Smells Success at Giorgio : Michael Gould Finds There’s Life After Robinson’s

As an industry, retailing is about as topsy-turvy as they get. If the bottom line starts turning from rosy to red, a fair-haired merchandiser can become a scapegoat almost overnight.

Consider Michael Gould. During a 7 1/2-year tenure, he helped turn J. W. Robinson into the fashion leader among Southern California department store chains, only to resign as chairman in March after the parent company criticized him for letting costs get out of hand and profits slip.

He soon landed squarely on his feet, in May becoming president of perfume maker Giorgio Inc., owner of a Rodeo Drive boutique redolent of its fragrance. The company is much smaller than Robinson’s, to be sure, but Gould contends that its “biggest opportunities are ahead.”

Frequent Encounters

Ironically, Giorgio’s best account is Robinson’s, which for about three years has been the only Southern California retailer to carry the line, doing what Gould characterizes as “spectacular” business. Sources put those sales at $11 million in 1985--out of total Giorgio sales of about $100 million. (By contrast, Robinson’s had sales of about $565 million last year.)

After his resignation, Gould and his successor at Robinson’s, Tom L. Roach, encountered each other at meetings to plan a big Giorgio’s splash earlier this month at four Robinson’s locations.

Says Gould, in his enthusiastic Boston accent: “From Day 1, Robinson’s and Giorgio took to each other like fish to water. We will continue to grow our business at Robinson’s.”

Roach concurs: “We consider this whole relationship one of our most important and our most prized exclusive at J. W. Robinson, and we hope it continues forever.”

Given this mutual admiration, the attitude of Associated Dry Goods, Robinson’s parent, toward Gould may seem puzzling.

Last week, Associated reported an 80% decline in second-quarter earnings, attributing most of it to a profit slide at the 23-store Robinson’s division. Associated stopped short of blaming all of Robinson’s problems on Gould, adding that a slowdown in consumer spending contributed. But retailing analysts say company officials privately have left the impression that decisions made while he was in charge are having negative repercussions months after his departure.

Analyst William N. Smith of Smith Barney, Harris Upham in New York said Associated executives told him that they were upset about “stale, bad and damaged inventory, particularly in home furnishings,” a comment that some observers viewed as a direct swipe at Gould. Since his early retailing days at Abraham & Straus in New York, his main area of expertise has been home furnishings.

An Associated spokesman told The Times last week: “The business conditions that Tom Roach inherited were much more serious than anybody anticipated, particularly on the inventory side.”

Such comments have infuriated other Los Angeles retailers, who say privately that Gould got a bum rap. Gould notes that many have called to offer support and express their indignation.

After all, they say, in a market such as Southern California, department store chains constantly jockey to be the most exciting store in town. Bullock’s seems to be leading the pack right now, but it was Robinson’s for a while.

From his vantage point at the Giorgio offices in Santa Monica, Gould waxed philosophical in an interview this week: “This is a business that says: ‘What have you done for me tomorrow, not what did you do yesterday.’ ”

Gould says responsibility for Associated’s poor second-quarter performance rests with the New York management, which he claims “never gave ideas of what the business should be except to cut expenses to make the profit plan.”

Under the late William P. Arnold, Associated won Wall Street plaudits for turning from stodgy to aggressive. Since his death two years ago, the company has been led by Joseph H. Johnson.

Longtime retailing observers in Southern California say Gould was able to build on a turnaround at Robinson’s initiated by two predecessors: George Philip (Phil) Kelly, who gave the store a dramatic fashion direction, and Redmond J. Largay, who added a layer of solid merchandising that won back the traditional Robinson’s carriage-trade customer.

Even though Robinson’s fortunes had already started to improve, Gould recalls that soon after he got to Southern California in 1978, a competitor called Robinson’s “the fifth store in a four-store town.”

“When I arrived, the customer was saying that Robinson’s stores weren’t fashion-forward, clean or easy to shop. Merchandise wasn’t in stock, and visual presentation was bad. The store was very unaggressive,” he said. “When I left, surveys said it was No. 1 in all those areas. It was a team effort that made it happen.”

He added: “I (now) have one of the great jobs that anybody can have. Associated’s negative comments are knocking their own people, not me. It hurts the people (at Robinson’s) who are trying to dig themselves out of a hole.”

(Philip Bradtmiller, an Associated spokesman, said Wednesday that the company is eager for Robinson’s to achieve a turnaround. “Deeply rooted in (Associated’s) traditional management philosophy has been the high level of autonomy at its divisions, and the corporate role has always been to lend assistance rather than manage by decree,” he said. “A division’s fate . . . has been much more dependent upon their own efforts.”)

Gould, 43, takes some satisfaction in noting that he had been negotiating with Fred Hayman, owner of Giorgio, to join the fragrance company as early as last January. “I was just about at the point of deciding in March to come to Giorgio,” he said. “Hayman has given me an opportunity to take this company to the next level, the next generation.”

Giorgio is clearly at a crossroads. Its perfume was launched in 1981 and soon became a leader in the $4-billion-a-year fragrance industry, going for $150 an ounce in about 350 stores.

But last year troubles surfaced. Hayman, chairman and chief executive, ousted co-owner and his former wife, Gale Hayman, as executive vice president. She still has a 49% voting stake in Giorgio and a seat on the board, but in May she filed suit to win back her management role and asked for $75 million in damages. She hopes to launch her own cosmetics line in 1987.

Some retailers report a slowing in the Giorgio boom, although they say it is still their No. 1 scent by far. Gould is heartened by the fragrance’s showing in the last few months. “Giorgio sales are up,” he said, but he acknowledged that “you’re not going to continue to grow a business at 50% a year.”

Under Gould, Giorgio has increased distribution to more than 400 stores. (By contrast, second-place contender Oscar de la Renta is sold at 1,500 locations, Gould said.) In addition, Gould and Hayman are cautiously venturing into new arenas, such as the licensing of the Giorgio name for apparel and other items.

A new women’s fragrance is expected to be introduced within several months at the Giorgio boutiques in Beverly Hills and New York. Gould also sees a “colossal” opportunity in expansion of VIP Reserve, a $50 men’s fragrance that has tested well in the boutiques.

The merchant noted that he brings to Giorgio an understanding of what stores want. “What Giorgio needed was an infusion of some retail thinking. One of our biggest problems is that we have so many ideas on the table and so many things in development that the problem is how to prioritize.”

Meanwhile, he said he rests assured that Giorgio has only scratched the surface. “There’s room for another fragrance that smells fantastic and is marketed properly.”