BOF
BY LAUREN SHERMAN
NEW YORK, United States — Eddie Borgo wants to set the record straight: the CFDA Award-winning jewellery designer, fresh off of Paris Fashion Week where he met with editors and buyers alike to present his Autumn 2018 collection, says his brand is not shutting down. Instead, it has undergone a restructuring in order to make room for a new partner.
Confusion surrounding the fate of the decade-old costume jewellery line emerged in early January, when reports of the company’s demise — based, in part, on the temporary disablement of its website and telephone — surfaced in the trades.
Borgo does acknowledge that there was a pause put on the business, although he says that pause did not include any sort of halt in wholesale retail activities. While the operation of the previous entities has ceased, a new operating company has been established with new strategic partner, a Los Angeles-based firm that provides operational support — including management of sales, supply chain logistics and product development — in exchange for equity and a revenue share.
As part of the reset, Borgo did shut down his website at the end of last year to replatform. Eddieborgo.com is set to go live once again by mid-March.
Borgo, who owns a majority stake in the new business, maintains full ownership of 36 trademarks and intellectual property, full creative control on anything bearing his name, and first right of refusal on manufacturing. (He will continue to work with the ateliers with which he has established relationships over his last 10 years in business.)
Borgo also maintains 100 percent ownership of his direct retail business — meaning e-commerce, for now — and plans to continue his consulting work for other brands, as well as non-accessories-related projects and collaborations in the tabletop and furniture design space. (He also designs products for beauty and fragrance companies.)
To an independent designer eager to focus on the creative side of a venture, not the balance sheet, Borgo’s new deal may sound like a dream scenario. And to be sure, plenty of Borgo’s peers have experienced similar transitions in their businesses, not all with such promising results. “I couldn’t have asked for a better situation,” he says.
However, like many small businesses owners, Borgo has hit plenty of rough patches along the way. In 2013, he took on an angel investor and staffed up, establishing a studio with nearly 30 full-time employees. He found that the traditional way of doing business — all in-house, with an expensive payroll — forced him to expand distribution too quickly, and make creative decisions he wouldn’t have necessarily chosen had there not been so much financial pressure. Overhead costs ballooned.
In 2015, the then-chief executive exited the company, leaving Borgo to “absorb” the role, as he says it. While he learned the ins and outs of the business during that period, it was not a sustainable situation. “An infrastructure that was built that I didn’t have the wherewithal to handle on my own, which I am more than willing to admit,” he says. “Quite a robust overhead and operating system had been built under our previous executives that I was trying to re-establish and re-finesse, contracts that I was trying to re-negotiate. And that is just not my forte.”
In March 2017, Borgo separated from his investor, and spent a good part of the middle of the year searching for new money. While he entertained other partners — including both private and institutional investors — he says that his new partners offered the best possible outcome.
While the arrangement may be unorthodox — in the past, agreements such as these may have required a designer like Borgo to give up rights to his name or trademarks — Borgo's new partner believes in giving a certain level of control keeps them engaged. “That old mentality, holding somebody hostage to a contract, just doesn’t make sense,” he says. “If I was to maintain the IP of a product and Eddie is not a part of it, it loses its soul.”
To move forward, Borgo dissolved his former operation and disabled his website to replatform, stirring speculation that the brand was finished. He says he didn’t respond to requests for comment from several media outlets because of a non-disclosure agreement that was in effect while his new partner performed due diligence. But his silence was damaging. “It negated the confidence of my retailer,” Borgo admits.
In an effort to re-instill that confidence, Borgo made a pilgrimage to Paris Fashion Week in February for market and editorial appointments, joined by his longtime studio director Beitressa Mandelbaum, who has returned to consult for the brand. “Our issue was never in sales, the company has only ever continued to grow,” Borgo says.
In fact, the designer says jewellery revenues in 2017 were up 10-15 percent from a year earlier, handbag sales were up 30-40 percent and e-commerce sales were up 50 percent. (While he declined to share revenue figures, Borgo previously told BoF that revenues were projected to hit $12 million in 2016.) Current accounts include Net-a-Porter, The Webster, Isetan and Selfridges, with half of the company’s revenues generated outside of the US.
Looking ahead, Borgo’s dream is to continue to grow his fashion jewellery business — unlike many designers of his ilk, he embraces the word “costume” — and relaunch handbags, which were put on pause during the changeover, for the Spring 2019 season. He also plans to formally launch fine jewellery in October 2019, with intentions of setting up a workshop in New York or Los Angeles (as his partnership brings him more frequently to the West Coast). He is working with two different companies to source diamonds, sapphires, rubies and emeralds for these one-of-a-kind pieces.
“I have such broad interests,” Borgo says. “I need the freedom in my life.”
Photographer: Paul Maffi
