Case History: 
"Pop-Up" Liquidation

Apparel & Accessories:
Robert Talbott

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When faced with a high volume of inventory stored in warehouses, monetizing through a multi-store "Pop-Up" Liquidation strategy can maximize returns with recovery rates up to 48% net of all expenses.

Situation

Founded in 1950 by Robert and Audrey Talbott, and headquartered in Monterey, California, Robert Talbott was best known for its line of hand-made silk neckwear, including limited edition Seven-Fold neckties made from a single sheet of silk, Estate collection neckties featuring individually woven tipping, and its world-renowned Best of Class collection. Over the years, Robert Talbott added tailored sports coats and suits, soft coats, high-quality sport, dress, and formal shirts, a sportswear collection of shirts, sweaters, and knits, outerwear and vests, and an impressive accessory line of bow ties, pocket squares, cuff links, belts, and shoes. Mostly recognized in specialty men’s stores and haberdasheries, Robert Talbott grew into upscale department stores, including Saks Fifth Avenue and Nordstrom, as well as opening their own locations in Carmel, Pebble Beach, and Newport Beach, CA, New York City, Dallas, TX, Atlanta, GA, and an eCommerce store. At its peak, Robert Talbott had an estimated 260 employees generating $50mm in sales revenue.  

 

Through the passing of the founders, the next generation, who owned a highly successful winery, hired a succession of CEO’s who struggled with internal and external pressures that began to significantly challenge the operation, including, but not limited to, the fact that men were simply not wearing ties as much as before. Also, as the operation adapted to what each CEO brought to the company, much of the core philosophy from the founders was lost. Robert Talbott was recognized as a classic American label with a largely classic American customer base. Historically, all manufacturing had been done in California; however, with the new leadership, some but not all the manufacturing shifted overseas to China, Italy, and other markets to save expenses and elevate the brand to a more contemporary look and “modernized” operation.

 

The final CEO in the succession ultimately agreed to purchase the business from the Robert Talbott family. To establish a new direction and remain relevant, the new leadership worked closely with veterans both of Robert Talbott and of the leaders in the industry. In the meantime, however, the new owner also developed other strategic goals for the company, including a move to abandon all production and leverage the name into a licensing agreement. This shift in motive led to making internal and external decisions that compromised the company, including a calculated stripping of the assets and overleveraging of the balance sheet. As the company was declining, bad press surfaced regarding how the staff was being handled, orders from major accounts were being unfulfilled, and stores and wholesale accounts were being shuttered. Ultimately, one of Robert Talbott’s lenders who held a lien on the assets recognized it was time to execute on their right to take possession of the inventory assets to secure recovery of their loan.

 

Given the long-standing relationship, the lender reached out to Fortis Business Advisors to discuss options to monetize the inventory for recovery, and it was determined that a multi-store “Pop-Up” liquidation strategy would yield the highest returns from the sale of the inventory assets.

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Atlanta

Houston

Dallas

Birmingham

Objective

With all the Robert Talbott stores having been shuttered, wholesale accounts closed, and the eCommerce store pulled down, conventional channels to liquidate the merchandise were effectively shut down. Furthermore, apart from a small grouping of inventory on its way east from California, all the merchandise was being stored in a third-party fulfillment warehouse in south Atlanta. The warehouse was incredibly expensive and wanted to charge premium amounts to continue to work with the product and any new strategies moving forward.

 

To overcome the initial, and unexpected challenges, it was determined that Fortis would take possession of the merchandise and truck it to a warehouse where Fortis’ team could sort through and reorganize the merchandise to support the “Pop-Up” Store strategy. Once the merchandise was secured, Fortis proceeded to organize the new operation and identify markets for the “Pop-Up” stores. The criteria for identifying markets were deliberate – isolate markets that had a former Robert Talbott company store, had a high concentration of former wholesale accounts/sales, had space availability in higher-income areas within an effective radius where Robert Talbott merchandise had previously been sold, store size between 1,500 – 2,500sqft, and stores not logistically challenging for merchandise transport. With the merchandise situated in Atlanta, the Southeast from the Carolina’s to Texas was the target.  

 

Fortis had to move quickly to capture the shopping season. The first market identified was Atlanta followed closely by Houston, Dallas, and Birmingham (details on each below). Other markets had been identified for additional locations, but unexpected challenges prevented their launch, including on King Street in Charleston, SC where Covid shutdowns were enacted the week a space was to be secured.

Within 3 months of securing the inventory, Fortis had launched four “Pop-Up” Liquidation stores. As Fortis continued to develop the strategy, Covid and the successive lockdowns struck that, once lifted, had a considerable negative impact on the strategy with sales waning at multiple locations after reopening. To combat the revenue squeeze, Fortis strategically shut down locations while developing a new “Facetime Shopping” program allowing customers to shop the merchandise and have it shipped direct. Well received by the customer base, the program opened markets across the US to sell the Robert Talbott inventory.

