Sal Loretta turned his simple embroidery company in Queens, New York into a diverse conglomerate. Sounds good on paper, but the end result was a disorganized, unfocused mess of a business that did more to confuse than to sell product. The company used sales of customized hats and T-shirts to generate up to $2 million. Using his own savings, A nearby warehouse was built out into a sign company, a restaurant, and a sports complex – (?!) – all owned by Sal.
With Artistic Stitch struggling to make a profit and over $1.5 million in debt, Sal turned to Marcus Lemonis and The Profit to see if he could help turn things around.
Artistic Stitch on The Profit
The Profit Season 2 Episode 10
Marcus started out by visiting the Artistic Stitch Sports Complex. He could feel the stress on the shoulders of the staff and the strain on morale that all that debt was creating. He sat down with Sal and his sales manager, Nick, to go over the finances and try to figure out their debt issues. Profits had dwindled from $900,000 to just $100,000, a shocking loss by any account. They owed over $600,000 to a variety of vendors and had come up $140,000 short per year. Sal had been neglecting his personal finances and expenses to pay his employees and keep the business alive.
The property was worth $3 million more than Sal had paid for it. Marcus looked at the debt incurred with the purchase of it and felt Sal was playing the equivalent of a high stakes poker game with Citibank and Chase. Marcus told Sal that he was not interested in investing in real estate. He was a small business investor and if he was to work with Sal he needed to know that Sal was committed to fixing the problems within his business. Above all, Sal would need to trust Marcus – as Marcus would need to take total control of the business and 50% equity in the company in order to save it.
Although he didn’t seem too keen at first, Sal eventually warmed up and agreed to Marcus’ terms. These terms included offering 10% of the business to a valued employee named Fabio, who had been with Sal since the start of the of embroidery business. With the terms all set and agreed upon, Marcus cut Sal a check for a cool $600,000 so he could pay off the company’s debts.
Marcus told the assembled group of employees that he was now in charge and suggested that they acquire some corporate accounts for the embroidery business, the side of the company that was generating the most profits.
Artistic Stitch Sales Pitches
When Marcus began grilling Nick as to how, exactly, they went after new business, it became painfully obvious that Nick did not have the answers. Nick told Marcus he typically simply used the Yellow Pages to seek out clients. Fabio seemed to know much more about the sales process and history than the sales manager did. Though he was not willing to hire a sales staff, Nick had never personally pitched Artistic Stitch to any big companies and was paid a salary with no commission built-in.
Marcus wanted to see Nick in action, so the two headed to a local firehouse to see his sales pitch first-hand. Nick had no concept of how to sell the business and lost his nerve, stumbling and cursing while talking with the client in front of Marcus, who eventually was compelled to take over the conversation, asking about their business and their relation to other fire companies in the area.
Marcus told Sal that changes need to be made in the sales department. Nick did not understand even the basics of making sales presentations and Marcus decided to put Nick on a 100% commissions plan based solely on what he sold, promising to give Nick all the resources and support he needed to get on board with the sales aspect of the business.
Wanting to eliminate the legs of the business that were failing to bring in revenue and expand those that did, Marcus said the focus of the company would center on the embroidery and silk screening business and grow out a retail clothing product line.
Sal had told Marcus that all of the debt that had piled up was from the business, but when Marcus dug deeper after speaking the accountant Giovanni, he discovered that Sal and his wife had used the business credit card for personal purchases. Marcus was understandably taken back and told Sal he was not going to finance Sal’s personal debt.
Willing to give Sal a second chance, Marcus let him know that he could not lie to him and he was close to bailing for his deal with Artistic Stitch.
Marcus created a design center and invested in equipment that would allow customers to create personal silkscreen designs.
Financial Picture Worsens
As the physical space of the building was beginning to pick up, Marcus made a disturbing discovery. Artistic Stitch was in worse financial shape than he was told, with the business in arrears by nearly $150,000 in back taxes and rent. Marcus was quickly running out of patience and met with the landlord of the building, who also feared that Sal had been dishonest in his dealings with him. The landlord told Marcus that Sal did not even have a certificate of occupancy for the property and that he had a summons to criminal court, as Sal had never completed the repairs needed.
Basically, Sal did not have the authority to strike the deal he made with Marcus and said that Artistic Stitch was using an old certificate of occupancy. The landlord wanted to deny Sal the right to purchase the building. Marcus informed Sal that his landlord could actually go to jail because of his poor and dishonest dealings with him.
Marcus transformed the lobby of Artistic Stitch into a retail space called Queens Vibe and secured some larger clients like AT&T and put in over $100,000 more for renovations.
Where Are They Now? Artistic Stitch After The Profit
Somehow, against all odds, Artistic Stitch seems to be hanging on…by a thread.
Even though Sal did the exact opposite of what Marcus advised, Artistic Stitch seems to be succeeding in spite of itself. They still have the building and have sold over 300 Groupons for the rock wall and batting cages. Reviews seem mostly positive, though the Artistic Stitch Sports Complex has mixed reviews on Facebook, with users complaining that Sal is running a scam and not paying his bills.
Their website is still operational, with recent flyers advertising a basketball clinic in April of 2020. However, the fact that this event (and all others) would have been canceled due to COVID-19, and the fact that the website makes no mention of the COVID-19 crisis or any rescheduling, makes this reporter extremely skeptical of the health of this business.
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