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Coldwater CEO: liquidation shocking and unexpected

Coldwater Creek CEO Jill Brown Dean said company's sales took a significant backslide in the third quarter of 2013 and continued into the fourth quarter. File photo.

Coldwater Creek CEO Jill Brown Dean said company’s sales took a significant backslide in the third quarter of 2013 and that continued into the fourth quarter. File photo.

Coldwater Creek CEO Jill Brown Dean said the women’s clothing company had been trying to turn around its fortunes for as long as she’d been with the company.

While Coldwater Creek, based in Sandpoint, has struggled for years, Dean said company managements’ efforts were undone by a poor end to 2013 and failed clothing line launches.

Coldwater Creek announced in October that it would undergo layoffs and look for a strategic partner to potentially acquire the company, but Dean said the bankruptcy, announced April 11, wasn’t expected.

“I don’t think that six months ago, when this process started, anyone thought this would result in a Chapter 11 liquidation filing. That was certainly not anticipated or contemplated, but unfortunately that’s where we are,” she said.

Dean said a number of factors prevented the company from rebounding. She said the company lost focus on its core customers and that efforts to close underperforming stores didn’t lead to higher revenues.

“There have been times when we’ve delivered very, very well for our customers and there have been times when we’ve been inconsistent. Frankly, we’ve suffered from multiple stops and starts in strategy,” she said.

Dean also said that the types of clothes the company sold weren’t consistent.

Jill_Dean“From season to season, month to month, we have not always been consistent. We confused our customer, and that in part led to this,” she said. In particular she said the company launched bad products toward the end of 2013, that, combined with larger retail shopping trends, harmed Coldwater Creek. While she said that many clothing retailers can miss on one season’s line of clothes, Coldwater Creek’s miss was significant.

Dean joined the Coldwater Creek in 2011, first as chief merchandising officer before becoming CEO in 2013. She previously held top positions with other women’s retailers, including Limited Too, Victoria’s Secret and Lane Bryant. Coldwater Creek hadn’t posted a quarterly profit since a year before she joined the company.

The search for a strategic partner was exhaustive, Dean said, but the company couldn’t find a buyer or capital to fund its turnaround. Instead, the company received $75 million from Wells Fargo to fund its liquidation. Coldwater Creek also reached agreements with two companies, Gordon Brothers Retail Partners and Hilco Merchant Resources, to manage the liquidation.

Liquidation at stores should start in May. Dean said many store employees will stay with the company through the liquidation process, which could take two months. The company has approximately 450 workers in northern Idaho, at its Sandpoint headquarters and a Coeur d’Alene call center. Brown said some northern Idaho employees could be laid off “very quickly” while others might stay on, depending on their roles. She couldn’t offer a more concrete time frame for the fate of Idahoans’ jobs.

Company employees would receive 60 days of pay and benefits after losing their jobs, Dean said.

Coldwater Creek was founded in 1984 as a catalogue-only clothing company by husband and wife Dennis and Ann Pence. The couple divorced in 2003, with Ann Pence leaving the company in 2002. Dennis Pence served as company CEO in three stretches for more than 20 year, most recently from mid 2009 to late 2012, before Dean took over for him.

The company has just under 6,000 total employees, both full- and part-time, Dean said. The company has  334 retail stores, 31 outlet locations and seven day spas. In addition to its Sandpoint and Coeur d’Alene facilities, the company also has a  distribution center in Parkersburg, W.V.

Coldwater Creek is one of the largest employees in Bonner County. Idaho Department of Labor Regional Economist Alivia Metts said those jobs will be hard to replace.

“Those are really good paying jobs for Bonner County, particularly the corporate jobs, so it’s going to be tough,” she said. “To find comparable jobs, with the wages and skills, might be difficult.”

Metts said the job losses are the largest in Bonner County since J.D. Lumber closed down a mill in 2008, which had a large effect on the area economy. She said Bonner County hadn’t seen year-over-year job gains until late last 2013, which was later than any other county in north Idaho.

Dean said Coldwater Creek had a strong team in Sandpoint, though being a large clothing company in northern Idaho was a challenge. She said that recruiting workers was difficult, though many employees loved living in the area.

While Dean said that bankruptcy couldn’t have been expected in October, the announcement has at least been expected for a few weeks. The company’s stock plummeted in late March after bankruptcy rumors circulated and the company didn’t release its earnings for the end of 2013. All three retail market analysts that follow Coldwater Creek stopped covering the company earlier this month. None were available for comment.

Andrew Burnstine, a former executive vice president and CEO of fashion retailer Martha, Inc. and now associate professor of fashion at Lynn University’s College of Business and Management in Boca Raton, Fla., said Coldwater Creek could not keep up with the changes and competition. He said the company’s efforts to attract younger women to the stores, including selling clothes with polka dots, didn’t work.

“A lot of the younger generation didn’t feel comfortable going into a store with that atmosphere,” he said, saying that Coldwater Creek wasn’t known for having a younger-skewing look. “They had a good product in the beginning, but they didn’t know how to market it.”

Burnstine said he had been optimistic about Coldwater Creek’s future even as it repeatedly posted losses, but that difficult trends in retail, including the rise of online shopping, ultimately did the company in.

“It was too little too late. What they perhaps should have done earlier, they didn’t,” he said.

About Brad Iverson-Long

Brad Iverson-Long is a reporter for the Idaho Business Review, covering banks, financial services, technology and new business.