Noemi Goureau and her children, Nicolas Goureau and Stephanie Menkin operated a women’s clothing boutique in Greenwich, Connecticut, along with six other locations throughout the U.S. The Greenwich store was founded in 2008, but the family’s first retail store – Fopps – was established years earlier in Manhattan. The Greenwich store, named Courage.b, is the focal point of Marcus’s examination of the business’s woes. The episode aired October 14, 2015, during Season 2 of The Profit.
Marcus Visits Courage.b in Greenwich
The Profit Season 2 Episode 9
The first thing Marcus saw when he approached Courage.b were the words, “60% Off” written on the window. That was not a promising sign. Entering the store, he saw products everywhere, and it didn’t look organized. He met Noemi, designer; Nicolas, in charge of Operations; and Stephanie, who was responsible for the company’s finances. He soon learned that the company made $5 million in sales the previous year, but had lost $500,000.
Marcus asked about the company’s margins. They were at 50%, while the average margin for retailers was 70%. Marcus wondered who did the merchandising and was told that the local managers were in charge of their stores. Marcus knew that if the company was going to succeed, it would need to bring in merchandisers to build a brand and help the stores achieve a cohesive look and feel.
Marcus wanted to know why the business was losing money and was told it was inventory that couldn’t be sold. Noemi had made some bad design decisions that were now stored in the inventory room. Marcus toured the space and could see the poor design decisions in plain view. The style was all wrong, and the quality of the fabrics was subpar.
How did those items get onto the floor in the first place? Apparently, Noemi’s designs were not checked by Nicolas to see if they were a good fit for the store. Noemi said she had a bad year, and then related how she and her first husband had opened their Manhattan store, Fopps, in 1987. He was diagnosed with cancer and died soon after. She quickly remarried, but when her second husband divorced her, he sued for $250,000. Noemi’s designs suffered during that time.
Marcus Goes to Manhattan
Marcus visited Fopps and noticed the same kind of disarray that plagued Courage.b in Greenwich. The manager told him a good day brought in $1,500, but the rent was $28,000. They were cash-flow negative and had 1.5 years left on the lease. Marcus’s take-away was that Courage.b had good locations, but design inconsistencies and bad merchandising.
However, when he visited the corporate offices, he saw a cleaner look. Stephanie showed him their best-seller, a long cardigan called the “Duster.” It retailed for $99 and cost only $11 to produce, but the fabric was of poor quality. Stephanie estimated that of their $900,000 in inventory, $400,000 included items they couldn’t sell. Marcus knew there was tremendous potential in fashion because of the very large markups. He would need to change the product and the process, as well as add money in order to make the company successful.
Marcus met with the three family members, ready to discuss a deal. But first, he asked Nicolas what he thought was a fair offer. When Nicolas said, “$1 million,” Marcus countered. He would offer $800,000, demand full control of decision-making, and 50% of the company. All three pushed back hard, so Marcus asked Nicolas what he thought Marcus deserved. Nicolas said, “10%”. Marcus was insulted. He said he could easily give them a loan, and when it wasn’t repaid, take the company. But he didn’t want to do that.
Marcus’s final offer included giving partial ownership to Noemi and Stephanie. He would still offer only $800,000 but would take 30% of the company, give Nicolas the majority stake (40%) and grant 15% each to Noemi and Stephanie, leaving Lemonis to control all of the decision-making. Nicolas shook his hand, and Marcus wrote the biggest check Nicolas had ever seen. Of the $800,000, $300,000 would go towards renovation, $300,000 towards inventory, $100,000 for working capital, and $100,000 to pay off existing debt.
Marcus then met with the staff and let them know about the upcoming changes. Noemi would no longer be in charge of design, and all of the stores would be rebranded and remerchandised. As for the product, he planned to buy higher-quality fabrics from better manufacturers.
The Plan – 5 Pillars
Marcus knew Courage.b had an identity crisis – they didn’t know who their customers were or what they wanted. Marcus intended to present a brand that was more youthful and innovative. He wanted to streamline the merchandise to include five foundational products:
- The Duster (in a higher quality fabric)
- Classic, simple dresses
- Clean, modern tops
- Pants in a greater variety
- Bags, particularly a signature bag
Their fashionable messenger bag would be the signature bag. They would name it the Courage Bag, and Marcus wanted Nicolas to develop 5-6 variations, including a diaper bag, a duffel bag, and a computer bag.
The Plan – Fix the Designs and the Fabric
After closing the Greenwich store for about a month and liquidating the existing merchandise, Marcus brought in a designer with a good track record that would help establish a brand identity. Next, Marcus and Noemi visited a manufacturer that would provide higher-quality fabrics. They would raise the price of the Duster from $99 to $145, and even though their costs would be higher, they would make a better margin from a higher-value item.
Merchandisers were brought in next. They were tasked with creating a fresh, inviting showroom with an open floor plan that would improve flow and increase the visibility of the merchandise.
But there was a minor setback when Marcus went to see how the product design process was going. Nicolas had been working on a new prototype for the Duster, without any input from Noemi. Mother and son were arguing about it, and Marcus told Nicolas he was supposed to work only on ideas for the bag. Marcus knew they would have to work out their issues themselves – he was not a therapist.
For a period of time, everything seemed to be going well. But then Marcus walked in on Nicolas screaming at his mother. Marcus looked like he had had enough of the family drama, and Stephanie begged her brother to stop. She was afraid that Marcus would walk away from the deal altogether. But Marcus was interested to know where the anger was coming from. He and Nicolas talked privately, and Nicolas admitted that his sadness (about losing his dad and the struggles that ensued afterward) had manifested in anger. Marcus gained respect for Nicolas because he was able to open up. Nicolas reminded him that Noemi was his mom first, and employee last.
Grand Reopening Day arrived, and the family was in for a big surprise. The Greenwich store was bright and open, the merchandise looked well-made and organized, and a showpiece chandelier was hanging from the ceiling. Stephanie remarked that Courage.b looked like a brand, and Marcus asserted that the customers could finally see what the store was all about. He also felt positive about the family dynamic moving forward. Even though he admitted that most of the time, people are who they are, these people were truly transformed.
Courage.b After The Profit
Courage.b is no longer Courage.b. It’s been folded into the Marcus Lemonis Fashion Group, which includes retail stores formerly known as Blue Jean Bar, Denim & Soul, Runway, Final Sale, and Union 73. The stores are now branded “Marcus’ and are located in fourteen cities throughout the country. The first “Marcus” branded store opened in Chicago in 2017, and in 2018 Lemonis decided to expand that concept to all of his stores.
Marcus describes his new shopping concept as a “contemporary multi-label womenswear and lifestyle boutique.” Stephanie Menkin is the President of Marcus Lemonis Fashion Group, and her brother, Nicolas, is still involved with the company. It’s been more challenging to determine what Noemi is up to these days, and it’s unclear if she’s still involved with the company.
Take a look at the MARCUS Instagram to see the products. This social media account doesn’t have a lot of engagement but does have more than 36,0000 followers. And video from the store’s grand opening in Chicago shows how Marcus turned a pumpkin into a luxury carriage. Marcus Lemonis is undoubtedly suited for the fashion business!
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