Transcripts For CNBC The Profit 20171101

Chris it felt like we financed your pregnancy with my money and our time. Lemonis if i cant help them fix their process and their relationship. You guys picked this location. Chris yeah. Lemonis you guys did it. This board shop will have to board up its doors. My name is Marcus Lemonis, and i risk my own money to save struggling businesses. Were not gonna wake up every morning wondering if we have a job. Were gonna wake up every morning wondering how many jobs we have to do. Its not always pretty. Everythings gonna change everything. But i do it to save jobs, and i do it to make money. This. Lets go to work. Is the profit. Tony windward, chicago. This is tony. Lemonis in 2010, partners chris, tony, and jess bought windward sports, an iconic chicago retailer with a 30year history and a reputation as the goto store for skateboarders and snowboarders. Chris do you want to print them a restock, jess . Jess yeah. Totally. Lemonis longtime friends and avid snowboarders, the three partners introduced new brands, updated the store, and renamed it windward boardshop. Jess there you go. Have a good day. Lemonis they were off to a great start. After a few years, they decided to double down, taking on a lot of debt to open up a second store, this time in an affluent suburb of chicago. Chris well kill the helmet rack. Lemonis but instead of the new location boosting the overall business, its actually bleeding it dry. Chris we still need to figure out a way to get more people in the store, shopping. Tony yeah. Lemonis profits have evaporated, and now theyre struggling to keep both stores fully stocked. Chris still no boosted boards cause i know we got a lot of customers calling and on the wait list for that, so. Its just been [bleep] lemonis active sports is one of the fastestgrowing segments in the industry, and windwards longtime history should give it a leg up against its competition. So im headed to the original location to check it out. Jess hey. How are you . Lemonis hey, hey. How are you . Jess excellent. [ chuckles ] come on in. Chris you must be marcus. Lemonis i am marcus. Chris im chris. Lemonis chris, how are you . Chris nice to meet you. Lemonis nice to meet you. This place is cool. Chris thank you. Lemonis you know, ive driven by here for years, cause i live in chicago. Chris yeah. Lemonis i think ive seen this place for, like, 20 years. Chris 1982 it opened. Its chicagos original board shop bought it about six years ago now. Lemonis okay. So, when i come in here, do i think about this as a snowboard shop . Chris in the wintertime, yes. In the summertime, we do skateboards, standup paddleboards. Lemonis thats a paddleboard . Chris yeah. Lemonis thats gigantic. Chris [ chuckling ] what . Lemonis like, okay. But how would i even get this there like, on my vw beetle . Jess weve definitely done it. Chris roof rack. This is jess. Lemonis how are you . Jess hi, marcus. Lemonis im marcus. Jess nice to meet you. Lemonis and youre jess . Have you ever been on this thing . Jess oh, yeah. For sure. Yeah. Chris we all go paddle. Yeah. Lemonis what does Something Like this cost . Chris thats 2,000. Lemonis and then, what does it cost you . Chris about a 30 margin on those. Lemonis thats it . Chris yeah . Lemonis paddleboards are gigantic, and theyre taking up a ton of space, a ton of inventory dollars, but a 30 margin . The overall store margin should be at least 50 . How do you do . Im marcus. Tony tony. Lemonis nice to meet you. Tony good to met you. Me and chris actually grew up together. Lemonis what is your role on a daily basis . Tony its Inventory Management and marketing management, i. T. Jess i manage the Highland Park location. Lemonis okay. Chris i do the accounting. I do the buying just the overall general strategy of the business. Lemonis what did you pay for the business . Chris about 200,000. Lemonis you put all the money up . Chris yeah. Lemonis and had you saved it . Chris i inherited a lot of it. Lemonis okay. And then, whats the equity spilt amongst the three of you . Chris so, i have 56 . Lemonis okay. Tony 34 . Jess i have 10 . Lemonis okay. Take me through the rest of the store. The apparels in the middle . Chris yep. Glove wall here. Snowboard wall. Lemonis mens over here. How many square feet is this . Chris about 3,500. And theres a womens side over on the other side. Do you want to. Lemonis yeah. What Womens Department . It looks like an anemic rack of bathing suits, and none of the bottoms or tops match. There was a lot of leftovers, like a flea market. Who buys all this merchandise . Jess chris really heads up all the soft goods. Lemonis why such a little amount dedicated for the female . Chris its only about 10 of our sales. Lemonis is it like a selffulfilling prophecy . We know that females drive more than 50 of the transactions in the marketplace. Well, the store should actually represent that portion of the market, and it doesnt. You want to know why . You have some guy buying product. Chris this is the skateboard section. Lemonis okay. Chris longboards, skateboards. Lemonis that is cool. Kids love this, right . Jess oh, yeah. Lemonis theres this new phenomenon in electric skateboards. Chris yes. This is boosted. So, this is the biggest brand out there. Lemonis and do they sell . Chris we our first year, did about 250,000. Weve been out of these for almost a year now. We have to prepay and buy at least 10 to 15 of them at once. Lemonis yeah, but do you guys not have any working capital to buy inventory . Chris its pretty minimal. Lemonis and so, in the last 12 months, how much revenue is actually missing from this not being here . Chris id say close to 400,000. Lemonis damn. Chris yeah. Lemonis thats a lot. Its a little odd to me that they have no working capital to buy boards, but when i look