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Esprit de Court 

How Susie Tompkins Buell built, wrecked, and sued San Francisco's legendary Esprit de Corp. clothing company, and why she still gets to sit next to President Clinton

Wednesday, Oct 8 1997
The dashing blonde in the loose-fitting, autumn-colored leisure ensemble has been having a stressful week.

First, there was the visit from the FBI investigators; "I can't remember, it was either Monday or Tuesday," she says, seated abstractly on the pale leather couch that anchors her luxuriantly spare Pacific Heights living room.

Then there were the wedding plans. Her daughter's nuptials were less than a month away, and much still needed to be done.

"Fletcher, how many people do you think we can get around that table?" she calls out to a neatly coiffed, middle-aged employee who has been arranging steel and leather chairs in her dining room for a small dinner party, before heading to the Bolinas country home to tend to wedding preparations. "Maybe I can serve. That might make things easier," she muses.

And then there was the disagreeable new CEO of what used to be her fashion house.

"They're saying I'm greedy because I just want what's owed to me according to their own books," she says. "I think this shows just what kind of people they really are."

The blonde is Susie Tompkins Buell, the 55-year-old occasional friend and lavish campaign contributor to Bill Clinton, scion of San Francisco high society, icon to West Coast fashion, and, once, perhaps the most-heralded female entrepreneur of her generation.

The fashion house is Esprit de Corp., the stylish clothier she founded and helped build into an $800 million-a-year clothing juggernaut -- before she helped it plummet into insolvency.

The CEO is Jay Margolis, the corporate-turnaround specialist who just banned Tompkins Buell and all members of her family from entering Esprit de Corp.'s Minnesota Street headquarters.

Oh, and the FBI: The bureau has been investigating White House campaign solicitations, and Tompkins Buell's number turned up on the president's phone logs. She says it was nothing more than a message Clinton left recently on her answering machine.

"He was just thanking me for having him over," she says indignantly. "Can you imagine?

In some way, all of Susie Tompkins Buell's current travails are lingering vestiges of the 30-year orgy of incompatible conceits that was Esprit de Corp. For an awfully long time, the look and feel of Esprit and the public image of Susie Tompkins were all but inseparable. Esprit was the bouncy, youthful, fresh, trendsetting clothier that led a wave of environmentally sensitive "green marketing." Esprit was the brand that mixed high-spirited fashion photography with social awareness. It was the purveyor of an internationalist, progressive, casual-high-style sensibility that, for some people, defined a certain time period, and a certain type of Californian.

It was the company built around the ideals of Susie and Doug Tompkins, the pair of San Francisco hippie merchants who sold clothing over a North Beach massage parlor. It was the company that took its employees on raft trips to listen to lectures from members of Earth First!, the firm that had progressive minister Cecil Williams preach at fashion shows, the venture that invited Gloria Steinem to speak at employee meetings.

"I feel so deeply that it is about -- and I'm not saying it's up to the private sector as a, you know, a Republican would say; I'm a very devoted Democrat -- but I think that there's a balance between what has to come out of the private sector and what the companies have to do and what the individuals have to do to really involve themselves in community problems and do more to deal with the solution than of the reason the problems happen," is how Tompkins Buell describes her business philosophy today.

But Esprit de Corp. also ultimately came to epitomize the worst side of another decade, the me decade, the 1980s and its junk-bond daddies and S&L pirates and slick-suited sharpies. After helping manage the company with her then-husband, Doug Tompkins, for 22 years, Susie Tompkins led a 1990 leveraged buyout that gained her control of the company, and netted her an estimated $150 million.

Esprit emerged from the buyout so deeply in debt -- and Tompkins Buell's subsequent helmsmanship left the company in such desperate financial straits -- that it went into technical default on its outstanding loans within less than two years. Esprit then spent five years shriveling to a morsel of its former self before Tompkins Buell relinquished all ownership of and involvement in the company in December.

And now, the once-grand saga that was Esprit, the corporate fairy tale that made Tompkins a spokeswoman for progressive feminine achievement, has descended into a petty, multimillion-dollar spitting match that centers on allegations and counterallegations related to income tax indemnities.

This March Tompkins Buell filed a lawsuit demanding nearly $3 million in reimbursements from Esprit for tax payments she made after selling much of her stake in the company to investors in 1990 for about $62 million. The case's merits are questionable, some people familiar with the situation say.

Her former husband, whose situation parallels Tompkins Buell's, says the lawsuit is a stretch. (Lawyers for Doug Tompkins and Susie Tompkins Buell are now engaged in a separate battle over tax reimbursements Doug says Susie owes him.)

