bankruptcy

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Brand Bankruptcy.

When you’re a hammer most things look like a nail. I am brand strategy hammer. Today’s nail is Brand Bankruptcy.

I worked for 7 months at a company that went bankrupt. The lawyers made money, vendors got cents on the dollar, employees were sent home and the manufacturing plant shut down. Thirty years ago, my father’s secretary claimed personal bankruptcy. Her credit card bills were astronomical.  She continued working, I’m assumed with less new clothes.

Bankruptcy is a common state-supported financial practice. Ask General Motors.

Brand bankruptcy happens when there are not enough assets in the brand bank to cover a massive value hit. This is when poorly prepared brands go bye-bye. Tylenol had enough value to recover from the tampering scandal. Chipotle survived its food poisoning debacle. It may even have come out stronger. Coke’s formula change made a run on the brand bank, but it definitely emerged healthier, with more committed customers. 

Every brand, every company, is going to have a natural or unnatural disaster. Building brand value and banking it, is what smart companies do. It’s prepper stuff.

Good brand strategy maximizes bank assets. It organizes them. Organize and calculate the assets you put in the brand bank and they grow and grow.

Peace.

 

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Steve and Barry’s University Sportswear has been on my radar for years. The two founders, Barry Prevor and Steven Shore, broke some rules and used edgy retail smarts to create a huge sales phenomenon. Launched when the economy was good, they created a value brand where everything in the store cost $7.99. Everything.  Prices and the business model have changed over the years but Steve and Barry’s is still a value brand. One would think they would be flourishing now as money gets tight, but they are not. 

Their’s is a volume business with very low margins. They manufacture in Asian, Africa and probably South America. I’m guessing they produce a tee-shirt for under a buck, but getting it to America and onto a store shelf with a couple of quarters worth of profit is the real magic.

 
Unfortunately, Steve and Barry’s is on the verge of bankruptcy today. What’s different? Less people looking for bargains? No. Who knew the price of oil would impact a chain of tee-shirt stores? Certainly not Steve and Barry. I hope they can turn it around. They deserve another chance.  

PS. If you like “white hot” guitar music, The Feelies are playing July 4th in Battery Park, NYC at 3:30.  I don’t have a ticket and will be sitting outside.  Perhaps with my telescope, as in the old days.

 
 

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 Delta emerged from bankruptcy yesterday with a big new financial plan, some product and service modifications, a politically inspired ad campaign, and new logo and color scheme. I’m not sure this latter part translates to “paint the planes,” but I certainly hope not. 
 
When USAir changed to U.S. Airways (don’t forget the periods after U and S), they painted the planes. If memory serves, the cost to paint each plane was $2 million and it took the equipment out of the sky for a number of days. Arguably, the paint job in that case was needed as was the name change. People were referring to USAir as US Scare. What was needed more than a paint job, however, was newer planes, a consolidation of plane types, and improved safety standards. (Oh yeah, they went bankrupt, too.) 
 
The last thing Delta needs is to change its color scheme and paint its planes. That’s not a demonstration of sound fiscal management to the public – especially, when gas is $3.15 a gallon. Demonstrating sound financial management is the objective. Proving it is the story. A new color scheme is off message.
 

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