around this giant showroom, there is merchandise everywhere. So, did they buy the wrong stuff . Im gonna walk around this store and kind of study it some more. Jess okay. Cool. Go for it. Salena salena. Lemonis salena. What do you guys do here . Salena i do everything from sales associate, retail this is my passion, so lemonis it is . Salena yeah. Lemonis im marcus. Cody hey, marcus. How you doing, man . Lemonis nice to meet you. What is your name . Cody cody. Lemonis nice to meet you. You run this basement . Cody yeah. What i do is we do the shipping down here. Lemonis are these online shipping orders youre sending out . Cody yeah. Lemonis how long have you worked here . Cody six going on seven . Lemonis do you love it . Cody i did. Everybody has to do so much that there is no fun time. But i miss that part and the three ps, i guess the fun part. Ive looked into your personal businesses and seen what youve done. And for everything ive researched about you. Lemonis yeah. Cody . I dont know if youre about the businesses anymore. Like, are you just gonna turn this into a glorified chain skateboard store in the malls and stuff . Lemonis are you concerned that, if someone like me, that some monster, got involved, that it would lose its authenticity . Cody you could just come in and say, oh, were just about the dollar now. Lemonis is that what you think about me . Cody i think you have a lot of money, and youre a powerful man, and that is not an easy thing to work with. Lemonis i think youre gonna be surprised. Cody really . Lemonis yeah. Cody is fiercely loyal to the brand. When youre trying to change a business, that can be an impediment. But in most cases, its a real asset to a company. Its like having Brand Ambassadors out in the marketplace. Cody all right, then, marcus. Lemonis all right. Nice meeting you. Cody you too, boss. Lemonis but i wouldnt exactly call that the warmest greeting ive ever received. Okay, that guy was interesting. Jess cody . [ laughs ] lemonis what id love to do is actually meet you guys at the other location. Jess yeah. Chris yeah, sounds good. Lemonis okay. Great. Chris all right. Lemonis hey, chris, theres nobody here. Its empty. Chris yeah. Lemonis when did you open this store . Chris last year. Lemonis so walk me through the logic of how you picked Highland Park, how you picked this location. Chris demographicwise, a more affluent customer the proximity to the lakefront with paddleboard sales made more sense for us to come north. Lemonis money and water dont equal opening up a windward location. Highland park is a suburb of chicago thats got a slightly older demographic to it, and i havent seen anybody ride down the street on a skateboard before. This is cool. What size would i wear . Chris you would probably be a small. Lemonis really . Have you seen the size of my ass . Im gonna go try this thing on. Chris okay. Lemonis i wanted to understand how expensive snowboarding actually was. And one way to do that is to get dressed from head to toe in all the gear. Jess oh, definitely yeah. Lemonis so, this is yeah. Jess all right. Lemonis how are these pants . Jess 250. Lemonis so, whats next after that . Chris jacket. Jess jacket. Lemonis all right. Okay, how much is the jacket . Jess 500 for that guy. Lemonis ah. Okay. How much for the helmet . Jess about 100 bucks. 220 here. Lemonis all right, now what . Chris 200 for snowboard boots. Steady as she goes. Lemonis all right, what else do i need . Chris gloves. Jess 50 bucks. Lemonis okay. Chris this would be the board. 600 for the board, and then the bindings 250. Tony and then on a really cold day, youll need a facemask. Lemonis so, ive just spend 2,200. Chris yes. Lemonis . And im hot as hell. I did not expect it to cost over 2,000. Like, thats a real investment, and to pick snowboarding or skateboarding as almost 90 of the product really limits the number of people thatll walk through the door. What about all the other things that people do outside . How much revenue does this store do a year . Chris 350,000. Lemonis and the margins are. Chris its a 35 margin. Lemonis so the gross profit would be about 100,000. Chris yes. Lemonis you divide that by 12. Thats basically a little over 10,000, and your rent alone is. Chris 13,000. Lemonis so, youre losing money before you pay for anything. Chris yes. Lemonis where did the money come from to open this store . Chris we have an sba loan we took out. Lemonis how much is that . Chris 390,000. Lemonis just for this location . Chris yes. Jess i regret not knowing more about it beforehand. I agreed to open a second location when the idea was brought to me, but what i didnt know is that the location had already been chosen. Lemonis so, you did it on your own . Chris tony was involved with some of it, as well. Jess mmhmm. Lemonis okay. And so why didnt you have a say in it . Jess i dont really know. Lemonis the fact that they didnt include jess its just disrespectful. Let me spend a minute with jess, just so i can understand this store a little better, okay . Jess yeah. Mmhmm. Lemonis whats going on here . Jess i found out when we were signing paperwork, and this guy says i love the location, and i just looked at them, and i said, we have a location . Said it was kind of in place, and i was just either gonna be on board or not on board these are my business partners. Lemonis youre on the team. Jess lets do it. Im on the team, so thats fine. Lets do it. Lemonis how much equity did you say you had in the business . Jess i have 10 . I started with 20 . When i told them that we were gonna have a baby we were all working six days a week, and i told them that, once the baby came, i was wanting to go down to five days a week to have more of, like, a normal schedule. Lemonis did you lower your wage, as well . Jess mmhmm. Lemonis so you lowered