"On the principle of it, we didn't think it was right to go sue Esprit for that money," says Doug Tompkins, who, like his former wife and partner, cashed out of the company under a 1990 stock purchase agreement. The agreement puts him in exactly the same legal posture as Tompkins Buell. But, he says, "we elected not to sue. We didn't feel that this suit had merit."

Esprit de Corp., now owned by a consortium of "vulture capital" investors that bought the troubled firm at discount, immediately banned Tompkins Buell from the premises upon learning of her lawsuit. The company lashed back at Tompkins Buell with court filings accusing her of financial double-dealing and cynical corporate malfeasance. Esprit issued a veiled threat in legal filings that it would scour the world for evidence against her -- unless she backed off.

"Ms. Tompkins, through her operatives, orchestrated a scheme to strip over $150 million out of a once-thriving clothing company she owned, via a classic leveraged buyout, leaving in its wake a financially crippled entity so heavily burdened with debt that its survival was doubtful," Esprit's lawyers wrote in court filings.

Company spokesman John Ordona says Esprit officially stands by the filings: If Tompkins Buell continues with her suit, the company will use its resources to attempt to show she has been involved in serious financial skulduggery, Esprit court papers suggest.

If Esprit is successful, a court "could order Ms. Tompkins to disgorge this ill-gotten gain," those filings say.

Don LaVigne, Tompkins Buell's financial adviser, says the threats are nothing but irrelevant harping from lawyers who should know better.

"You've got to remember that they're trying to put as much pressure on, and make Susie and me look as devious and bad and greedy as possible," LaVigne says. "They're trying to use every tactic they can to get us to throw out the suit."

Adds Tompkins Buell: "It's on their records that they owe me money, and they think they can get out of it."

Whatever the merits of the lawsuit, it represents what would seem to be the last, tawdry, 1990s chapter in one of the more dramatic -- and emblematic -- tales in recent American corporate history.

Esprit was one of the many attempts children of the '60s made to soften the practice of business by wedding it to a not entirely coherent set of leftish sensibilities. In the case of Esprit, the result was charming and successful and disordered, until it was greedy and disastrous and just plain strange.

Susie and Doug Tompkins are now enormously wealthy. The rich actually are different from ordinary people. But in many ways, as Susie and Doug Tompkins went over the last 30 years, so went the best and brightest of their well-intentioned and often self-deluded generation.

No one who knows the whole Esprit story should have been very surprised to see William Jefferson Clinton and Susie Tompkins Buell together at a public dinner the other week, chatting and smiling away as if lawsuits and investigations and the troubles of time could never touch them, not in a million years.

Like its cousin, cinema, the fashion world depends largely on the creation and maintenance of illusion.

The fun, sprightly clothes on the magazine fashion model were likely sewn by tired people in a low-ceilinged sweatshop. The knit blouse you bought on a whim won't likely do anything for your sex life. And the enviable men and women on catwalks are said to suffer at least their fair share of life's sadnesses.

Susie Tompkins Buell, most of whose life has been spent in this illusory fashion industry, is a creature of her environment.

Upon meeting her, one is struck by her guileless graciousness, her engaging, almost purposefully scattered conversational style. But with her takeover of Esprit de Corp. just seven years ago, she joined the ranks of the country's most artful corporate raiders.

She gained, then nurtured during 20 years, a reputation as the model New Age professional woman: stylish, competent, and independent. Yet her shocking blunders as leader of Esprit de Corp. during the 1990s drove a once-thriving company into insolvency within less than two years.

She is famed for her generosity, sponsoring two foundations that give money to schools, environmental causes, soup kitchens, and other worthy organizations. She has been a top California independent contributor to the Democratic Party. Yet, her detractors say, the lawsuit against the shriveled remains of Esprit smacks of greed. And her excesses -- her famed lavish parties, her 44-acre estate in Bolinas, her Pacific Heights penthouse -- seem to give her charity an air of Carnegie-like atonement.

These contradictions are as unremarkable, of course, as they are human. But it is useful to understand them to follow the dramatic rise, the ensuing fall, and the complex present of the corporation Susie Tompkins Buell helped found, because the corporation evinced many of those same contradictions.

It was a company where stringent idealism was an unyielding corporate creed. Employees received 10 hours a month off for volunteer work, and staffed an "eco desk" that looked after environmental education of workers. Company-sponsored employee rafting trips culminated in company-sponsored presentations by environmental activists. Esprit was an early sponsor of the AIDS Walk.