 

As a final channel to increase sales, Fortis developed an eCommerce store and the requisite infrastructure, including securing new fulfillment warehousing with logistics under Fortis’ direction, photographing the merchandise, development of an online store on the website, and a comprehensive inventory of the merchandise to go into the online store. While ultimately not utilized, the design of the store can be found at roberttalbottclearancestore.com.

Comprehensive Results         

38.8 % Total Cash return/recovery, net of all expenses, to lender on inventory sold

(Dallas - 48.1%; Atlanta - 43.9%; Birmingham - 34.4%; Houston - 16.3%)

Over 40,500 total units sold from 5,767 transactions

 

4 fully operating retail locations designed, built, and staffed in 4 markets in 3.5 months

 

Introduced "FaceTime Shopping" as a concept to supplement in-store shopping

Projected annualized gross sales from all locations combined - $3.54mm

Atlanta, GA

Objective

The original location for the Robert Talbott store in Atlanta was in the Buckhead, Atlanta area. Notably, Robert Talbott merchandise had also been sold at several of the specialty men's stores in the area, as well as Nordstrom and Saks Fifth Avenue. With the Robert Talbott merchandise being warehoused in Atlanta, it was the ideal first location for the “Pop-Up” stores. Fortis identified a location in the heart of Buckhead in a former vitamin store, executed the lease, acquired the license and insurance, merchandised the store for liquidation, staffed the store, and launched a high-impact marketing program that included developing a website, social media ads on Facebook and Instagram, a market canvasing direct-mail program, and comprehensive mass email campaigns.

 

While it took time to gain momentum in Atlanta, it ultimately shot up considerably as word got out to government agencies, including the governor’s office, prestigious law firms, financial institutions, and correspondents at local news organizations. The Atlanta store and its team were also the springboard for the “FaceTime Shopping” program, handled several wholesale sales to former Robert Talbott merchants, and was home base for the development and infrastructure of the eCommerce platform.

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Results         

43.9% Total Cash return/recovery, net of all expenses, to the lender on inventory sold

Over 21,300 total units sold from 2,739 transactions in a 1,744sqft. space

 

Projected annualized gross sales - $807,000

Houston, TX

Objective

While the Houston, Texas market never had a Robert Talbott company store, it was a leader in sales through wholesale accounts with some of the local men’s specialty stores being long-term customers. Also, Fortis has a relationship with a national landlord that had space available off Voss Road in a former pet store located directly behind the original location of Rosie Carrabba’s in the Galleria/Uptown area of Houston.

 

Fortis secured the lease and opened the Houston “Pop-Up” location 3 weeks after Atlanta. The space was completely empty, and Fortis was able to set the floorplan, bring in the inventory and merchandise it, and execute the marketing program three days before Thanksgiving to get the store open by Black Friday.

 

Notably, while in the Houston market Fortis worked closely with a former Robert Talbott account, Norton Ditto, to create a consignment opportunity. This generated an additional stream of income through the Norton Ditto location in The Woodlands area.

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Results         

16.3% Total Cash return/recovery to the lender on inventory sold

Nearly 4,500 total units sold from 842 transactions in a 1,500sqft. space

 

Projected annualized gross sales - $615,000

Dallas, TX

Objective

The original location for the Robert Talbott store in Dallas was Highland Park Village in the Park Cities area of Dallas. It was one of the strongest of the Robert Talbott company stores. Also, most specialty men’s stores in the Dallas market had carried Robert Talbott at some point, proving Dallas to be a strong market. While Highland Park did not have available space, neighboring University Park presented an ideal location for a Robert Talbott “Pop-Up” in a former cycle studio less than 2.5 miles away.

 

The landlord had delayed executing the lease, but finally agreed to terms the week of Christmas, roughly 3 weeks after the opening of the Houston location. Given the urgency to get open in time for limited holiday shopping, Fortis trucked in merchandise the night the lease was signed and opened the location in less than 24hrs. For the length of time the store was open in Dallas, it proved to be the strongest location for the “Pop-Up” stores.

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Results         

48.1% Total Cash return/recovery, net of all expenses, to the lender on inventory sold

Over 10,800 total units sold from 1,478 transactions in a 1,710sqft. space

 

Projected annualized gross sales - $1,450,000

Birmingham, AL

Objective

Like Houston, Birmingham did not have a company store, but there was a huge wholesale presence with local specialty stores. Also, Birmingham was a logistically favorable location to Atlanta. When seeking out a space, Fortis identified the English Village area of the Mountain Brook region as being an ideal area given its considerable household income levels and proximity to former wholesale accounts. The space where a former long-term tenant was located, Billy’s Sports Grill, had recently become available and it presented a unique marketing opportunity as Billy’s was a household name in the area. Before the license would be approved and the store could get underway, Fortis had to make a presentation to the City of Mountain Brook for approval, which was not only approved, but members stopped by the store to shop.

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Results         

34.4% Total Cash return/recovery, net of all expenses, to the lender on inventory sold

Over 4,000 total units sold from 704 transactions in a 1,800sqft. space

 

Projected annualized gross sales - $641,000

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