your wage because youre working less that i get. Jess correct. Yep. Lemonis i dont understand why your equity would go down. Jess i agreed to it because i really didnt feel that there, you know, was another option. Again, like lemonis in or out . Jess yeah. Yeah. And i had a newborn at home, so what am i gonna do . Lemonis i dont know what choice jess really had. Chris and tony leveraged the situation to get the result that they needed. It really makes me question their ability to be in a partnership with anybody. Id like to go over the financials. How are you feeling . Chris tired. Lemonis yeah . Chris yeah. Lemonis been a long couple years . Chris long six years, yeah. Its been challenging from the start. Lemonis what did you do before this . Chris i started out working with my dad originally. We were brokers, and then my father passed away. This opportunity kind of came up. And so, i inherited that money. Lemonis how did he pass away . Chris he took his own life. Lemonis holy [bleep] man. I cant even begin to think about what that would feel like. Chris yeah. Lemonis . So first of all, im sorry that it happened. Did you do this business with the inheritance . That was the seed money . Chris yeah. In a weird way, its kind of like this is part of him still. Lemonis and thats probably what weighs on you, because you probably think to yourself, this cant fail. Chris yeah. It would feel like another loss, a big loss. Lemonis 100 of the money that opened up this business came from his father. This idea of the business failing creates this illusion for chris that, if the business fails, hes lost his connection with his father. Chris this is through 2016. Lemonis okay. So, in 2010, it did 325,000 in revenue. 2016 2,714,000 so far in revenue so impressive growth. You made 81,000 in 15 and 16. Chris well probably lose 250,000, about. Lemonis so you went from making 81,000. Chris yes. Lemonis . In 15 to losing 250,000 almost entirely from this location. So the companys sitting with 600,000 of payables, 200,000 that are past due, and the debt 250,000 owed to two banks and an sba loan of 390,000. So you got no excess working capital and a location that is sucking the life out of the business. Chris yeah. Lemonis all right, i want to take this back and study it. Chris yeah. Lemonis it was honestly a real pleasure to meet you. Thank you so much. Chris very nice to meet you. Lemonis nice meeting you, as well. Chris thanks for coming in. Lemonis absolutely. The original store was a decent first effort. But they took that success, and they tried to parlay it in a different market without a lot of research and thought. That type of naivety can put you out of business. Tony and jess, have you guys seen the Financial Statements . Jess it has been a little while. Lemonis so, it looks like you guys are gonna lose about a quarter of a Million Dollars for the year. Did you know that . Tony i was aware of it. Lemonis did you know the number . Jess no. Lemonis shocked . Jess you know, i think theres a lot of conversation in the office at the chicago store where they are always at, and im just kind of worrying about the daytoday of this place. Lemonis that was a nice way of you saying, im not there, and they talk about things, and im not included. Do you guys think its weird that you have such a disjointed dynamic between the three of you . Tony it boils down to better communication, i think. Lemonis better communication . Jess we need any communication. Lemonis whyd you cut her equity . Chris cause were putting in more time and effort into the business. Its barely getting by. Ive put in my life savings on it. Its hard for someone to come to me and go, i need time off, and work less. Lemonis i understand that. Do you guys have families . Chris no. Jess we never talked about what happens when we have babies. It wasnt said. It wasnt asked. Chris it was written in there the 5year commitment. Jess yeah. Chris . For the first five years. Jess and if one of us walks away lemonis so, just so you know, you shouldnt have had a baby in the first five years. Jess in the first five years. Lemonis what are you essentially telling her . Dont get married. Dont have kids. Put your life on hold. And at the end of the five years. Well let you know . Theres no question that you guys have put your heart and soul into this. I think thats a great sign of business character. You dont always find that, so i compliment you on the fact that you care about what you do. So, i want to make an offer, because i need the Business Needs to solve its pastdue payables and needs to get current inventory in, and it needs to be a store that can speak to more people and more families. So, my offer is 500,000 for 50 . Chris if i had to pick a number, itd be, probably, more to 600,000. For 40 . Lemonis so, this is your display . Chris this is our booth. Lemonis this is the [bleep] display that ive ever seen. Chris if i had to pick a number, itd be, probably, the 2018 cadillac xt5. Beauty, greater than the sum of its parts. My business was going nowhere. So i built this kickin new website with godaddy. Building a website in under an hour is easy 68 of people. Who have built their website using gocentral, did it in. Under an hour, and you can too. Type in your business or idea. Pick your favourite design. Personalize it with beautiful images. And. Youre done and now business is booming. Harriet, its a double stitch not a cross stitch build a better website in under an hour. Free to try. No credit card required. Gocentral from godaddy. Throughout my career, ive been fortunate enough to travel to many interesting places. Ive always wanted to create those experiences for others. With my advisors help along the way, its finally my turn to be the host. When you have the right financial advisor, life can be brilliant. Ameriprise