Yet Esprit de Corp. is the same company that was found by the National Labor Relations Board to have illegally interrogated and intimidated $2-an-hour Chinese workers, and then to have shut down a factory to keep them from unionizing.

Esprit de Corp. was borne of the patchouli oil and lysergic acid diethylamide ferment of 1960s San Francisco, where illegal drug abuse, new music, and post-beatnik literary dallying were accompanied by a groovy entrepreneurial culture that included music venues, health food stores, jewelry stands, and back-of-the-VW-microbus clothing companies.

An upper-middle-class girl who had put off going to college, Susie Quincey Russell spanned the bohemian generation gap that existed, in that era, between late-twentysomethings looking for something to do and the younger dropout ragamuffins lounging on the sidewalks in the Haight. Susie fell in with the energetic Jane Tise, and together they founded the Plain Jane clothing company, selling puffy-sleeved dresses to local shops.

"We just started it, we didn't really have a mission," Susie recalls. "I'd been to Europe. I'd seen the fashion in Europe and France, and I just loved it, and it was something that was really missing here. Women in my generation didn't have this free-spirited expression of themselves in their fashion like Europeans do. It was just kind of, you know, predictable. It just wasn't fashion. You couldn't really do any body language with your clothing the way you do now. Now, you see the way people dress, and you know something about them. I came back just with that kind of realization that there was this opportunity.

"A friend of mine was looking for a job, and I suggested we start this business."

Other accounts from those days describe Susie serving largely as Jane's aide-de-camp, hauling racks of clothing in her station wagon. But by 1967, they were making dresses in lots of 100. By 1968 they had filled a $15,000 order from Joseph Magnin. The growth came in part thanks to the help of third partner Allen Schwartz, an East Coast salesman who trucked their dresses from department store to department store, pestering buyers until they agreed to try Plain Jane clothes.

Susie, meanwhile, had married Doug Tompkins, whom she had picked up hitchhiking at Lake Tahoe a couple of years earlier. Tompkins had left a Connecticut prep school, shunned his parents wishes that he attend college, and migrated to California in hopes of making the U.S. Ski Team. He joined the budding Northern California rock-climbing scene. Together, he and Susie became part of the love 'n' Haight party-hopping set, traveling to Mexico together in a Volkswagen bus, and, eventually, moving to then-bohemian North Beach.

While Susie carted cotton dresses around in her station wagon, Doug was founding the North Face rock-climbing store across the street from the fabled City Lights bookstore. Tompkins took merchandising at his North Face store and catalog to high concept. His store's image was fashioned around the just-evolving clean-climbing movement, in which scalers try not to mar their boulders with the sorts of nicks, holes, and spikes that their forebears had.

The business thrived, even though Doug spent much of his time skiing, climbing, and surfing. Still, the store interfered with Doug's larger passions, so he cashed out for $50,000 and took off on a trip to southern Argentina with his friend Yvon Choinard. Choinard would later found an outdoor clothing company named after the Patagonia region they visited. Doug tried again to make the ski team, signed on as producer of a rock-climbing documentary, and did more traveling.

But he eventually came back revived, refreshed, and anxious to get involved in running Plain Jane.

While he knew nothing of the fashion industry, Doug brought to the business a rock climber's sense of precision, and an adventurer's verve for self-invention. He soon began clashing with the other partners, who by 1970 had built Plain Jane into a nearly $2 million-a-year business, and who fancied themselves as doing perfectly fine without his interference.

Doug saw no future in sportswear, which Schwartz had been doing a nice business selling to New York department stores. He didn't like the name Plain Jane, and convinced the partners to change it to Esprit de Corp. The name was "a sort of joke on the Marine Corps," says Peter Buckley, a close friend of Doug's and former CEO of Esprit de Corp. Europe.

Doug's drive to fashion the company in his own image was not a joke, though, and Tise and Schwartz found themselves increasingly sidelined by this one-time athlete's single-mindedness. Touchy-feely rock-climber environmentalism aside, Doug at heart was a merchant. "He knows how to project an image around something. This comes from his mountain-climbing days, and starts with focusing on the real subtle things," says Buckley.

In 1972, the company -- then making $8 million a year -- moved into an old wine storage warehouse that Doug had remade into a posh, California-style headquarters, complete with showers, a full kitchen, and roof gardens. Tompkins set up import-export, and later retailing, operations in Hong Kong. He also waged what has been described in press accounts as a guerrilla war against Tise and Schwartz, making more and more decisions without consulting them. In 1975, the Tompkinses bought out their partners.

