Esprit de Court

How Susie Tompkins Buell built, wrecked, and sued San Francisco's legendary Esprit de Corp. clothing company, and why she still gets to sit next to President Clinton

"They were eliminating this trivial stuff, which didn't really cost that much, and not taking care of the essential stuff," Buckley says.

The most notable touch of the Susie era was the introduction in March 1992 of the Susie Tompkins Signature Line. These were the mature-minded clothes that Susie had dreamed of designing, and their initial presentation at an avant-garde New York fashion show appeared a triumph of the Susie sensibility.

This was no ordinary fashion show. Susie flew San Francisco minister and political powerhouse Cecil Williams to New York, where he gave a rousing sermon about violence, racism, drug abuse, and love. The show closed with a gospel choir concert. It was scandalous, it was innovative.

The clothes were a dud.
"It looked like old ladies-wear," recalls David Wolfe, creative director of the Doneger Group, a New York fashion consultancy. "It was such a shock to everybody. There were dowdy housedresses, dark colors. It was totally out of sync with the rest of the season. This meant she was terribly ahead or terribly out of touch, and since it didn't sell, it meant she was out of touch."

The year the line was introduced, Tompkins was removed as the company's design director.

While Esprit's management, fashion, and advertising troubles may have appeared daunting yet repairable, the company's back office -- its nuts-and-bolts business end -- was an absolute disaster.

Though the fashion industry is very much like the movie business in its emphasis on style and glamour, it is also a manufacturing business with narrow profit margins.

Companies must decide months ahead of time what sorts of clothes will sell, buy acres of cloth to sew them from, and deliver hundreds of samples to sales agents in time for the pre-season. Once garments are sold on the basis of these samples, complex orders must be filled, on time, to department stores, free-standing retail outlets, and other sales locations. The more different types of garments are produced, the more exponentially difficult the logistics of this process become.

And in its new-era anxiety, Esprit was trying to cover its bases by producing hundreds of different pieces.

"In the U.S., tons of uncut cloth would end up in warehouses in Hong Kong. I looked at their operations, and I knew the shit was about to hit the fan. Fundamentally, it looked like the people they had in charge did not understand the business," says Buckley, who bought Esprit's then-insolvent European arm from Doug Tompkins in 1978 and turned it into a $400 million corporation.

"Clothing is a very low-cost business. Department stores were getting leaner when Susie took over, and there was a lot of pressure on prices. Esprit simply didn't have the discipline to operate on a low-price basis. The whole sequence of events, from their bookkeeping to manufacturing, wasn't functioning. Their motor wasn't firing on all cylinders."

It became very clear, very fast, that Susie and her backers had got in way, way over their heads. The fashion industry was much more complicated than Stein and his S.F. deal-makers had fancied. And for Susie, running a company wasn't nearly the enjoyable experience it had appeared it might be in 1990. She came to bitterly resent the executives she was forced to hire.

"It isn't my fault that it was having problems. There was management that I hired, but the problems weren't ones I was responsible for," Susie recalls. "It got to a place where we couldn't control what was going on. We had to hand it over to business types to handle it, and that just wasn't something we were into. I had an understanding about how a company should be handled. You should have a beautiful workplace, you should have benefits for the employees. To live with the way of the new management, to make the company lean and mean -- that was a big adjustment."

In 1992, just two years after the original buyout, the floundering Esprit was forced to restructure its loans. By the end of that same year, the company went into technical default. Bruce Katz, the Rockport shoe company founder who had signed on as a partner, was bought out after he filed a lawsuit charging that Susie and her partners had attempted to defraud him.

In 1993, Ammann was replaced by Cupertino management consultant David Folkman.

By the mid-'90s, after five years of appallingly incompetent management, Esprit's U.S. sales, not including sales of the separately owned and managed European and Asian divisions, had shrunk from $360 million a year in 1990 to around $200 million.

The 16 insurance companies and other financial institutions that had participated in Esprit U.S.'s debt restructuring lost hope of ever being paid in full. The trademark that had come to define California style was becoming known inside the industry as a retailer of cheaply made knockoffs. The failure was so rapid, and so complete, that some in the fashion world are still stunned.

"You don't expect somebody to go so wrong when they've been doing it so right," David Wolfe says.

Just as miraculously, Esprit does not seem likely to disappear. It may even thrive.

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