Transcripts For CNBC The Profit 20240712

Giordano im not getting mad. Lemonis at the end of the day, youre going to learn how to do it the right way. His business will be ripped to shreds. Rocco, i dont know if i can do this, man. I really dont. My name is marcus lemonis, and i risk my own money to save struggling businesses. Were not going to wake up every morning wondering if we have a job. Were going to wake up every morning wondering how many jobs we have to do. Its not always pretty. Everything is going to change. Everything. But i do it to save jobs, and i do it to make money. This. Lets go to work. Is the profit. In 2010, new york city Fashion Designer Rocco Giordano started faded royalty, a streetwear brand he was determined to grow into a household name. Giordano our whole thing is affordable pricing, good quality. Lemonis he had no formal training. His First Venture was selling hats, and after finding early success, he was able to grow his brand, opening three retail stores. Giordano theres only one rule in business stay in business. And ill do everything in my power to make this work. Lemonis but as time passed, roccos business couldnt generate enough revenue to cover the overhead. Giordano our business failure is cash flow. Aeneas right. Giordano im doing the best i can with little to no money. Lemonis now, with only a single location remaining and over 50,000 in debt, rocco is hanging on by a thread and is desperate for help. Giordano this business, if it went away, it would destroy me. Lemonis part of the reason that i wanted to visit faded royalty is ive recently made a number of investments into the active streetwear space, and this product really fits nicely inside of that. Hi. Giordano hows it going . Lemonis im marcus. Giordano nice to meet you. Im rocco. Lemonis nice to meet you, rocco. How are you, sir . Aeneas hi, aeneas. Nice to meet you. Lemonis nice to meet you. Well, this is a cool spot. Giordano the reason why i picked this spot, and i love this spot, its the lower east side. Its 50 percent tourists, 50 percent real new york. Lemonis did i catch a little accent in there . Giordano a little bit of an accent, a little bit. Lemonis where are you from . Giordano jersey city. Lemonis can i see some of the product . Giordano sure, sure. So these here are cut and sewn in new jersey. Lemonis all mens . Giordano mostly mens, but women can wear some of the stuff. Lemonis did you design this . Giordano i designed that. I do everything. Lemonis good nice color. Giordano thats a really interesting piece. Lemonis this is a nice shirt. Giordano its a very nice shirt. This was one of our first things. Lemonis its got the high low here. Giordano its got this slight high low for extended. Lemonis for a normal person, its got a little bit of stretch. Giordano this sells. Lemonis this is a totally different look. Giordano this is my funky. You always got to have a funky one. Lemonis i dont dislike any of it. I just didnt understand how it connected to everything else. Giordano theres a hat here that ties back into it. This hat gave me the idea lemonis could somebody say youre shooting from the hip all the time . Giordano not all the time but most of the time. Lemonis what i liked about roccos designs is that they had a combination of streetwear mixed with high fashion. It had good bodies to it and good color and good prints. The challenge that im having though is that none of them really connect to another. Is it for somebody thats 50 that lives on the beach, or is it somebody thats 19 that skates in the skate park . Pick a lane, dude. Just pick one. How do you put your collection together . Giordano i start taking elements of what i see, what i see people wear, what i see thats out there and just throwing them together. Lemonis really . Giordano when i started 7 years ago, i just opened a small store, half this size, in jersey city. My rent was 500 bucks, and it was the last 500 bucks i had, so i designed 12 hats. Lemonis you opened a store with 12 hats . Giordano with 12 hats. That sold in less than a week, and so i took that money and made tshirts, and then by the first month, not only did i have the rent, i had more money to dump back into the company. And. Lemonis that was a good move. I will tell you something. I am genuinely impressed by the creativity in here, but it still has t have a point of view, and i feel like that point of view is close, but i see something that has mainstream possibility. I like raw talent, and i need to