more to 600,000. For 40 . Lemonis um, im not willing to budge from my 50 . I cant philosophically do it, cause its risky. So heres what im willing to do. Theres 750,000 worth of inventory in the system. Chris yeah, yeah. Lemonis how much of the 750,000 is inventory you would never buy again . Chris probably at least 100,000 or 200,000 of inventory to get rid of. Lemonis great. Chris . Thats offseason. Lemonis so, ill throw in an extra 100,000 for no additional equity if you can liquidate the 200,000 of inventory that you believe shouldnt be here in the next 30 days. And it is passfail. Chris yeah, i think that i think we could. Lemonis im going to write two checks. Ones for 500,000. One is for 100,000. If you liquidate the 200,000 of problem inventory in 30 days, youll get this check and ill ask for no more equity. Chris yeah. Lemonis if you dont, this is the check. Chris i want to communicate well and ask if you guys are on board. Jess im in. Tony if you feel confident in it, then i will. Lemonis so, do we have a deal . Chris yeah. Jess lets do it. Lemonis here you go. Okay . Jess got it. Lemonis you know what id like to do, jess . Jess yeah . Lemonis id like to get everybody together and have a discussion. Chris yeah. Lemonis so, yesterday, tony, chris, and jess, and i made a deal for me to invest 500,000 in the business. The 500,000 can actually become 600,000. If you could figure out how to liquidate 200,000 worth of dead inventory in the next 30 days, i hand you another 100,000. The moneys gonna pay the pastdue payables, buy new inventory, and were going to pretty significantly change the look of the store. When i think about windwards Customer Base, i think about it like youre standing outside of a door. The Product Offering is so narrow and the price points are so high, that very few customers could actually fit through that door. Now, the shop has a longstanding history, and we dont want to lose those core customers. But we also want to widen the door and find new customers who are interested in active sports in general, whether theyre looking for sneakers or swimwear or anything else they would use in their lifestyle. Thats the key to growing this business. Also, the name of the store is changing. Salena okay. Man are there options . Lemonis there are options. Regardless of what its called, were not gonna be making these Big Decisions without having some sort of discussion about what it is that were doing. All right . Lets go to work. Thanks, guys. Salena thanks. Hey hey lemonis chris asked to meet me at the Mccormick Convention center where the chicago boat, rv strictly sail show is. But im not exactly sure why a board shop would have a tradeshow booth at a boat and rv show. Chris welcome to the boat show. Lemonis how you doing, buddy . Chris well. How are you . Lemonis good. So, this is your display . Chris this is our booth. We have our flyers over there. We have a little video to try to entice people. Lemonis you brought nothing else but the paddleboards . Chris no. Lemonis nobodys in uniform. Theres no other signage. Theres no other products. This is the [bleep] display that ive ever seen. I was not only annoyed, but i was embarrassed. Free delivery and free paddle and up to 15 off. Chris yes. Lemonis so, when we talked about the overall paddleboard margins. Chris yes. Lemonis . We already knew they were low at 30 . Chris yes. Lemonis then you gave 15 off, then you gave a free paddle, then you gave free delivery. Whats left . Chris 10 . Lemonis okay. What does it cost you to rent the booth, come down here, staff it . Chris 2,800. Lemonis so, last year, you did how much . Chris about 25,000. Lemonis how much gross would there be . Chris 2,500. Lemonis windward boardshop where we love to lose money. It seems to me that chris makes a lot of decisions without doing Much Research the product that he buys, the low margins that he has, the new stores that he opens, and now this. Woman scoot your feet a little further apart. Perfect. Lemonis chris, were good. I got on. I dont like the margins. So ive pretty much established that this whole thing sucks. It makes no sense to be here none. No more of these shows this way. Stop wasting money and making quick decisions. You got to think through them. Hey, chris, i thought if we could just get everybody together just chat as a group. Jess yeah. Its clear to me that you guys were doing perfectly fine a year and a half ago. Had you not opened up this location, i doubt that you would have called me. Chris we bit off more than we can chew, and we thought we could do it. Lemonis well, dont say we. You. There are not enough paddleboarders and snowboarders and skateboarders in this part of chicago to give you the revenue. So, first order of business this store is officially closed. So, we have work to do here tonight. Pull everything off the floor that you know will sell downtown without a question. While were closing the store, the Company Still has an obligation to five more years at 13,000 a month. So what ive decided to do is to negotiate with the landlord to buy the building. I now own an asset, and ive solved a very big problem for windward. Chris yeah, jess just being up here without us to make sure things are getting done properly i think things kind of fell apart pretty quickly. Tony yeah, its just the consistency is not there with her. The inventory got a little out of whack here there with her. Lemonis you guys you know, ive heard you guys say that you dont think that jess was really a great manager her. Chris i think she was overwhelmed with the level of responsibilities she had. Lemonis you guys picked this location. Tony yeah. Lemonis you guys did it. We should make sure that we carry products that are for novices. Salena thats not how we approach our Customer Base at all. Lemonis you are coming off so selfrighteous. Lemonis you know, ive heard you guys say that having moderate to seis not always easy. Is its a Long Distance run and you have the determination to keep going. Humira has a proven track record of being prescribed for nearly ten years. Its the number one prescribed biologic by dermatologists. 