The next year, after the company's headquarters were destroyed in a fire, Doug and designer Hanz Keinz rebuilt the company's Minnesota Street offices in a spectacular, polished, bare-wood, barnlike structure that included a greenhouse, a large cafe, a gymnastics area, and a furniture-making studio. The Doug Tompkins era had arrived, and it was to help shape the fashion world for a decade to come.

Doug Tompkins is a very difficult man to reach by phone. He resides in a remote area 150 kilometers south of Puerto Montt, Chile, a port city just across the border from the Patagonia region of Argentina. Every couple of weeks or so, he visits an office in Puerto Montt, where he conducts the business of his Fundacion Bosque Pumalin.

His contact with the outside world consists of a fax machine turned on in the Puerto Montt office, which he checks periodically.

Tompkins has used part of the estimated $125 million he received cashing out of Esprit in 1990 to become the second-largest landowner in Chile, creating the 785,000-acre nature preserve that has earned him enmity in Chilean industrial circles, and fulsome praise from U.S. environmentalists.

Amassing this huge chunk of land hasn't been an easy task. Suspicious Chilean government bureaucrats have held up some purchases. Other balked at Tompkins' offer to turn over the land to the Chilean government on the condition that it be kept a nature preserve. But through single-minded relentlessness, Tompkins has largely prevailed, and his preserve looks destined to become a Chilean national park.

This is the same irresistible nature Tompkins brought to his role as "director of image" for Esprit through the 1980s. In that post, he pioneered the sort of obsessive attention to high concept that now characterizes many image-conscious brands, including Benetton and Versace. He was among the first to link socially progressive rhetoric to merchandising. He engineered the strategy, perhaps now most used by the Gap, of employing anti-consumerism to promote consumption.

In molding Esprit in his own image, Doug Tompkins tried to create a workers paradise for the outdoorsy-minded, attractive, idealistic youngsters he aimed to populate his company with -- and sell his clothes to. Employee programs included discounted tickets to cultural events, subsidized vacations to Doug's favorite exotic vacation spots, and French language and kayaking lessons.

His image campaigns, characterized by perky models who were posed not to look like models, included the work of photographer Oliviero Toscani (now of Benetton fame) and artist/designer Ettore Sottsass. Tompkins learned Italian and made frequent trips to Milan to hobnob with the aesthetic elite. He spent tens of millions of dollars on designers who produced high-concept packaging knickknacks, breezy, bouncy, fresh-faced catalogs, casually breathless magazine advertisements, and sprightly billboards.

The pioneering genius of Doug Tompkins, fashion analysts and executives still say, was to place an abstract image in the public consciousness that evoked the same sensibility year to year, despite seasonal changes in clothing designs.

The result: a brand name known to -- and seemingly desired by -- every 17-year-old girl in the United States, Europe, and Asia.

"Doug had incredible vision, and the timing was right for that vision to be acted upon," says fashion industry consultant Harry Bernard. "Everybody and their mother wanted Esprit. It probably had the strongest consumer franchise of any brand in our business. Esprit was the benchmark against which everybody measured their junior presentation."

As Doug pushed image, Susie came into her own as Esprit's design director. She would travel frequently to the world's great fashion capitals, filter the latest trends through her laid-back, Northern California sensibility, and come up with colors and designs that became the season's buzz.

"Susie's great strength was a nose. She had one of the most sensitive noses for trends. Traveling the world as often as she did, she was able to pull things together from disparate places and bring a common denominator to them," says Bernard.

By 1986, Doug and Susie's potent combination had turned Esprit and its loosely connected overseas divisions into $800 million in yearly sales. Northern California chic graced the backsides of American schoolgirls coast to coast. Esprit's triple-bar logo was the talk of the industry.

But there was trouble in paradise. Doug's stable of Milanese image-makers never really got along with Susie. They regarded her fashion ideas as dross.

Toscani "used to say Susie's ideas were sort of like a fart. It smells bad, but it goes away quickly," recalls Peter Buckley, former Esprit Europe CEO.

Doug and his image team weren't entirely welcome in the design division either. And as the couple's fashion ideas diverged, their marriage foundered. By 1985 they were living apart. Susie recalls the breakup as more a result of the normal course of their lives than any specific catastrophe.

"I outgrew Doug, he outgrew me," she says. "It just was a time that we needed to get on with our lives."

But they didn't. Not right away, anyway. Instead, their bickering took its toll on the company, employees of that era recall.