stress the word raw. Whats the name from . Giordano faded royalty. So, basically, if a king has two sons, youngest son is faded royalty. Hes still royalty, but he doesnt have the pressure of being king. Were rebels in the fashion business. We do what we want. Lemonis okay. Giordano whats going on, guys . Hows it going . Lemonis you guys seem like pretty sharp dressers. Man wed like to think so. Lemonis i mean, would you wear Something Like that . Man i mean, me, personally, probably not. Lemonis would you wear Something Like that . Man nope. Like, one of these shortsleeved buttonups. Giordano you want to try a buttondown on . Man yeah, id like to try a buttondown on. Giordano and now, theres an option here. Did you like the fit . Man oh, my god. It feels good. It doesnt even need darts. Giordano this is what weve been getting a lot of buzz, the cut and sew stuff. This sells really well. Lemonis its a really nice shirt. I mean, its got construction to it. Man 2 if im looking for, like, a cool Bomber Jacket for friday night, yeah, sure. Ill come to a shop like this. Lemonis do you have the Bomber Jackets here . Giordano i feel like Bomber Jackets are on the tail end of the trend. For instance, now this is just a sample lemonis okay, rocco. Im just going to stop you. Bomber jackets are not offtrend. Giordano okay. Lemonis they are very ontrend, very ontrend. Giordano okay. Lemonis hey, man. You know that Bomber Jacket that you really, really want . Yeah, thats way out of style. Giordano thank you. Man 2 thank you. Giordano see you soon. Lemonis now i definitely want to shop with you. Do you run the store when hes not here . Aeneas i only work parttime. Lemonis are there any fulltime employees here . Giordano unfortunately, right now, no. I dont have money to pay people. I probably take a day off every 15 days. Lemonis you better sell some hats. Giordano this is my photographer, j. D. Lemonis how you doing, my man . Im marcus. J. D. j. D. Lemonis nice to meet you. And so, what do you do . You come in, and you take product, and you shoot it on the street . J. D. uhhuh. I do that part and also, like, the web site. Lemonis so lets go i want to see how this process works. Giordano yeah, lets do it. Lets do it. Aeneas also does some modeling for us. Lemonis the shirt that he has on, whats the name of that shirt . Giordano i dont have a name. Lemonis whats the name of that shirt . Giordano chic gas station. Its like mechanic chic. Lemonis what was the name of this shirt . Shortsleeve polo zipon. Giordano i dont have all the names of everything. Lemonis you dont have any names. I dont think that rocco knows who his customer is. Its probably anybody that walks in that he can sell something to. Lemonis so why in a nutshell, why did you call me . Giordano the company has a lot of potential, but its not doing well. Its not all about money. Its about contacts. Its about that im entering my 40s without a paycheck, even though im doing what i love. If i didnt borrow money from my friends and fight to stay alive, id be out of business. Lemonis i sympathize with the fact that rocco wants to get to a point in his life where he has steady income coming. He has good ideas, but hes got to be able to implement them in a way where they can turn into revenue, and that revenue turns into profit, and that profit turns into a paycheck. Giordano my whole thing is, design a shop that grabs people, and then once theyre in, theyre your customer. Hey, joe. Joe whats up, brother . Giordano whats up, my man . Lemonis joe, im marcus. Joe pleasure to meet you. Lemonis nice to meet you, sir. Giordano other than joe, i dont have any other investors. Lemonis i feel like the odd man out without a beard here. Giordano is that a beard . Is that considered a beard . Lemonis why you dissing him already . Hes your partner. Joseph, what do you do for a living . Joe im a partner in a manufacturing business. We worked on these bags for him. Lemonis oh, you designed this . Joe well, he designed it. Giordano we worked on it together. Lemonis who paid for the buildout here . Joe i did. Lemonis and who paid for the inventory in here . Joe i did. Lemonis so youve funded, really, the whole business up till now . Joe basically. Lemonis and how much do you have invested . Joe close to 50. Lemonis really . Joe yeah. Lemonis and how much equity does joe have . Giordano 25 . Joe yeah. Lemonis typical day, how much do you sell here . Giordano three hundred a day maybe. Lemonis three hundred a day . Giordano