San Antonio Express-News (Sunday)
GRUNT STYLE
In November 2017, Alarik told his staff at a Beer:30 meeting that he was moving the headquarters to San Antonio and that everyone would need to relocate to Texas within the year.
Texas was the Grunt Style’s biggest market at the time, and the company was looking to expand. Also, land was cheaper in Texas, and taxes were lower. The move was expensive. Alarik sought to acquire 280 acres near Helotes for a Grunt Style campus but later withdrew from the deal.
The company ultimately selected a three-story brick building at 900 Broadway for its headquarters, spending $1.2 million to refurbish it. It also opened a cut-and-sew facility in a warehouse near Fort Sam Houston that employed 33 locals.
Once established in town, Grunt Style also paid for a San Antonio Spurs season box suite. Under current pricing at the AT&T Center, home of the Spurs, full suites cost $250,000 per year. A smaller suite would go for $150,000.
“We made some pretty aggressive decisions, and within a few months, I saw our cash dry up,” Alarik said. “We got a big problem, and this is in the middle of the move.”
Early in 2018, even after striking the loan agreement with C3 Capital, the company was in financial free fall. Alarik said Grunt Style was within a week or two of not making payroll.
He started making cuts. The San Antonio cut-and-sew facility was the first to go.
“That was the first time I had to lay off anyone,” he said.
The apparel-maker fell behind by 30,000 orders, had $13 million in past-due accounts payable and faced $34 million in future liabilities, according to Alarik.
Consultants urged him to declare bankruptcy, but he wouldn’t do it.
“Our fans and customers and especially the people working their butts off everyday — they better know that nothing was left on the table,” he said.
Despite the crisis, the company hosted GruntFest 7 at Cowboys Dancehall in April 2018.
The event featured live country music by Kane Brown, Nitro Circus’ motorcycle stunts, a cigar lounge and Red Bull. More than 6,000 people attended.
GruntFest turned out to be a modest moneymaker. It cost $150,000 to stage and netted $200,000, according to a person with knowledge of the event.
Metzger, who still lived in the Chicago area, put money down on a house while in town for the event and planned to move his family to San Antonio in May.
He described what happened next as “a bloodbath.”
“We would call it Black Friday because we didn’t know who was going to get laid off,” he said
Metzger had already sold his house when his pink slip came, leaving him, his wife and two kids, both younger than 3, without a home.
“This is the company that talks about how much they support their veterans and everything else,” he said. “They did a lot of us wrong.”
One employee, a female veteran living in Illinois, said she’d packed a U-Haul and was set to move to Texas on a Monday. She was fired the Friday before her move.
Former employees estimate that between several dozen and 60 people lost their jobs. Alarik said the company laid off five or six, in addition to firing a “handful of people” for not meeting standards. Several others quit.
Alarik said he called an employee meeting to outline a three-phase recovery plan.
“We can solve our own problem here, and it’s going to be really hard,” he said.
Alarik took responsibility for the fallout, saying, “I do understand the hurt. I really am sorry. … I got us in that situation. I’m the captain of the ship.”
Throughout 2018 and into 2019, he and his top executives scrambled to turn the business around. They cut expenses and renegotiated contracts with about 40 vendors and marketing partners to minimize future liabilities.
“We called everyone,” he said. “Some were letting us out of two- or three-year deals. Some let us out of five-year deals.”
Still, Grunt Style failed to hit financial targets outlined in the $10 million loan agreement with C3 Capital, so the investment firm withheld the final $4 million tranche.
Instead, Grunt Style agreed to a separate $3 million loan from C3 in November 2018 for “product only” ahead of the holiday season.
By April 2019, the company had paid down the past-due accounts to about $2 million and had posted seven profitable months in a row, according to Alarik.
Nevertheless, Grunt Style defaulted on its loan from C3 Capital. The lender visited Alarik in San Antonio in June 2019.