"It was a challenging environment during that time. Both Doug and Susie had very strong visions, but some of the synergy had fallen away, so it did make it more difficult," says Danny Kraus, who worked for the company from 1986 to 1996, mostly in the public relations department. "It was more difficult because people knew there was internal conflict."

The company's problems went beyond Susie and Doug's marital troubles.
Under the couple's tutelage, the company had enjoyed more than a decade of amazing success, and that success had given Esprit a can-do-no-wrong air of invincibility. But suddenly, in the fall of 1986, Esprit's pastel and polka-dot fashion sensibility fell from vogue. The fall line sold poorly. Subsequent collections were similarly blase.

It seemed Susie had lost her nose for fashion.
Doug, meanwhile, was pursuing his vision of a chain of Esprit superstores. The stores' spare-no-expense Italian interiors were meant to dazzle customers like its Oliviero Toscani ad campaigns had. At the same time, the company-owned retail outlets would allow Esprit to escape the tyranny of department stores and their buyers, who were ever more difficult to please as the casualwear garment business became more competitive.

While physically stunning -- Doug spent a reported $15 million to fashion a store out of an abandoned Los Angeles skating rink -- the superstores were economically foolish. Press accounts described such accouterments as Uchida fixtures, Zolatone walls, steel staircases, metal grids, chrome handrails, Sottsass sculptures, Alpi wood, and Vicenza stone.

The idea of selling Esprit clothes through company-owned retail stores may have been forward-looking: The Gap and its Banana Republic subsidiary have spun the company-store concept into an empire.

But, Buckley recalls, "Doug completely ignored the first three rules of retailing: location, location, location. He built these superstores in bad locations."

The L.A. skating rink, like Esprit's San Francisco outlet store, was built in a warehouse district.

By 1988, the bickering, the money drain created by the stores, and troubles with the Esprit clothing line were combining to put the firm in a real financial crunch. While Susie and Doug painstakingly cultivated the company's image and style, Esprit's back office -- the inventory controls, purchasing and delivery systems, manufacturing oversight, and other details crucial to what is essentially a commodity manufacturing business -- had been badly neglected. As a result, when sales growth sputtered, profits evaporated.

What's more, Susie and Doug's bickering created a paralyzing standoff, stymieing either partner from capitalizing on their ideas, friends and associates recall.

From the inside, it looked as if Esprit were two different, competing companies, Buckley says. "He would shoot advertisements he wanted to shoot, she would shoot things she wanted, and they were fundamentally contradicting each other," he says.

It was Susie's lawyers who appeared before a San Francisco judge and asked that an independent director be appointed to mediate between the quarreling partners. As part of a resulting agreement, Susie and Doug jointly appointed three new members to Esprit's board of directors. The new board would decide whether Doug or Susie would guide Esprit.

Doug, who unlike Susie is quite comfortable speaking the language of corporate executives, won the battle of presentations to the reconstituted board of directors, hands down.

Under the new scheme, Doug would resign as Esprit CEO and be replaced by Corrado Federico, who had been acting as the firm's president since its 1986 financial troubles. Doug, meanwhile, would direct all of Esprit's creative activities -- both clothing design and marketing image.

Susie, according to a press release her publicist issued at the time, would be bought out and step down to pursue her social activism. The change was first announced at a surprise employee meeting. Hired, as they were, on the promise of becoming members of a youthful Utopia, Esprit staff had been kept largely in the dark about the details of the Doug-and-Susie unpleasantness.

The marriage was formally dissolved in June 1988, 23 years after its North Beach beginnings.

Susie bought a 44-acre spread in Bolinas.
Doug went about running the company. But rather than bring Esprit into a triumphant new era, Doug immediately set to bickering with the company's directorship. As the corporation's new fashion czar, he assembled a 1989 clothing line and marketing effort that suggested purchasing Esprit products was an act of anti-consumerism. Advertising copy told customers that if they didn't really need another shirt, "don't buy it."

"I wanted there to be less style-changing, less products that were obsolete before you even produced them. I wanted to see more durable products that people would use year after year," Doug Tompkins says.

In hindsight, it wasn't a terribly bad idea, says Buckley.
"Doug wanted to make products like the Gap and Banana Republic later did. He wanted to sell simple, well-made garments, and a lot of them," Buckley says. "Susie had wanted products to be trendy and hip."

The change rankled the company's new brass. Deep ecology was a fine thing for millionaire ex-hippies to dabble in, but it didn't have much to do with running a multinational corporation. Corrado Federico and Susie's representative on the Esprit board, San Francisco investment banker Isaac Stein, began to characterize Doug as an undependable dreamer who had lost interest in running the business.