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Be sure to talk to your doctor before you begin an aspirin regimen. Bayer aspirin. Juswho own them,ople every business is different. But every one of those businesses will need legal help as they age and grow. Whether it be help starting your business, vendor contracts or employment agreements. Legalzooms network of attorneys can help you every step of the way so you can focus on what you do. Well handle the legal stuff that comes up along the way. Legalzoom. Legal help is here. You dont think that jess was really a great manager here. Chris i think she was overwhelmed. Lemonis you guys picked this location. Tony yeah. Lemonis you guys did it. What upsets me more than anything else is chris and tony standing here talking about the fact that its jess fault. Like, at some point, you guys need to take responsibility for your screwup. Jess [ sniffles ] lemonis while everybodys packing up boxes, im noticing that jess is really upset. Jess i just feel like i failed everybody. Cody nobody can tell you you didnt try your best. Lemonis jess. Jess [ sniffles ] lemonis you all right . Whats wrong . Jess yeah no. Im i dont know how i feel right now, but i want to do what is best for the company, but, like, what about our staff . Like, what am i telling my Highland Park staff tomorrow . Lemonis Jobs Available for them in the city, no problem. Jess yeah. Okay. Lemonis but i think, more importantly, the way id like you to think about it is, lets fix this, as an owner. Jess yeah. Lemonis lets fix the city. Lets get that thing cranking, pumping out cash. The fact that jess is upset actually is a confirmation for me of her passion. Right now shes worried about whats gonna happen with her staff, and shes doing all that in spite of whats happened with chris and tony. Im gonna give this to you. Go put them up in the front door. Chris all right. Jess [ chuckles ] lemonis here you go, brother. Man yep. Lemonis as part of closing down the Highland Park store, im having all of the inventory packed up and moved downtown to the chicago store so we can consolidate it and liquidate the bad stuff all in one location. I never expected their stock room to look like the amazon fulfillment warehouse, but i also didnt expect it to look like a garage sale. Its thousands of square feet. Get it organized and then make use with the rest of the place. Cody. Well, so, i figured since your inventorys upside down, i would hang upside down, too. Chris i knew there was gonna be a good joke here. Lemonis it doesnt look good. Chris yeah. Lemonis we need to totally remodel this basement. So, heres the challenge you have you have to liquidate 200,000 in 30 days, you have to organize this warehouse and the store up top. Chris its a its a constant game of keeping up right now, and that would lemonis did you say keeping upright . Chris [ chuckling ] trying trying to keep upright jess [ laughs ] chris there it is. Lemonis eventually, were gonna need to close down the whole store in order to remodel it, but for now, well start with the basement. Theres at least 3,000 square feet down here. I want to use a portion of it to properly organize the inventory. But the balance of it i want to turn it into a whole retail environment. Jess 13. 78, and with the discount. Lemonis meanwhile, the team has been busy liquidating the inventory in an attempt to hit their 200,000 goal i gave them. Jess on sale. [ scanner beeps ] salena its, like, the sweetest deal ever. Man yeah, it is. Lemonis hey, bud. Jess both thumbs is the easiest way. Man 2 this way . Jess there. Yep. Lemonis ive been most impressed by jess, because she singlehandedly led this liquidation. These are the mfis that tony brought. Lemonis she kept the team motivated and focused. Jess layers are definitely going. Streetwear has been moving. Lemonis now that weve been making progress on the inventory and the remodeling, its time to really rethink how the customers gonna see this store and what its gonna be called. A boardshop . That just doesnt do it anymore. The name of the store is changing. Lets get some names moving. Man yeah, yeah, yeah. Lemonis windward active sports. [ laughter ] chris the active part i think will turn off a lot of people. You feel like youre going to a running store. Salena active suggests more of a sport. When you skate or snowboard, you look at it as kind of like an art form in your lifestyle. Chris and thats why im saying windward or windward outdoor. Lemonis outdoor feels like a hikingcamping store to me. Salena yeah. Lemonis any numbers that matter . Jess 82 was the year that it opened, yeah. Lemonis so thats kind of cool. Chris windward 82. Chris i dont think it would turn anyone off. Jess windward 82 could be really good. Chris . The skate kid or the active person. Salena i really like that. Chris i like that one the best. Jess i feel good about it. Chris yeah. Lemonis hey, cody cody we talking about names . Lemonis i think we already landed on a name. Cody oh, we did . Jess and chris windward 82. Cody see, but i think that impromptuness is part of the problem. It doesnt allow for proper communication. Windward is an awkward word to say, its an awkward word to spell, and its an awkward work to talk to people about. Lemonis its an awkward word thats existed for 30 years that people know, and i want to celebrate the fact that weve been here since 1982. Jess what about just w82 . Cody yeah. Lemonis thats awesome, right . Cody that can definitely work. Lemonis dont