For 35 years, Bernie Leifer has been the guiding force behind SG Companies.
Under his steady leadership, the Hackensack, N.J.-based firm transformed from a small domestic slipper manufacturer into a global licensing giant spanning both the footwear and apparel businesses. Over the years, the president and CEO — who is set to retire next week — navigated times of tremendous change within the industry, adapting and evolving the company to stay ahead of the curve.
Leifer joined SG (formerly S. Goldberg & Co.) in 1981, armed with 20 years of experience in banking. He quickly put his keen business instincts to work mining new opportunities for the privately owned firm, including delving into the import business, chasing hot licensing deals and expanding into the clothing market.
Today, SG juggles an ever-growing stable of entertainment and lifestyle brands, among them “Sesame Street,” “Power Rangers,” “Pokémon,” Perry Ellis, Chinese Laundry, Dockers and Harley-Davidson. The company produces a range of adult and children’s footwear including slippers to sneakers, as well as sleepwear, jeans, bathing suits and sportswear.
“SG was almost 90 years into its history when I came on board, and it had a successful niche in slippers. But I felt it was important to be more diversified,” said Leifer, who turns 72 in March. “It was very apparent that we needed to become an importer and expand our product offering, and that opened up a lot of new opportunities for us.”
On March 9, Leifer will hand over the leadership reins to former Reebok and Stride Rite executive Matt Feiner, who has been working alongside him for the past year. As he prepares to step away from the company he’s shaped for more than three decades, Leifer paused to look back on his long career, the changes he’s seen and SG’s biggest successes.
Footwear News: How did your many years in banking prepare you for SG?
Bernie Leifer: My time in banking taught me that I am blessed with sharp instincts. I have a pretty good nose for judging people and situations. That trait served me very well at SG. I trusted my nose, and it gave me the courage to make difficult decisions. My business acumen was the one thing I could bring to SG because even after all these years, I don’t consider myself a shoe dog; I consider myself an executive who knows how to run a business. I didn’t get in the middle of the design and selling. I’ve been through literally hundreds, if not thousands, of footwear factories, and I can’t stop and tell [the workers] that a shoe is being made wrong or that it has too much of this or too much of that. What I brought to the table was the macro direction and leadership.
How did you transition the firm from its niche in slippers to a major resource for many different categories of footwear?
BL: When I first came to SG, we were strictly a domestic manufacturer. We had a well-oiled, 600-person factory in Hackensack, N.J., that was producing about 50,000 pairs of slippers a day. We were much smaller — probably 15 percent of the size we are today. Within six months of my taking over, we started to import product. We initially used other companies to source for us, but after a couple of years, I realized we were leaving a lot of money on the table. So we decided to open our own office in South Korea and import the types of products we weren’t making in New Jersey. We added seasonal footwear such as flip-flops, sandals and EVA styles, and that opened the door to making athletic shoes, rainboots, canvas vulcanized styles and many other categories. Over our history, we’ve sold more than 1.5 billion pairs of shoes, which is a huge number.
What prompted the move into the apparel business in 2006?
BL: We went into apparel because we saw that retailers were moving toward having fewer vendors. They were always trying to cut back. And the licensors, too, didn’t want as many licensees. So we felt we could leverage our overseas sourcing operation, internal design expertise and back-office [functions] to expand into other product categories and become more important to retailers and the licensing community.
How difficult was it to find a foothold in a new market?
BL: It was challenging. We were a smaller, privately owned company going up against large public companies with access to significant capital and resources. That’s why we decided to first focus on flame-retardant pajamas — because it’s a category that’s not easy to make. Even then, there were half a dozen major sleepwear companies, all with proven track records, whereas we had never made a single unit. Initially, we struggled to get licenses and generate sales. We lost a lot of money in the first few years, but then the tide began to turn. We got some better licenses and sales picked up. This year, our apparel division will probably account for about 30 percent of our overall business.
What have been the company’s most successful licenses over the years?
BL: In footwear, the biggest license we ever had was “Power Rangers,” and now we have it again, with a new movie coming out [next month]. “Pokémon,” “Teletubbies” and “Sesame Street” also were huge for us back in the day, and we have all three licenses again now. “Despicable Me” and “Minions” have been very successful. But even evergreen licenses like these have ebbs and flows.
The licensing business is notoriously risky and fickle. What’s been your secret to successfully navigating it?
BL: There really is no science to it. Licensing is an incredibly volatile, complicated business, and it comes down to having courage, good instincts and, quite often, luck. I remember offering $4 million for a license, which we did not get, and it ended up not performing well at all. Then another time, we paid $50,000 fora license, and we did more than $50 million with it the first year. There are always going to be big hits and also big misses, where you spend a lot of money on a deal and don’t sell any shoes at all. The key is that you have a better batting average than your competition.