“The partner from C3 came down after we showed him the financial turnaround (plan) and said, ‘OK, great job. But we’re executing on this springing proxy, which is our right, which means we’re forming a board,’ ” he said. A springing proxy is a loan agreement clause that allows lenders to take control of companies in the event of default.
Steven Swartzman, a partner at C3 Capital, did not respond to request for comment.
According to a Securities and Exchange Commission filing in July 2019, C3 Capital took an $6.8 million equity stake in Grunt Style in a deal that stripped Alarik of majority control.
Alarik said did not receive anything in the deal beyond an employment contract.
Silbert said the company’s financial performance is turning around, though he offered no details.
“We’re doing a lot of great things — some of the financial stability and leadership that we’re able to put against the company today that wasn’t there,” he said. “We’re able to
make the investments in our teams, and more importantly in our community.”
Grunt Style has contributed to numerous causes, including breast cancer awareness, a program that builds homes for veterans, and mental health services and suicide prevention for vets. The company also launched a program to support first responders and small businesses during the pandemic.
“This year was a big year for the company,” Silbert said. “We’re able to start leaning in and really focusing in on that mission.”
On Broadway
Grunt Style’s headquarters,
which includes retail on the first floor, is located near Maverick Park on a portion of the Broadway corridor that’s quickly being redeveloped with shiny new office and apartment buildings.
Low-key black signs hang outside the brand’s headquarters.
Inside, the shop feels like a mix between a military museum and boutique clothing store. Photos of fallen police officers adorn a wall above a table commemorating POWs and MIAs. A vintage jeep occupies one corner of the shop. Classic rock plays in the background.
The store’s bright shirts contrast with the concrete floors, white walls and exposed ceiling.
The company’s crossed musket logo is everywhere.
In January, Grunt Style hired Tey, a clothing store manager, to launch the retail shop. Tey interviewed with Alarik in January. She said his story, core values, passion and drive inspired her to take the job.
“His concept was never about selling a T-shirt,” said the mother of five. “It was selling the freedom that was associated with that T-shirt.”
Tey scrambled to get the store ready three weeks before the Feb. 8 grand opening, which drew more than 2,500 people.
Tey said she has “thick skin,” and she’d heard that Grunt Style was a tough place to work.
“It was a lot of sarcasm, a lot of disrespect — a lot of, you know, just inappropriate comments they would say to each other,” she said.
She shrugged it off at first. But she said male employees had targeted her.
“It was constant, like, snapping their fingers at me,” she said. One person always called her “new girl.”
She approached the company’s human resources representative after a director belittled her in front of shoppers. According to Tey, he said, “I’m not trying to be (expletive), Nikki, but I’m busy right now” and “I don’t have time to hear your (expletive).”
She said HR took no action. The company shuttered the Broadway store from early March to May during the government-mandated pandemic closures. Tey returned to work only to test positive for COVID-19 in mid-June, along with her firefighter husband and one of their children. After recovering, she said, she returned to work remotely.
In August, she emailed HR to address several concerns. She felt underpaid, overworked and stressed.
A few days later, her supervisor fired her over the phone.
“Had I not sent that email addressing my concerns, I’m almost 100 percent confident I would have my job still,” she said. “I’m glad I stood up for myself.”
Jessica Lerma, Grunt Style’s general counsel and vice president of human resources, said “that any claim of a termination for retaliatory purposes is simply without merit and we stand behind the decision that was made regarding this individual.”
The company promptly addresses any instances of disrespectful or inappropriate behavior, Silbert said.
Employees who “weren’t in line with how we treat other people” are no longer with the company, he said.
For his part, Alarik is currently interviewing for jobs and preparing to put his $1.3 million home in Boerne on the market.
“I almost lost my family over all this business and noise, and I remember praying to God — I’m like, I would give all this up just to have my family. That’s the most important thing,” he said. “Perhaps God heard that prayer. Now we’re in the position where we’ve lost almost everything … and we’re happy. We don’t care.”