worry about it. Chris i think a hug is in order i think a hug is in order lemonis w82 its short, its simple, and its awesome for ecommerce. The less somebody has to type in, the better. And even cody likes it. Do you see how we can work it out . Cody no, we are gonna work quite well together. Lemonis one of the things that i want to do today is analyze this downtown store, and then were gonna start looking at the different categories and ranking them from highest to lowest gross profit. Chris yeah, you want me to start putting together those lemonis yeah, if you could pull them, thatd be great. Chris ill get the numbers going. Lemonis in order for windward to move their business forward, they have to solve two problems gross margin and the inventory mix. So what i wanted the team to do is actually pull sales data. I want to find out what sold, what has margin, whats gonna stay, and whats gonna go, but have them come up with the conclusion. What is the minimum margin that a product should have for it to make the cut . Chris i would say 40 would be the minimum. Lemonis that would be the minimum . Chris yeah. Lemonis okay. So lets talk about this product. Jess bindings. Lemonis okay. How much revenue did we do . Jess 17,166 margins 29 . Lemonis why are the margins so bad on this . Tony likely the sale price when we have overstock, at the end of the season, we have to discount it to lemonis so this is a buying mistake. What would the margins be if you didnt have the buying problem . Jess 40 . Lemonis this product is staying in the stores, but we have a buying problem. Snowboard boots. Jess 25,000 again, coming in with a 31 margin thats got to be sale. Lemonis so, you didnt make your cut as well. Whats the problem here, tony . Jess sale. Tony same problem. Jess definitely for overbuying. Lemonis who bought all these . Im sorry. I didnt see your hand high enough. Chris either bought too much or bought the wrong stuff, and in order to sell it, they had to discount it. When your Product Offering is as narrow as windwards is, the pool of people that actually want to buy it is too small. So the more you discount doesnt make the audience bigger. It just makes the profit smaller. To think youre gonna sell skateboards, paddleboards, and snowboards only is a giant mistake. Ultimately, we want to service everybody, whether its hiking or biking or anything else. Salena but were not a department store, either. I dont want to see this turn into dicks sporting goods. Lemonis were not talking about having basketball and football. Salena right, but this industry is about creating something thats unique. Youre not gonna find this in your typical bigbox stores. Lemonis but we should make sure that we carry products that are for novices if salena but were not gonna carry, like, plastic boards or a [bleep] quality product. Lemonis but who says we are . Where are you getting that from . Salena i mean, thats not how we approach our Customer Base. Lemonis you are coming off so selfrighteous. You made the decision to change the equity structure. Chris at the time, it felt like we financed your pregnancy with my money and our time. Thats why a cutting edgeworld. University counts on centurylink to keep their global campus connected. And why a Pro Football Team chose us to deliver fiberenabled broadband to more than 65,000 fans. And why a leading car brand counts on us to keep their Dealer Network streamlined and nimble. Businesses count on communication, and communication counts on centurylink. 107. 00 at. Doggie lovers warehouse . [woman] an alert from wells fargo . No. I would never. Doggie lovers . Please you know me. I dont even know where that is look, im replying deny. See . Oh, come on [phone rings] hello . Wells fargo. I did not make that purchase. I didnt do it im so glad you caught that. Uh huh. That it almost makes me feel like im not included here, that i shouldnt shop here. What youre telling me is that you guys are trying to create this cool vibe that has a certain look. Salena its more about about creating a reputation. Lemonis this business doesnt have a good reputation. Did you know that . Salena thats interesting. Lemonis the vendors dont like you, cause you dont pay your bills. Woman yeah. Lemonis and when you dont pay your bills, they dont ship you merchandise, and if you dont have merchandise, the customer comes in, and they have a different perception of what the place is versus what it used to be. There used to be a wider selection. There were things in stock. I want to have cool vendors, too. Maybe were partnering with some upandcoming companies that would never get a shot to get into a bigbox store. Were that company that gives the little guy a chance. Salena and thats what i want to see. Im very protective of. Jess but just know lemonis and im very protective of my money, and youre very protective of the brand, so its gonna be a great marriage. Salena okay. [ laughter ] lemonis id like to break you guys up into twos. And why dont you take categories and say what categories you would get rid of and what categories you would keep . Cody all right, where we going . Salena were gonna have to start with the products that we make the least margin on. Lemonis in order for this business to really be profitable, they have to get to a 50 margin. The only way to do that is to eliminate the lowmargin things and find things that are greater than 50 that are gonna allow us to land at the end of the year at 50 . Cody paddleboards produced 38,000. Margin was 26 on these. So. Not making the cut. Lemonis so paddleboards should go. Salena wet suits. Billy you got i mean, thats those, actually, are pretty popular. Salena casual boots are actually doing pretty good. Jess so. Chris you want to come back, and well work through some of this . Lemonis you guys learning anything . Jess yeah. Chris we learned a lot. Jess definitely. Chris yeah. Jess womens swim bottoms, bikini bottoms, were 50 . Billy mens, actually the work shorts was 47. 