we break even after that. Lemonis and how do you buy inventory if you have no cash left . Giordano joe was able to open our first credit card. Lemonis how much is that . Giordano fifteen thousand. Lemonis and how much do you owe on it . Giordano eight thousand. Lemonis so you bought your inventory on a credit card . Giordano yes. No interest. Joe i dont think he thinks things through. I think he just buys stuff and doesnt, you know, budget himself accordingly. Lemonis but super talented . Joe yes. Giordano cant have it all. Joe hes an artist. Couldnt let him just close up shop and quit. After all the time and all the effort and all the money he put into it, you know, i just believed in him, and hes a friend. Lemonis joseph, thank you, buddy. Joe thank you. Lemonis i appreciate it. Joe it was a pleasure. Lemonis nice meeting you. Giordano joe. Thank you. Joe ill see you. Lemonis how many years have you been in business . Giordano october is going to be 7 years. Lemonis and youve been fulltime in this business since the beginning . Giordano fulltime. Lemonis how do you pay your bills . Giordano im very lucky. My girlfriend, which i plan on marrying, shes my everything. Lemonis how long have you guys been together . Giordano four years, and shes been with me, and shes been supportive since day one. Lemonis shes supporting you. Giordano shes supporting me, and theres going to be a time where im going to hold most of the weight or all the weight. Lemonis this is now the second person that i know about thats funding this vision that he has. I dont think its the greatest business plan. Hes got no clear path to success at this point, and everybody else is paying his bill. Wheres all your inventory, like, back stock of items . Giordano we, actually, joe has a house where he has a 2bedroom garage, and im storing everything there. Lemonis how much is there . Giordano on the retail side, maybe 100,000. Lemonis 100,000 . Giordano in retail, yeah. Lemonis by cost, how much is it . Giordano i would say maybe 40,000. Lemonis 40,000 of inventory . Giordano yeah. Lemonis its a little odd to me that hes borrowing this money from his friend and his girlfriend to support this business, and theres 40,000 of inventory sitting in a storage facility. Like, why dont you just sell off the inventory . Something just isnt adding up to me. Rocco. Giordano no, no, no. We release things. Lemonis rocco, rocco, stop. Giordano all right. Lemonis okay . Do you remember when joe said you dont really have a plan . Giordano yeah, this could fall under that category. Lemonis no, it doesnt it couldnt, it does. Giordano its what i can do with the money i have. Lemonis the money thing just doesnt work for me because theres 40,000 sitting in a warehouse. Wheres the plan to turn it into cash . Theres not even a sale sign in the window. Like, why isnt this whole place on sale . Giordano well, its not on sale cause some of the products you know, most of the products are new. Lemonis so how old is this merchandise . Giordano those tank tops are from last season. Lemonis are you in love with them . Giordano no. Lemonis well, why are they not on sale . Giordano theres no sale sign. Theres no sale rack because theres no room. Lemonis i think youre in love with your merchandise. Giordano [ chuckles ] lemonis i do. Tell me that you need money, and all the money that you need to live your life and take a day off. Giordano is locked up. Lemonis . Is locked up. Rocco, i need you to be, like, brutally honest with me. Giordano i just feel. Lemonis how close is this store to closing . Giordano we could close in a month. Lemonis what financials do you have on your computer . Giordano i know most of it by heart. Lemonis i cant go on your heart. I got to go on something on paper. Giordano yeah, no, i understand that. Lemonis am i the only person that thinks its crazy that people dont have their financials ready when i get there . Thank you for coming, and im going to ask you to invest hundreds of thousands of dollars into my business with no information. Oh, well, great. Where do i sign . I want you to get a piece of paper. I want you to write down your revenue, your gross margin, and your profit for the last 2 years. Giordano sure. Let me do it. Lemonis okay. So you realize that this is a tax return, not a Financial Statement . Giordano sure. Lemonis do you know the difference . Giordano i know there is a difference. Lemonis have you ever done a Financial Statement . Giordano not a real one. Lemonis how come . Giordano id like to think its in my head, which isnt a good excuse. This is what i owe my friends. Lemonis so you owe your friends 19,700. Giordano yes. Lemonis what are these . Giordano these are the business. Lemonis so thats 36,500 in loans and payables. Giordano yes. Lemonis and 19,700 to friends and family for a total debt of 56,200. How much inventory do you have . Between some garage and in the store . Giordano actual cost, lets say 5,500 or 5,700. Lemonis hundred or thousand . Giordano oh, 57,000. Lemonis did you just make that [bleep] up . Giordano no, i had it here. Lemonis okay. So 57,000 of inventory at cost and 56,000 of debt. Giordano yeah. Lemonis okay. 167,000 of sales, 68,000 gross profit. So what are your Monthly Expenses . Giordano 2,800 for rent. Its about 1,700 a month for employees. Say another 250 to web Services Like shopify and all that other stuff. Lemonis business has around 57,000 in operating expenses for the year, 68,000 gross profit. If youre left with 11,000 a year, and you have 56,000 of debt. Giordano how do you pay that back . Lemonis how do you pay it back . Giordano how do you pay that back . Lemonis and how do you buy new inventory . And understand the fact that your friend has funded your business and the fact that your girlfriend is funding your lifestyle. Giordano yes. Im willing to change it, get the business healthy, and grow the business where it should be. Lemonis what if you go through the Sidewalk Sale process. Giordano i dont know look, ive never had a Sidewalk Sale, so i dont know if thats the right way. Lemonis i want to prove to you that you can do it on your own. You are capable. Anybody that has the guts to start a brand and put their ass on the line has all the guts that i like to partner with. Giordano great. Lemonis i want to make an offer. Giordano im going to fall off this chair. Lemonis why . Giordano its nervous, this. I am, you know, im a little nervous. Lemonis if your business is in trouble, and you need my help, log onto the theprofitcasting. Com. Lemonis i want to make an offer. Beautiful. But when i started cobra kai, the lack of control over my business made me a little intense. But now i practice a different philosophy. Quickbooks helps me get paid, manage cash flow, and run payroll. And now im back on top. With koala kai. Hey more mercy. Save over 30 hours a month with intuit quickbooks. The easy way to a happier business. You can go your own way go your own way your wireless. Your rules. Only Xfinity Mobile lets you choose shared data, unlimited or a mix of each. And switch anytime so you only pay for the data you need. Switch and save up to 400 a year on your wireless bill. With the carrier rated 1 in customer satisfaction. Call, click, or visit your local xfinity store today. Giordano im going to fall off this chair. Lemonis why . Giordano its nervous, this. I am, you know, im a little nervous. Lemonis my offer is 150,000. The way the equity is going to work, ill have 50, youll have 40, joe will have 10, and i want to give joe 15,000 back of his investment. Giordano i just i dont know how i would feel with him coming in, helping me out, an saying, hey, now youre getting less than the deal. I would go 25, joe is still 25, and you 50. Lemonis i feel like you have to have enough of a vested interest that its meaningful to you, too. 25 is not enough, in my mind, for you to have, because i also gave him 15 grand back. I want to pay off all of the debt, all of the payables. I want to put 30,000 into developing a new collection. I want 30,000 of cash in the bank. I want to put 4,000 into a web site, and i want to put 10,000 into marketing. Giordano okay. Lemonis what do pay yourself today . Giordano i pay myself lunch. Lemonis thats it . No wage . Giordano no wage, no. Lemonis im going to advance you 20,000 so you can get back on your feet. Giordano thats amazing. Lemonis im investing in you. Joe, hes going from 25 to 10, but hes also getting 15 grand back. Giordano okay. Lemonis and now he owns 10 of a business that has no debt and a ton of cash. The inventory must be liquidated, and you have to think about clarifying what your Product Offering is. Giordano sure. Lemonis we have a deal . Giordano yes. Deal. Lemonis you better get to work. Im headed to roccos cut and sew factory in new jersey to see where he makes a few of his products. Is rocco here . Giordano hey, marcus. Lemonis im liking this place. Giordano this is a great place. Lemonis this is like a work studio. Giordano