Estranged Co-Owners of Esprit See ‘Baby’ Go on Auction Block : * Retailing: Both Doug and Susie Tompkins plan to bid on the trendy San Francisco firm. An outsider could snap up the operation, which is finally rebounding after suffering from the couple’s long-running feud.
It once seemed that Doug and Susie Tompkins, founders and 50-50 owners of the innovative Esprit de Corp. clothing company, had all the potential of building an empire, growing old together and waltzing off into a happily-ever-after sunset.
Then matrimony turned to acrimony.
And, in the divorce court equivalent of throwing out the baby with the bath water, the estranged couple plan today to put Esprit on the auction block.
As usual, they’ll be battling each other. Observers say each of the Tompkinses, along with their respective investment partners, will vie to buy the company. The planned sale is the culmination of an agreement reached last July, and updated last December, stipulating that the company would be auctioned off if Doug Tompkins decided not to buy out his wife’s half at an appraised price.
In a rare interview this month, he told the San Francisco Examiner that he turned down the chance because the estimated $350-million price tag set by the Goldman, Sachs & Co. investment house was too high. He’s hoping to get it for less to reduce the need for debt.
Goldman Sachs will collect the bids and is expected to announce a winner early in June. Meanwhile, the various principals are adhering to a vow of silence on the matter.
By throwing open the floor to competing bids, the Tompkinses risk watching their one-time fashion hotshot go to an outsider just as it is rebounding from the bitter feuding that for a time threatened to drive the company under.
“It’s unfortunate that their own problems have caused (problems in a company) that served as a model for so many,” said Marjorie S. Deane, chief executive of Tobe Associates, a New York fashion consulting firm.
Doug and Susie Tompkins met in 1963 in what is now Lake Tahoe, Nev., when he was working as a tree-topper and she as a keno runner. After their marriage that year, they moved to San Francisco. A dedicated rock climber, Doug Tompkins borrowed money to start a climbing-equipment business (North Face, which he later sold for $50,000). Susie and a friend started a dress company called Plain Jane.
In 1971, the company name was changed to Esprit de Corp. Years later, when the Tompkinses parted from their one-time partners and began making Susie’s own designs for colorful, casual, moderately priced weekend wear for juniors, the business began booming. Doug ran the marketing and business side. By 1987, profits reportedly had soared to $80 million on revenue of $1 billion, with most coming from sales in better department and specialty stores.
As it grew, Esprit developed a colorful corporate lifestyle, offering employees free tennis lessons on the company’s grass court and use of a company-owned ski cabin in Lake Tahoe.
In the mid-1980s, the clothing maker launched an expensive move into retailing, opening 14 stores from 1984 through 1987, including a $15.5-million, high-tech wonder on Santa Monica Boulevard in Los Angeles. (Esprit now has 43 franchise stores and 17 company-owned outlets, including one in Costa Mesa, and another scheduled to open soon in Sherman Oaks.)
During that time, fashion took a turn toward the conservative, catching Esprit with its polka-dotted pants down. Profit margins shrank. The owners, whose marriage was also more or less in tatters, quarreled over the company’s direction. Susie suggested that Esprit seek to attract more mature customers with more sedate designs. Doug voted for keeping things young-looking.
Their battle went public in a March, 1988, story in the Wall Street Journal in which employees said Doug Tompkins had affairs with Esprit workers. Morale was at a low ebb as employees chose sides.
The company suffered a loss in 1987, then began paring staff and perks and hiring new managers. In 1988, three new directors joined Esprit’s board as a result of a lawsuit filed by Susie Tompkins. Both Tompkinses later abandoned most of their operational control.
Jack Seitchik, president of Seitchik Corwin & Seitchik, a San Francisco executive search firm specializing in apparel businesses, said the company was profitable last year and is expected to show a profit this year as well. (Annual sales last year, including children’s clothing, were reportedly about $800 million.)
Seitchik added that President and Chief Executive Corrado Federico has “done an amazing job holding it together.”
Evidently, a more sober mood is prevailing, if the company’s widely known oversize catalogues are any indication. The company’s previous, somewhat precious catalogues have featured salespeople and their families in Esprit designs.
The spring 1990 catalogue hopped on the ecology bandwagon, with big color pictures of vivacious models alongside headlines such as “Conservation or Consumption?” and “Rainforests or Acid Rain?” The copy is credited to Doug Tompkins.