39 . Lemonis so better than our company average. Jess and womens tops 50. 82 . Lemonis so swim is up 48 , plus. Chris its a good margin category. Jess right. Yeah. Man and a good volume. Lemonis i think the best part of this is that you guys are working together. Chris communicating. Lemonis communicating together, making decisions together. Ive closed the store for a total remodel. The upstairs is going to be transformed, creating new and clear departments, like a swim department, a shoe department, an Electronics Department with electric skateboards, cameras, and drones. Work continues in the basement reallocating space, having a segmented stock room thats organized and clean. With the additional 2,000 square feet, were building a pure Skate Department and a pure snowboarding department. The new spaces are built to speak to that enthusiast. Ive taken jess and chris to agenda, one of the largest apparel and footwear trade shows in the country, and it really is a great opportunity to not only find new products, but to expand on the ones we already have. Theres literally almost 1,000 different brands represented here. What do you think of these kind of glasses . Chris its edgier than we do right now. Jess i love these. Lemonis this stuff is really nice. Jess so, were gonna do the crew pocket for guys, crew pocket for girls, and then a couple of the womens tanks. Okay. Lemonis as i watch jess, im noticing some of the great characteristics that i see in my other buyers asking the right questions, getting the right product at the right price. Man 59 retail. Lemonis she has a familiarity and a comfort in doing this. Right now, i need to make a switch on who the buyer is. Jess, i feel like you are a better buyer than chris. Chris part of my concerns with you buying. Jess yeah. Chris . Tracking the numbers. Jess i know that i can do it. Chris buyings a fulltime role. Jess taking that off your plate and putting it on to mine opens you up for biggerpicture things that you need to be worrying about. Chris yeah. Jess and i think, also, i want to bring the staff in so that its not necessarily me on my own. I can do this. I can i can do this. Chris and i believe she can. I think if we have the right system in place, she can do this. I always felt like i kind of had to lead everything, but i think youve stepped up to lead, and we sold a lot of stuff up there over the past week and a half. Lemonis how much have you guys sold since we started this process . Chris total . Over, probably, 500,000. Lemonis and what was the goal . Chris and jess 200,000. Chris yeah, we. Once she led the team, we did it. Lemonis and i appreciate you recognizing that. Chris yeah. Lemonis so, this is very different than how you were when i first met you. Chris yeah, i can see that. Lemonis so, i thought it would be good for the four of us to get together and just talk about jess equity. When jess first started, she had 20 , and then chris and tony cut her to 10 , and then, when i invested, her equity dropped to 5 . Based on her contribution, its time for me to do something about it. You made the decision to change the equity structure. Chris for me, when it happened, i put my life savings into this business. Im not getting a paycheck. You said, i need three months off. I need to get paid for three months, so we cant afford to hire anyone to replace you. Tony its tough on us. It makes it feel like youre not giving enough. Chris at the time, it felt like we financed your pregnancy with my money and our time. Chris it felt like we financed your pregnancy the 2018 cadillac xt5. Beauty, greater than the sum of its parts. Just serve classy snacks and bew a gracious host,iday party. No matter who shows up. Do you like nuts . You wont see these folks they have businesses to run. They have passions to pursue. How do they avoid trips to the post office . Stamps. Com mail letters, ship packages, all the services of the post office right on your computer. Get a 4 week trial, plus 100 in extras including postage and a digital scale. Go to stamps. Com tv and never go to the post office again. Tmobiles unlimited now includes netflix on us. Thats right. Netflix on us. Get 4 unlimited lines for just 40 bucks each. Taxes and fees included. And now netflix included. So go ahead. Binge on us. Another reason why tmobile is americas best unlimited network. And her new mobile wedding business. Tte at first, getting paid was tough. Until she got quickbooks. Now she sends invoices, sees when theyve been viewed andtadahpaid twice as fast for free. Visit quickbooksdotcom. With my money and our time. Lemonis things in life happen. The three of us are not gonna have a baby, but we may have Something Else happen to us that requires us to have to be gone for a little bit. Its clear to me now that everybodys contributing. With you guys having more skin in the game, the odds of my investment succeeding are better. So, what id like to do is lower myself from 50 to 40 . You were at 28 . Id like to take you to 30 . You were at 17 . Id like to take you to 20 . And you were at 5 , and id like to take you to 10 . Tony well, i appreciate your fairness in this. Yeah. Its a side that you dont see too often in business. Lemonis you earned it, though. Do you agree . Jess i was gonna give you a hug. [ laughs ] lemonis okay. Chris cool. Good to see you. Lemonis all right, guys, thank you. And what happened to my hug . Jess i am gonna take a hug. Lemonis there you go. [ machinery whirring ] we have one week left before the grand opening of the new w82. The contractors are busy putting in the final touches. Also, i brought in several artists to create a unique look to the store. And