this is everything. This is good here. Lemonis and so this whole area is used to draw the patterns and cut the patterns . Giordano yes. Lemonis you can store bolts of fabric here. And where do the finished goods going when theyre done . Giordano theres racks back there where you can go. Lemonis so this factory really has everything you need . Giordano everything you need. Lemonis how you doing . Im marcus. Bieder zeev, how you doing . Lemonis zeev, how are you . Bieder im wonderful. Lemonis did you bring any of your pieces with you today . Giordano yeah, i have pieces over here. Lemonis in order for rocco to move the brand forward, he has to clearly define what it stands for, who hes making it for, and the way to do that is to simplify the offering. Nothing feels cohesive at all. Theres no story. Giordano i have a story. Its just lemonis tell me what the story is. Giordano faded royalty is good quality product at affordable pricing. Lemonis thats not a story. Giordano okay. Lemonis thats a brand promise. Giordano can i show you the pieces . Lemonis no, i need to understand your thought process from inspiration to final product. Giordano sure. Lemonis and i need to understand how those pieces all tie together for one brand. Is there something that inspires you . Giordano the time. I feel like, for me, its the 60s and 70s. Lemonis great. Thats the genre. Giordano yep. Lemonis okay. Now, take me to the next point. Giordano while the adding the edge of stuff from today. Lemonis and how are you adding the edge . Giordano the different modern cuts. Not you know. Lemonis keep going. Giordano so. Lemonis im going to give you an example. Giordano okay. Lemonis i believe that what you described is accomplished in this piece. Giordano okay. Lemonis i believe its accomplished in the style because its an oldschool fiveanddime shirt. So, like, what prompted this from a design standpoint . Where is the inspiration . Giordano i had a grandfather. This would have been out of his collection. Lemonis so this, to me, so far, is the only piece that has met the description that you gave me. Giordano okay. Lemonis show me Something Else on the board. Giordano i also really like this. These are trail runners. Lemonis let me have this. Describe to me, again, what you told me the brand stands for while youre looking at this. Giordano late 70s, early 80s track jacket. Lemonis i thought this was 60s or 70s, the brand. Giordano its not necessarily 60s and 70s per se. Lemonis okay. Were going to stop. What i worry about with rocco when he struggles to explain himself isnt his creativity or his character or his integrity. Its his ability to organize and collect his thoughts. What i want to see you do is, on paper, before we go any further. Giordano okay. Lemonis . I need you to pick one thing that youre going to have a vision about that says to the consumer, this is my classic piece. This is what im building the brand on. This is the audience that i want to serve. And im going to literally make my investment on this piece. Giordano got it. Lemonis vintage, define that for me. Giordano old style. Lemonis give me more than that. Give me descriptive words. Old what, like old clothes . Giordano not the feel but the way. Lemonis retro patterns . Giordano retro patterns. Lemonis write retro patterns. Giordano this is what gets me the most is the old retro prints, the colors. Lemonis is that a retro print on you . Giordano its a retro print, but the colors pop. Lemonis so you want vibrant colors . Giordano vivid. Lemonis because right here, you wrote muted colors. Muted colors or vivid colors, which one . Giordano so lets take this out. Lemonis you got to pick a lane. You cant be all over the place. Check off on there what this is. Giordano old cut, retro print, you wear that, and it looks like my grandfathers shirt. Lemonis this is your anchor piece . Giordano yes. Lemonis now, i want you to throw everything in the garbage except this shirt and start over. You are going to show me what you would do to this shirt to have it hang on a rack or in a wholesale showroom that would make somebody want to buy it. My goal is to have rocco identify one item that he can build his whole collection around. His grandfather shirt is the most successful garment he has in his entire collection and a really solid building block. Each newly designed tshirt, hoodie, hat, or accessory needs to tie back to that original piece, not only with style but with Color Palette so the entire line can be viewed