"He was seen as erratic and wild," Buckley says.

As Doug bickered with Esprit's management, a new back story began to emerge in the fashion industry. The whisperers were many: Esprit had lost its soul when it lost Susie, people began to imagine; now it was foundering along as just another manufacturer of knockoff clothes. Wasn't it Susie who went on the worldwide buying trips? Wasn't it Susie who had been director of design during Esprit's heyday? Wasn't it the always-stylish Susie who was always bounding gleefully in the Esprit catalog?

The couple's dissolution agreement continued to follow its prearranged course. In mid-1989, the two agreed to allow Goldman-Sachs bankers to determine a price at which Doug would buy Susie's shares. If Doug for some reason failed to buy Susie out, the entire company would be sold at auction, with the proceeds split between them and Esprit Europe, a separate corporation that held a piece of Esprit U.S. The auction, if necessary, would be held June 1, 1990.

Doug brought on the San Francisco investment bank of Montgomery Securities to put together a financing package. Under that plan, Peter Buckley would be in charge of Esprit operations while Doug would direct image and design, recalls Buckley.

But nothing happened.
The four months the agreement had allotted Doug to buy Susie out came and went. Another month passed.

To Susie and her supporters, it looked as if Doug were playing hardball. By waiting until the company went up for auction Doug seemed to hope to buy Esprit for less than the reported $380 million Goldman-Sachs appraisal. He was planning to pull one over on Susie, it appeared.

Susie bristled, then acted. With Stein as her adviser she assembled her own group of financial backers, with the aim of going head-to-head at auction with Doug.

Doug brought on Luciano Benetton as a 50 percent partner.
Susie brought on Bruce Katz, founder of Rockport shoes.
Then, during the weeks leading up to the auction, something happened that should have seemed obvious, but came as a complete surprise. Outside bidders began to appear. Reebok, the tennis shoe manufacturer, stepped to the plate, as did Tuntex, a Taiwanese manufacturer. A bidding war was brewing that neither Tompkins was cut out to win.

Esprit was poised to become just another division of just another conglomerate, a notion offensive to everything the two people who had started the company believed in.

Doug called Susie, they talked, and he agreed to sell to Susie at a lower price than he would have received from the Taiwanese.

"I made an inside deal with her to keep it inside the family," Doug says. "I took a $40 million bath to keep it with her. I could have spent that money on our environmental foundations. It has turned out to have been a bad idea, but at the time, I had my children to consider."

Doug now says that he assembled his financial backers, his new management team, and his bidding strategy as a ruse to drive up the price of his company at auction. His critics maintain that Doug played a risky hand, and lost.

Whether Doug was actually a bad gambler or an astute bluffer, the end result was the same: His former wife was at the helm of Esprit, a place, she said in interviews, that she'd always dreamed of occupying.

It was June 1990, and a new era had dawned. Flush with promise, Esprit de Corp. U.S.A., its backers, its employees, and its co-founder were poised to ride one of the most spectacular collapses in the history of fashion.

Susie's triumph was celebrated among shadow wives throughout America. She was the subject of profiles crafted by Working Woman, CNN, and countless other media. Morale at the company was the best it had been in years. Unfettered by the marital bickering that had poisoned the company during the previous five years, Susie would return Esprit to its glory days, with new, more mature-minded clothing lines that offered the kind of fashion verve Doug threatened to strip from the company.

Esprit's advertising played on the new hubris.
"When I was little, I wanted to be a nun, a cowgirl, a cheerleader, a professional ski racer," Susie muses triumphantly in an advertising video produced not long after the buyout. "Mother said to me a dozen times: 'You'll never amount to a row of pins.' "

With Federico as CEO and Stein as chairman of the board, the company hired Neil Kraft, a Barney's department store advertising executive, to become the new director of image. Susie fired the design team Doug had installed, and hired a new team she felt would best craft the more mature look she hoped to create.

But just as Susie had assembled her new team, Federico resigned. Stein was appointed to replace the former CEO, and Susie went about putting her imprint on the company. The first obvious evidence: an $8 million advertising campaign in which customers were asked to suggest ways they would change the world. The answers -- including "I'd keep a woman's right to choose"; and "I'd teach the world to groove" -- were fashioned into print and television advertisements. The ads were a rousing success from a publicist's standpoint. But they didn't seem to be selling clothes.

