycerin hand cream and its foot-comfort cream but failed to help more esoteric products such as tooth powder, which was discontinued.
In the spring, 1998, as if life weren't complicated enough, Robinson fell in love--with a Scotsman she met at a trade show. She started a transatlantic romance, shuttling overseas for long weekends. (They would marry 18 months later.) Then, in the last quarter of 1998, Caswell-Massey hit a milestone--its first profit in a decade. To celebrate, Robinson treated the whole staff the following spring to a dinner cruise around Manhattan. The company has been profitable ever since.WAKE-UP CALL
Robinson remembers the first time she seriously considered that she, the turnaround artist and cleanup queen, could own Caswell-Massey. She was cruising into a tollbooth on the way back from signing a loan agreement with a new lender in July, 1997. "Am I working this hard for them to go out and sell the company, or do I want this for myself?" she recalls wondering. The epiphany ended with a truck rear-ending her. "I didn't care," she says. "I was so excited about the prospect of buying the company."
Hung and Sian never took her interest too seriously; they were apparently looking for someone with deeper pockets. Then, on Feb. 4, 1999, Robinson was awakened at her Manhattan home by a 5:30 a.m phone call. It was Hung, phoning from Hong Kong to ask if she still wanted to buy Caswell-Massey. "I was stunned and ecstatic," she says. "I got to set the price." While Robinson won't disclose that amount, within 24 hours the owners had signed a letter of intent.
That was the easy part. Now she needed financing, but she didn't want to give up most of her equity to financial lenders. She approached various commercial banks and subordinated-debt lenders. Most said the deal was too small. Finally, she managed to get a $4.2 million investment from American Capital Strategies LLC, a buyout fund that invests in small to midsize companies. American Capital took a 25% stake. Robinson tapped friends, family, and her Harvard network to complete the leveraged buyout.
By September, 1999, she closed the deal. As owner, Robinson started to open new stores again. Now, she's also restoring spit and polish to the flagship store on New York's Lexington Avenue. She's remaking the corporate culture, too. No more 48-page monthly division reports--now they're just five pages. No more endless meetings. "Now if you need to talk to someone about a problem, you walk down the hall," says Robinson, sounding more and more like a real entrepreneur.
Lacking a big marketing budget, she has learned to find new customers by making speeches, handing out samples galore, and even hawking Caswell-Massey on shopping channel QVC. She's also negotiating a deal with a major airline to get Caswell-Massey products into its toiletry kits.
What's next? Robinson is deep into planning for the company's upcoming 250th anniversary with new commemorative products and collectors' editions. "Ten years from now, I hope I'm sitting in the same seat and the company is 10 times the size it is today," she says.
For now, Caswell-Massey is just a bit player in the multibillion-dollar market for shampoos, soaps, and fragrances. It lacks appeal to the hottest market for personal-care products these days--pre-teen and teenage consumers, says Aubin Wilson, manager of an industry trade show, Extracts. Moreover, its competitors "have money bags more than a mile deep," cautions retail analyst Kurt Barnard, president of Barnard's Retail Trend Report. Still, none of them has George Washington in their back pocket. And, if Robinson's instincts are right, such tradition could well be worth its weight in cologne.To read more about turnarounds and how to compete against big companies, click Online Extras at frontier.businessweek.comBy Debra SparksReturn to top