as a cohesive collection. Task is clear, right . Giordano task is clear. Lemonis okay. See you later. Giordano see you. Lemonis what are you doing, my man . Giordano hows it going . Lemonis rocco told me there was 40,000 of inventory sitting in joes garage. I want to see whats here. Giordano its, um. Its a shock. Its a shock. Lemonis rocco. Giordano i know. Lemonis i got to be honest with you, man. You need to take a step back. Giordano this is scary. Lemonis no, no, no. Thats an understatement. What is this . Giordano this is whats been holding me back. Lemonis this is whats holding you back. Or yourwhats holding you back . Giordano well, sure. Lemonis i mean, most of this, honestly, feels like junk. Giordano it still sells. Lemonis why isnt it on the web site . Giordano i only have a couple of pieces of each. Lemonis what are these hats . Giordano these are the hats i showed you. These were in the shop. Lemonis what is all this fabric . Giordano for hats. That was going to be a buttondown. Thanks. This failed, a corduroy bucket hat. That failed. Lemonis what is all this . Giordano this is the perfect lemonis let me have it. Giordano all right. Lemonis this is my faded royalty look. Giordano its not a bad look. Lemonis this is what i just invested how much in . Giordano 150,000. Lemonis this is what i invested 150,000 in . Giordano no, you invested 150,000 in. Lemonis in what . In your system . Giordano not my system. Lemonis in your process . How could you convince me this is not a bad idea . Giordano this is a bad idea. Lemonis how could you can giordano but investing in me and the company isnt a bad idea. Lemonis the company is in this garage. If theres 10,000 of inventory here, id be surprised. Giordano no, theres 40,000 in inventory here. Lemonis no way. Rocco, i dont know if can do this, man. I really dont. Hoodies, faded royalty for 5. You can get mad, and you can pout. Giordano im not getting mad. Lemonis at the end of the day, youre going to learn how to do it the right way. Lemonis if theres 10,000 of inventory here, i would be surprised. Giordano no, theres 40,000 of inventory here. Lemonis no way. Rocco, i dont know if i could do this, man. Giordano this doesnt sum me up. Even though it might look like that, but the inventory is here. The money is here. It has to be sold. Ill do what it takes. If we have to do a Sidewalk Sale, and we have to generate income, ill do that. I want the company to grow. Lemonis heres what you got to do. Everything here thats sellable, you need to get to the store. Lemonis because we need people to know that were having a sale. Giordano its going to be a sale. Lemonis this garage has to get emptied. Then, once we sell that, were going to come back here and check it again. Giordano yes. Lemonis okay. Giordano deal. Lemonis im keeping your clothes. I want to see you take this buttondown shirt and were going to find new fabrics, and were going to build the anchor product. Giordano got it. Lemonis now that weve established that the grandfather shirt is the anchor to the entire collection, im taking rocco to a fabric store because i want to have him start the process of designing some new pieces. Giordano i think regular camo is a little played out right now, but stuff like this, the bamboo stuff. Lemonis okay. Its really about seeing if youre picking things that line up with what you put on paper. Giordano got it. Lemonis i want you to read those words out to me, and i want you to start with, faded royalty is a brand that has. Giordano faded royalty that is a brand that is a lifestyle brand thats faded, edge, modern fit, vibrant, bold, fashionforward, grandfather conservative. Lemonis vibrant, bold, grandfather conservative. Those conflict with each other . Giordano its a fusion. So grandfather conservative and bold is lemonis thats such a [bleep] word because fusion, to me, is a way to say, im going to do whatever i want because i always explain. Fashion is a very finicky environment because you have to be able to explain to the consumer and the company thats going to buy your product exactly what your message is and what youre trying to address, and rocco is scattered and all over the place. What i need him to do is pick a path and tell a story. You will not successfully sell if you cannot communicate. You have to be able to explain it. Giordano im going to have to do all that. Lemonis . So that a buyer doesnt have to do the thinking. When you described this shirt to me is a grandpa shirt. Giordano mmhmm. Lemonis . It would explain to people, this cut. Giordano has this fit. Lemonis . Has this inspiration. Rocco, write this stuff down. Four attributes. Number one, the cut. Giordano cut. Lemonis were calling it a grandfather cut. Number two. Giordano embellishments. Lemonis okay. So what would be the next thing . Giordano the feel. Lemonis the quality of the fabric. Giordano and the fourth one, the actual print. Lemonis the actual print. Youre describing for the consumer or the buyer the actual cut. Its a grandfather cut, okay . Embellishments. Giordano bold. Lemonis bold. How are you describing the print . Giordano retro. Lemonis he finally lands on two words that he believes are the cornerstone of his brand, retro and bold. Why did it take us 3 days to get to that . Giordano you know, i never had someone say, hey, why this . Why that . Lemonis were going to see if this works. Giordano yep. Lemonis okay . What about Something Like this . Giordano yeah. I think you could do something to that. I could do polka dots, different variations. Good. Lemonis yes or no . Is this edgy . Giordano we can make it edgy. Lemonis yes or no . Giordano i mean, on the shirt, yes. Lemonis great. Do you understand . Giordano i do. Lemonis you have to pick a lane. So i want you to go back, and i want you to make 12 shirts using six different fabrics, so each shirt has two variations of it. I want to see things with thread, stitching, buttons. Change it up, but dont change what the brand stands for. Okay . Giordano okay. Got it. [ whistling ] lemonis im meeting rocco back at the store to ensure that hes moved everything out of joes garage, and he started liquidating things on the sidewalk. Instead of seeing a Sidewalk Sale, which is what tasked him to do, i see rocco standing out front pouting like a little baby, and a store full of boxes that dont even look like theyre open. I thought you would have been, like, out there with the table. Giordano well. Lemonis were you waiting for me . Giordano i wasnt waiting for you because, you know, i dont know the full execution of all this. Lemonis i think rocco is so focused on the vanity of his brand that he doesnt want anybody knowing that he made some mistakes. Faded royalty hoodies faded royalty designed by rocco man ill buy one. Lemonis five dollars. What size are you . Man extra large. Lemonis its hard. Its a little hot out today but. Five is good. Man 3 five is good . Lemonis thank you, my man. You can get mad, and you can pout. At the end of the day. Giordano im not getting mad. Lemonis . Youre gonna learn how to do it the right way. Hoodies, faded royalty for 5. Giordano just cause it was in a garage doesnt mean that there needs to be a fire sale. Lemonis why not . Giordano because a lot of this stuff is still new stuff, and putting your foot down and saying this has to get done, thats wrong. Ill give it to charity before i sell it in this fashion. Its something i cant do, where i just put it on the sidewalk and sell it cheap. Thats how i feel about it. Lemonis how many hats are here . Giordano close to 5,000 hats. Lemonis and so how much is that . Giordano 30,000. Lemonis you understand how this flies in the face of everything weve been talking about . Giordanbeautiful. Butmake sense when i started cobra kai,le the lack of control over my business made me a little intense. But now i practice a different philosophy. Quickbooks helps me get paid, manage cash flow, and run payroll. And now im back on top. With koala kai. Hey more mercy. Save over 30 hours a month with intuit quickbooks. The easy way to a happier business. In this fashion. Its something i cant do where i just put it on the sidewalk and sell it cheap. Its the integrity. I dont want to sell it in this fashion. Lemonis what do you mean this fashion . Giordano throwing it out on the sidewalk. Kristina hows it going . Giordano stressful. Kristina what do you need help with . Giordano no, you dont kristina i want to help you. Lemonis how are you . Kristina im good. How are you . Lemonis im marcus. Kristina kristina. Nice to meet you. Giordano my better half. Lemonis okay, awesome. Kristina so were having a Sidewalk Sale . Lemonis have you asked him to do this before . Giordano how long have you been wanting me to clear out that garage and stop the hoarding . Kristina forever. But this is good. Im glad this is out here. Giordano if shes happy, then im happy. Kristina i think this is the right step. Giordano i get what youre saying. I need to move it, and i will move