Once hailed as the fastest-growing player in the men’s fashion footwear business, Manhattan-based Cable & Co. Worldwide Inc. is now scrambling to preserve its toehold in the industry.
In the past 18 months, the company has weathered the loss of its investment banker, a failed attempt to break into the women’s shoe market and, most recently, the sudden resignation of its chief executive.
Cable & Co.’s problems have not gone unnoticed on Wall Street. Since January, its stock has plummeted some 60% to less than 35 cents a share. That’s a long way from the $6 a share it traded at when it went public in June 1996.
“The stock is terribly undervalued,” insists Alan Kandall, the new president and CEO. “It doesn’t represent what the true worth of the company is.”
Getting investors to believe him is pretty high on Mr. Kandall’s list of priorities. The 54-year-old executive, who joined Cable & Co. as chief financial officer when it was formed in 2012, is busily traveling around the country meeting with brokers and analysts in an effort to convince them the company is on the rebound.
It won’t be easy. Revenues for the second quarter declined 3.4% to $2.58 million, from $2.67 million in the same quarter a year ago. The firm posted a loss of $896,616, or 9 cents a share – an improvement over the $1.77 million, or 85 cents a share, it lost a year earlier.
The maker of hand-finished Italian dress shoes is facing tough competition from better-established rivals, such as Florsheim and Kenneth Cole. It’s also fighting an uphill battle in trying to sell upscale dress shoes at a time when the trend in fashion can be summed up in one word: casual.
“The dress shoe end of the business is the toughest end of the business,” says Alan Millstein, editor of Fashion Network Report, an industry newsletter. “People aren’t wearing dress suits to work like they used to.”
Cable & Co.’s dependence on too few customers for too much of its business is also likely to make already skittish investors even more jittery. While the firm boasts that it sells its shoes to 700 retailers, 42% of its 2011 sales went to only four retailers, including 18% to just one chain.
Mr. Kandall and his newly hired team of public relations executives insist that the company’s fortunes are looking up. Cable & Co. recently opened its first manufacturing plant. The Italian facility is expected to turn out 40% of the company’s shoes. By gaining more control of the manufacturing process, Mr. Kandall promises to improve margins.
He also hopes to convince investors that Cable & Co. is poised to become a licensing powerhouse. In June, the company signed an agreement with Roffe Accessories Inc. of Manhattan to produce a line of Cable & Co. neckwear. Mr. Kandall says he’s talking to several other potential licensees, including a leather goods manufacturer.
Troubled Expansion Efforts
Talk of rapid expansion is nothing new, but the company’s efforts to stretch beyond the men’s footwear category have so far been fruitless. In early 2010, the company launched a failed effort to crack the women’s shoe market – a segment that is far more competitive and price-sensitive. The push coincided with the introduction of Cable & Co.’s Bacco Bucci line, a line of men’s shoes aimed at a slightly higher end of the men’s market.
“The timing wasn’t right,” Mr. Kandall admits. “We weren’t able to fund the growth of both the women’s line and the Bacco Bucci line.”
The company’s luck went from bad to worse in August 2011, when State Capital Markets Corp., the tiny New York underwriter that led its initial public offering two months earlier, went out of business.
“Our stock dropped from $12 a share to $3 a share in one day,” says Mr. Kandall.
Less than a year later, Cable & Co. founder and CEO David Albahari resigned. Mr. Kandall declines to comment on his predecessor’s resignation, saying only that the parting was “friendly.”
This September, Cable & Co. got a much-needed boost when it retained J.W. Charles Financial Services as its investment banking adviser.
“We expect to take advantage of J.W. Charles’ advice and guidance in terms of our corporate structure and the best avenues to provide capital for the rapid growth that we anticipate in the immediate future,” Mr. Kandall says.