By Erin Sherbert
By Howard Cole
By Erin Sherbert
By Erin Sherbert
By Leif Haven
By Erin Sherbert
By Chris Roberts
By Kate Conger
The couple's dissolution agreement continued to follow its prearranged course. In mid-1989, the two agreed to allow Goldman-Sachs bankers to determine a price at which Doug would buy Susie's shares. If Doug for some reason failed to buy Susie out, the entire company would be sold at auction, with the proceeds split between them and Esprit Europe, a separate corporation that held a piece of Esprit U.S. The auction, if necessary, would be held June 1, 1990.
Doug brought on the San Francisco investment bank of Montgomery Securities to put together a financing package. Under that plan, Peter Buckley would be in charge of Esprit operations while Doug would direct image and design, recalls Buckley.
But nothing happened.
The four months the agreement had allotted Doug to buy Susie out came and went. Another month passed.
To Susie and her supporters, it looked as if Doug were playing hardball. By waiting until the company went up for auction Doug seemed to hope to buy Esprit for less than the reported $380 million Goldman-Sachs appraisal. He was planning to pull one over on Susie, it appeared.
Susie bristled, then acted. With Stein as her adviser she assembled her own group of financial backers, with the aim of going head-to-head at auction with Doug.
Doug brought on Luciano Benetton as a 50 percent partner.
Susie brought on Bruce Katz, founder of Rockport shoes.
Then, during the weeks leading up to the auction, something happened that should have seemed obvious, but came as a complete surprise. Outside bidders began to appear. Reebok, the tennis shoe manufacturer, stepped to the plate, as did Tuntex, a Taiwanese manufacturer. A bidding war was brewing that neither Tompkins was cut out to win.
Esprit was poised to become just another division of just another conglomerate, a notion offensive to everything the two people who had started the company believed in.
Doug called Susie, they talked, and he agreed to sell to Susie at a lower price than he would have received from the Taiwanese.
"I made an inside deal with her to keep it inside the family," Doug says. "I took a $40 million bath to keep it with her. I could have spent that money on our environmental foundations. It has turned out to have been a bad idea, but at the time, I had my children to consider."
Doug now says that he assembled his financial backers, his new management team, and his bidding strategy as a ruse to drive up the price of his company at auction. His critics maintain that Doug played a risky hand, and lost.
Whether Doug was actually a bad gambler or an astute bluffer, the end result was the same: His former wife was at the helm of Esprit, a place, she said in interviews, that she'd always dreamed of occupying.
It was June 1990, and a new era had dawned. Flush with promise, Esprit de Corp. U.S.A., its backers, its employees, and its co-founder were poised to ride one of the most spectacular collapses in the history of fashion.
Susie's triumph was celebrated among shadow wives throughout America. She was the subject of profiles crafted by Working Woman, CNN, and countless other media. Morale at the company was the best it had been in years. Unfettered by the marital bickering that had poisoned the company during the previous five years, Susie would return Esprit to its glory days, with new, more mature-minded clothing lines that offered the kind of fashion verve Doug threatened to strip from the company.
Esprit's advertising played on the new hubris.
"When I was little, I wanted to be a nun, a cowgirl, a cheerleader, a professional ski racer," Susie muses triumphantly in an advertising video produced not long after the buyout. "Mother said to me a dozen times: 'You'll never amount to a row of pins.' "
With Federico as CEO and Stein as chairman of the board, the company hired Neil Kraft, a Barney's department store advertising executive, to become the new director of image. Susie fired the design team Doug had installed, and hired a new team she felt would best craft the more mature look she hoped to create.
But just as Susie had assembled her new team, Federico resigned. Stein was appointed to replace the former CEO, and Susie went about putting her imprint on the company. The first obvious evidence: an $8 million advertising campaign in which customers were asked to suggest ways they would change the world. The answers -- including "I'd keep a woman's right to choose"; and "I'd teach the world to groove" -- were fashioned into print and television advertisements. The ads were a rousing success from a publicist's standpoint. But they didn't seem to be selling clothes.
In 1992, Kraft, who had overseen the production of the ads, resigned.
In what was to become a continuing string of CEO turnovers, the Swiss fashion executive Fritz Ammann was hired in early 1992 to replace Stein, and, it was hoped, bring an overarching fashion/business sensibility to the company. Ammann instituted a series of cost-cutting measures, including the elimination of Esprit's "eco desk," which helped employees volunteer for environmental projects. He canceled the Esprit lecture series, the Esprit newsletters, and the Esprit employee stock ownership program.