How do you know when to bet on a license?
BL: You have to look at who the licensor is; whether it’s a toy, movie or video game; the marketing budget behind it; the target audience. Still, there is so much entertainment content available to kids these days across many different platforms that you never really know where the next hit license will come from. We did a huge business in emojis last year, and that wasn’t even licensed — nobody owns that.
What are the biggest changes you’ve seen in the industry over your long tenure at SG?
BL: All of the consolidation is a monster change, for sure. You’re seeing it among retailers, toy companies, licensing companies — everyone. And obviously, the shift of power from brick-and-mortar retail to the dot-coms and giants like Amazon is a major evolution for the industry. Sourcing has changed dramatically, duties have gone up, and there are a lot more product safety and materials regulations. Really, I don’t know what hasn’t changed in the last 35 years.
How do you see the overseas sourcing situation playing out in the future?
BL: Taking President Trump off the table — because who knows what is going to happen under his administration — China will continue to represent the lion’s share of shoe manufacturing, but there is always going to be movement to other countries. You can’t put all of your eggs in one basket because what happens if China suddenly goes away? I’m not betting on that, but anything is possible. We see Vietnam, Indonesia, Thailand and even Africa growing. But it takes the big companies to move en masse first because the skilled workers, materials and infrastructure just aren’t there yet.
Why is Matt the right person to lead the company forward?
BL: Matt and I have very different personalities and leadership styles, but we also share a lot of commonalities. We both have a passion for running this company and feel strongly about the family flavor that permeates it. Matt is much more of a product person, coming from Reebok and Stride Rite. He’s also much more of a sales driver than I was. He knows a lot of people in the industry. And probably one of his biggest assets is his familiarity with the online world. We’ll be maximizing our relationship with Amazon based on his prior experiences. These qualities and traits are all critical for SG’s continued growth. Matt is going to do a great job — he came on the scene at the right time for us.
Do you feel good about the position in which you’re leaving the company?
BL: I feel unbelievably good. I’ve poured my life into this company, so knowing I was in the ninth inning of the game, I wanted to make sure I left it in the best shape I could. Over the last several years, I’ve spent a lot of my time building up our infrastructure and systems. We opened a 100,000-sq.-ft. warehouse in California, we tripled our showroom space in New York and we signed a long-term lease on our New Jersey office. We also put in a multimillion-dollar computer system three years ago that’s starting to pay dividends. We invested in new warehousing and scanning equipment, and we expanded our role in packing and shipping directly to consumers. We’re well set up for the future.
How is 2017 looking so far?
BL: I actually think this could be the biggest year in our long history. We have five blockbuster movies coming out [tied to our licenses], which are getting great [marketing and promotional] support from their respective entertainment companies. One of our newer properties, The Elf on the Shelf, is showing some nice promise. And we just signed Hatchimals for footwear and sleepwear. It was one of the hottest toys this past holiday season, so we hope it will be a huge hit for us.
Where do you see the company five years from now?
BL: I think e-commerce will be a much more significant portion of our overall sales. We already do a healthy online business with retailers such as Amazon, Jet, Target, Wal-Mart, Kohl’s and JCPenney, but we have a lot more room to grow in that channel. I think we’ll have made at least one, if not two acquisitions. Our product mix will be even more diverse, and our distribution channels will be expanded. We play in the box store and mom-and-pop businesses a little bit, just to see what’s happening, but we could be bigger there. Matt has a strategic plan, and he will continue to re-evaluate it as he goes because the world is changing very rapidly.
What will you miss most about the shoe business?
BL: I’ll miss the people — we have such a wonderful team here. I’ll miss the thrill of having the salespeople come in with a 5 million-pair order or a major new retail account. I like to compete; I’m a competitive guy. I’ll miss the action. This time of year is incredibly busy. Everybody is out there selling fall ’17 right now, and orders are coming in. And today, I walked past the design room, spring ’18. The business is always driving ahead — it’s exciting.
How are you planning to enjoy your retirement?
BL: I’ll be spending a lot more time with my family and doing lots of traveling. I have five trips planned this year, and my wife, Susan, and I will celebrate our 50th wedding anniversary in May. I’ll also be serving on several boards, including LIMA, the Hackensack University Medical Center and SG’s newly created advisory board, which I will chair. I am going to play golf again and go out on my boat. I also have my farm up in the Berkshires. So I should be OK.