Banker found calling making shoes
MINNEAPOLIS — Paul Grangaard spent 25 years in commercial banking, investment banking and at private equity firm Goldner Hawn Johnson & Morrison. He left in 2008 to try to turn around a portfolio company, Allen Edmonds, the Wisconsin shoe manufacturer that nearly failed during the Great Recession. Goldner Hawn invested an additional $10 million as other equity partners walked away. Grangaard, always a fan of the shoes, led a revival of the company. Los Angeles- based Brentwood Associates bought Allen Edmonds from Goldner Hawn for about $200 million in 2013 and, late last year, sold it for $255 million to St. Louis-based Caleres, which owns a diverse portfolio of global footwear brands. Grangaard still spends some of his time in the Twin Cities, where Allen Edmonds operates a 15-employee e-commerce and marketing operation. The firm has revenue of around $170 million.
Q: Please discuss the 2010- 2016 performance of Allen Edmonds.
A: We’ve had record revenues and earnings every year since 2010. U.S. employment since 2010 has grown 89 percent to 750 people. The key growth drivers have been product development, both in terms of increased depth in great dress shoes and in terms of significantly increased breadth in casual shoes; clothing, belts, business leathers and gift items.
We’ve opened stores across the U.S.; adding 12 locations (in 2016) and we’re up to 70 stores, and building a major e- commerce business; and marketing strategies and action plans through cataloging, Google affiliates, social media and other digital vehicles.
Q: To what extent do you give credit to the workers?
A: As we go to market, we lead with great shoes, so it all starts with the shoemakers on the production line and the sourcing of great leather. Less than 2 percent of the shoes bought in the U. S. in 2015 were made in the USA. We’re one of the last remaining American shoemakers as is ( Minnesota- based) Red Wing Shoes, by the way. So, in a very real sense I give all the credit to the shoemakers. It (also) takes more than great product to succeed. I came to this company as a finance and investments guy who happened to notice people’s shoes. Like any “extroverted” Lutheran of Norwegian descent we look at your shoes when talking to you! I didn’t know retail management, shoemaking techniques, leather types, sole adhesion ... that important stuff. So, I give all the credit to the workers in every role at our company. Many people got more than they ever expected in this last transaction and everybody got increased compensation along the way and increased employment opportunities, from higher commissions in our stores as sales grew ... to the factory floor.
Q: Are these good-wage jobs on the factory floor?
A: We pay up to $18 or $19 an hour. We had a discontinued 401( k) retirement plan when I got here. We reinstated it with a company match. We have good health insurance, and the company has absorbed some of the increased costs of health care insurance. We work on employee engagement ... from bowling and softball leagues to a night at Miller Park (home of the Milwaukee Brewers). We were voted, in 2013, one of the best places to work in Milwaukee. Usually those awards go to software firms, ad agencies or other companies with Ping-Pong tables in the lunchroom. Not manufacturers.
Q: Why has this been a satisfying journey for you?
A: I was welcoming a new employee on our production line one day to the company. He looked like somebody I would know from the neighborhood growing up, wearing a ball cap and he was about my age. I asked what he had been doing before he came to work with AE. He said he had been laid off at a manufacturing job ... and doing odd lawn care and snowplowing jobs for two years to make ends meet. I said I was glad our growth had given us the opportunity to hire and give him a more permanent income and benefits. He said, “You’re not as glad as I am. This job is the difference between my daughter going to college and not going to college.”