In 1992, Kraft, who had overseen the production of the ads, resigned.
In what was to become a continuing string of CEO turnovers, the Swiss fashion executive Fritz Ammann was hired in early 1992 to replace Stein, and, it was hoped, bring an overarching fashion/business sensibility to the company. Ammann instituted a series of cost-cutting measures, including the elimination of Esprit's "eco desk," which helped employees volunteer for environmental projects. He canceled the Esprit lecture series, the Esprit newsletters, and the Esprit employee stock ownership program.

"They were eliminating this trivial stuff, which didn't really cost that much, and not taking care of the essential stuff," Buckley says.

The most notable touch of the Susie era was the introduction in March 1992 of the Susie Tompkins Signature Line. These were the mature-minded clothes that Susie had dreamed of designing, and their initial presentation at an avant-garde New York fashion show appeared a triumph of the Susie sensibility.

This was no ordinary fashion show. Susie flew San Francisco minister and political powerhouse Cecil Williams to New York, where he gave a rousing sermon about violence, racism, drug abuse, and love. The show closed with a gospel choir concert. It was scandalous, it was innovative.

The clothes were a dud.
"It looked like old ladies-wear," recalls David Wolfe, creative director of the Doneger Group, a New York fashion consultancy. "It was such a shock to everybody. There were dowdy housedresses, dark colors. It was totally out of sync with the rest of the season. This meant she was terribly ahead or terribly out of touch, and since it didn't sell, it meant she was out of touch."

The year the line was introduced, Tompkins was removed as the company's design director.

While Esprit's management, fashion, and advertising troubles may have appeared daunting yet repairable, the company's back office -- its nuts-and-bolts business end -- was an absolute disaster.

Though the fashion industry is very much like the movie business in its emphasis on style and glamour, it is also a manufacturing business with narrow profit margins.

Companies must decide months ahead of time what sorts of clothes will sell, buy acres of cloth to sew them from, and deliver hundreds of samples to sales agents in time for the pre-season. Once garments are sold on the basis of these samples, complex orders must be filled, on time, to department stores, free-standing retail outlets, and other sales locations. The more different types of garments are produced, the more exponentially difficult the logistics of this process become.

And in its new-era anxiety, Esprit was trying to cover its bases by producing hundreds of different pieces.

"In the U.S., tons of uncut cloth would end up in warehouses in Hong Kong. I looked at their operations, and I knew the shit was about to hit the fan. Fundamentally, it looked like the people they had in charge did not understand the business," says Buckley, who bought Esprit's then-insolvent European arm from Doug Tompkins in 1978 and turned it into a $400 million corporation.

"Clothing is a very low-cost business. Department stores were getting leaner when Susie took over, and there was a lot of pressure on prices. Esprit simply didn't have the discipline to operate on a low-price basis. The whole sequence of events, from their bookkeeping to manufacturing, wasn't functioning. Their motor wasn't firing on all cylinders."

It became very clear, very fast, that Susie and her backers had got in way, way over their heads. The fashion industry was much more complicated than Stein and his S.F. deal-makers had fancied. And for Susie, running a company wasn't nearly the enjoyable experience it had appeared it might be in 1990. She came to bitterly resent the executives she was forced to hire.

"It isn't my fault that it was having problems. There was management that I hired, but the problems weren't ones I was responsible for," Susie recalls. "It got to a place where we couldn't control what was going on. We had to hand it over to business types to handle it, and that just wasn't something we were into. I had an understanding about how a company should be handled. You should have a beautiful workplace, you should have benefits for the employees. To live with the way of the new management, to make the company lean and mean -- that was a big adjustment."

In 1992, just two years after the original buyout, the floundering Esprit was forced to restructure its loans. By the end of that same year, the company went into technical default. Bruce Katz, the Rockport shoe company founder who had signed on as a partner, was bought out after he filed a lawsuit charging that Susie and her partners had attempted to defraud him.

In 1993, Ammann was replaced by Cupertino management consultant David Folkman.

By the mid-'90s, after five years of appallingly incompetent management, Esprit's U.S. sales, not including sales of the separately owned and managed European and Asian divisions, had shrunk from $360 million a year in 1990 to around $200 million.

The 16 insurance companies and other financial institutions that had participated in Esprit U.S.'s debt restructuring lost hope of ever being paid in full. The trademark that had come to define California style was becoming known inside the industry as a retailer of cheaply made knockoffs. The failure was so rapid, and so complete, that some in the fashion world are still stunned.

"You don't expect somebody to go so wrong when they've been doing it so right," David Wolfe says.

Just as miraculously, Esprit does not seem likely to disappear. It may even thrive.