jess is really hustling to get new merchandise onto the shelves. [ thumps ] todays the grand opening of the new and improved w82. As i look around, there is stuff everywhere. What time is it supposed to open . Chris 4 00. Lemonis and what time is it now . Chris noon. Lemonis okay. Chris ive got four hours to get this wrapped up. Lemonis theres not even racking here. This doesnt look done, either. Chris no, no, no. Jess were gonna get it done. Lemonis if your business is in trouble and you need my helpg on. Chris four hours to ge[phhello. Ng]ed up. Hi, its anne from edward jones. Im glad i caught you. Well im just leaving the office so for once ive got plenty of time. Whats going on . So those financial regulations being talked about . They could affect your accounts, so lets get together and talk, and make sure everythings clear. Thanks. Yeah. That would be great. Weve grown to over 900 billion in assets under care. By being proactive, not reactive. Its how edward jones makes sense of investing. Ththe next energyngs toto power our dreams,re will be american energy. [he has a new business teaching lessons. Rodney wanted to know how his business was doing. So he got quickbooks. It organizes all his accounts, so he can see his bottom line. Ahhh. Thats a profit. Know where you stand instantly. Visit quickbooksdotcom. Whstuff happens. Old shut down cold symptoms fast with maximum strength alka seltzer plus liquid gels. Lemonis theres not even racking here. This doesnt look done, either. Chris no, no, no. Jess were gonna get it done. Lemonis all right. Well get there. Jess were gonna get there. Lemonis well figure it out. Jess were gonna get it done. [ machinery whirring ] we have a lot of really colorful, nice spring bags from burton right now, so that would at least be eyecatching. Chris cool. Jess cool. Lemonis that looks good. Jess lets go ahead and hang this workout apparel. Woman yeah. Jess i want it to live here. Lemonis want to take a little quick tour before we open the door . It looks like a totally different business. Chris yeah, it is. Lemonis this is the biggest transformation that i have ever done to any business ever, and i spent about 400,000. I wanted to create the largest streetwear sneaker department in all of chicago. There are over 300 different types of shoes. I brought in an Electronics Department drones and gopros and cameras and the new electric skateboard display. We now have a real swim and a real ladies department. Jess did an amazing job buying bathing suits, womens apparel, streetwear, hoodies, shorts, tanks, tshirts, in a wide selection. Chris you want to see the basement here . Lemonis this looks cool. Chris it looks [bleep] awesome. Lemonis this looks really cool. Chris sorry. Lemonis [ chuckling ] so, this room looks awesome. I wanted to create a snowboard room that felt like you were in park city, so i brought in special wood i brought in a chair lift. I dont even like snowboarding, but im ready to go. Chris skate room. Lemonis this is the coolest space. The new skate cave has double the amount of inventory and a full display of all the accessories. This store is essentially double the size of what it used to be. Chris yeah. Lemonis we now have about 9,000 square feet. The additional floor space will generate at least 700,000 of revenue without more rent, without more headaches. I have a quick question for you. Does it feel like a mall store to you . Cody no. It feels good. Lemonis are you happy with it . Salena i am happy with it, yes. Lemonis okay. Should we get the store open . Your dad would be very proud right now. You did a really good job. Chris well, now we enjoy it. Lemonis go say hi to everybody. How are you, sir . Man hey, man. Chris thank you, everyone, for coming out to the grand reopening of w82. [ cheers and applause ] excited to have you guys in here. Jess this just by ourselves. Chris we didnt build it all. This was a huge team effort, and were excited to have it open so you guys can come enjoy it now. So, thank you, everyone, for coming out. Jess thank you so much, you guys. Chris and thank you to marcus for believing in us. Jess thank you, Marcus Lemonis my vision Going Forward for w82 is for it to become an iconic retailer in chicago. If its as successful as i expect it to be, it could be coming to a city near you. Chris mom, this is marcus. Lemonis how are you . Nice to meet you. Woman nice to meet you, marcus. Lemonis what did you think when you came in here . Woman i was shocked. Everything is awesome. Lemonis you know, when i first met him, he wasnt the greatest communicator i ever met, but hes become a really great leader. Chris seems more comfortable, like he has a new outlook on things. You should be very proud of him. Woman im very you have no idea how proud i am. Lemonis hes communicating great with jess. More importantly, i feel like he trusted the process. You guys happy with the way things turned out . Tony yeah. I am surprised. I was i was hesitant. Chris its a good balance of him going, i dont think we can do it, and me going, just shut up. We got to do it. Jess im so pleased that we could do this. Chris yeah. Lemonis okay. Thank you. Jess thank you, marcus. Lemonis tonightrob whoo rofit, lemonis . Its a business unlike any ive ever visited, at a startup specializing in sleek and stylish longboards. Im honestly blown away by the quality. Something is very wrong. As an outsider looking in, its kind of unsettling. The product is absurdly overpriced. Mike its 329 retail. Rob do you just want to not do well . Lemonis the owner is often absent. Mike i have obligations that lemonis well, what are they other than your business . And what scares me the most is that the employees are fleeing. Where is everybody . In droves. Josh nates no longer here. Chris quit. Mike nearly 100 turnover in staff