Last January, Jay Margolis, former vice chairman of both Tommy Hilfiger and Liz Claiborne, with the backing of the vulture capital firms Oaktree Capital of Los Angeles and Cerberus Partners of New York, bought Esprit's defaulted loans at 65 cents on the dollar, for a total of $80 million.

Margolis in turn hired turnaround specialist Alison May, who was a former CEO of Patagonia clothing and a one-time Chase banker, as the company's chief financial officer.

The company is investing in new computer systems, and Margolis says he is revamping Esprit's purchasing, manufacturing, design, and advertising divisions.

Sales are rebounding, thanks in part to a translucent Esprit beach shoe that sold more than a million units this year. From $220 million in sales last year, the company hopes to reach between $230 million and $240 million this year, and $300 million next year.

Margolis is reinstating some of the canceled employee benefits, and adding some quirky new ones that evoke the old Susie-and-Doug days: A messenger is sent each week to an outdoor farmers market to buy fresh vegetables for employees who wish to order some to take home. Bus stops in New York and San Francisco now sport Esprit placards. And the company is issuing a catalog for the first time in years.

The idea, Margolis suggests, is to erase Esprit's last seven years.
"This was a great brand that needed to be repositioned. Until 1988, it was such an amazing company," Margolis says in his glass and bare-wood office at Esprit's Minnesota Street headquarters. "In building a brand, we want to do what Doug Tompkins did. He built consistency and respect for the label."

The vulture capital firms hope to bring Esprit public during the next five years or so, May says. By then they will have built a few dozen more Esprit retail stores and completely refurbished the company's logistical and financial operations. It's still too soon to say whether Esprit's latest incarnation will be its last, but the market seems optimistic.

"I feel very, very strongly that God must have sent Jay to the board of directors, because I couldn't have imagined any other person who had the attributes to pick up that particular mess and put it into shape," says Harry Bernard.

Susie Tompkins Buell says she's glad to have Esprit out from under her. Even when she wasn't directly involved in management, she says, she worried constantly about the company. And it's been nice to get on to other things.

Tompkins Buell's assets were pretty well protected in the buyout deal arranged by Isaac Stein, she says, and she's financially very comfortable.

"I don't know what you call them. They're not investment bankers. They make deals and then they get a piece of it. It's just a deal, the art of the deal, that kind of thing," she offers by way of explanation.

While she is no longer considered the model New Age entrepreneur, she has another image now, in some ways just as flattering as the old one. By spending a portion of her millions on lavish parties and worthy causes, she's become one of San Francisco's most prominent socialites, and a respected philanthropist.

The fact that her name has been mentioned in front-page stories describing President Clinton's campaign contribution scandal has added to her public persona the role of harried political activist.

Bill Clinton refers to her as "my friend Susie Tompkins" in speeches. He might well; she contributed $158,200 to the Democratic National Committee during his 1996 re-election campaign. She recently had the president over for a fund-raising dinner -- hence the FBI visit last month.

In San Francisco, which likes its ostentatiousness served with a tasteful portion of liberalism, she has become one of the city's most celebrated hostesses.

She cemented this reputation last September with her marriage to local real estate developer Mark Buell. The reception was held on a pier at Fort Baker. The fete was a paean to Tompkins Buell's sense of stylishness, centered on a 1940s theme.

The wedding cake was based on a recipe for Blum's coffee crunch cake, which used to be served in the Blum's coffee shop in the basement of Macy's and was a midcentury San Francisco institution. Tompkins Buell had the bakery creating the cake track down the owners' heirs and buy the recipe, bakery sales director Christine Iriartborde says.

"The floor was covered in sisal carpeting and small cafe tables with little chairs there and an oyster bar," says event designer Stanlee R. Gatti. "It was all burgundy. The center portion had an island with different levels to put liquor on. It had simple elements with a raised area where liquor goes, in a simple oval shape. They danced to the Count Basie Orchestra."

This is as it should be, Tompkins Buell says.
"You know, I really believe people should have fun in this world," she says, before drifting, in the same, uninterrupted sentence, into a lament about the opaque smog that recently formed over Indonesia as a result of forest fires. "I just think we don't know what we are doing to ourselves."

These ideas are part of the same basic, modern, clean, and comfortable Esprit garment. Lawsuits; Earth First!; leveraged buyouts; political fund-raising; copyrighted cakes and burgundy carpeting -- all might be summed up by one of Susie Tompkins Buell's more famous newspaper quotes:

"Social awareness is the lifestyle fashion."
Or, as she now says, a bit less obtusely, "It's a real inspiration to me to live up to that name: Esprit de Corp.

About The Author

Matt Smith


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