it now that its here because its not going back in the garage. Five dollars five dollars. Try that on. Twenty bucks. I got this in large. Lemonis five dollars. This one . Giordano five dollars five dollar hats you both need tank tops, five bucks. Five dollar hats. This guy right here needs a hat. One time only sample sale lemonis how is it shaking . Want to get a little count . Giordano yeah. Lemonis so i have 1,100 in this pile, 1,200, 1,300, 1,400. Giordano three hundred. Lemonis so were at 1,775 right now. Giordano thats what i did in a week. Lemonis okay. And that was in 2 hours. Okay. Were moving stuff. Fivedollar sweatshirts fivedollar tshirts. All designed by rocco. Giordano five dollars, you get a hat. Lemonis five bucks, my man. After i gave rocco some direction, and i gave him some time to design some of his shirts, i asked him to come out to la. Whats happening . Giordano good, man. Nice space. Lemonis . And present to me where he was going with the line. Giordano so the one on the left is our standard fit, but what i changed. I like this detail with the pocket flap, which is different from the original. Lemonis and so your current shirt does not. Giordano does not have this. Lemonis okay. Giordano so this is the current shirt but with this. Lemonis all right. Lets see what else. Okay, so the 12 shirts that you this is not. Not a fabric that we picked. Giordano no, no, no. There was actually enough to make 13, so i experimented with one. So if we wanted to do a collection that ties all in together lemonis now, i just have to tell you this. This wasnt as much of a fashion exercise as it was a dontdomorethanyoure supposedto exercise. Giordano okay. Lemonis because one of the things that you and i have had as a small issue is you are all over the place. Giordano okay. Lemonis right . And so were working to get it honed in. Giordano honed in. Lemonis so that we dont end up with a garage full of stuff that, like, oh, i had this, and so i made it. This is an example of what got you in trouble. Giordano okay. Lemonis because you didnt do the task. Heres whats frustrating for me. I think this came out great. I think this came out great. You changed the color. You changed the buttons. You changed the side pin. So i know what talent you have. The fact that he did not follow instructions really watered down the creativeness. I couldnt even focus on the fact he had some good ideas because i was still so annoyed by the fact that he didnt just do exactly what i asked him to do. We got to pick a lane and you got to literally get committed to something thats cohesive. So im comfortable with you continuing to develop the shirts. I want more changes to them. Giordano got it. Lemonis so i want you to create 12 shirts using six fabrics. Were going to try this again. Giordano okay. Lemonis i want you to make six styles of hat. I want you to make tshirts and sweatshirts, but they have to connect to what you did. Im looking to see an entire collection thats cohesive. And then, once we finish making that, im going to take you to a retailer, and were going to see if they actually want to buy it. Giordano okay. Lemonis is that garage empty . Giordano yes. Lemonis theres nothing in that thats yours . Giordano yes, yes. Lemonis all right. Good job. Giordano thank you, buddy. Lemonis rocco. Giordano got it. Thank you. Lemonis im taking rocco to one of my Storage Spaces in new york city, and its vital that he proves to me that he can actually organize the merchandise and treat it with respect. I want everything that does not sell at the Sidewalk Sale to be brought here and hung here. Get it inventoried. Get it put on a spreadsheet and establish the dollar amount. Giordano got it. Lemonis historically, rocco used to dye his garments one at a time in a bucket at his house, and in order for the volume to really grow here, hes not going to be able to do that, so im going to take him to a dye factory in new jersey. Binson if you want to do different novelty pieces for, lets say, 50 shirts or 20 shirts lemonis or 1,000. Binson or 1,000. Giordano yeah. Lemonis if this brand is going to explode like i think it can, i want him to have more resources at his disposal so he can try new things. That looks good for a tshirt. We want to do all of our stuff, our dyeing here. Thank you, guys. Thank you. Man no problem. Lemonis one of the things that rocco really loves to do is use prints on different fabrics. How are you . Zimmerino hi, marcus . Lemonis im marcus. Zimmerino jeanette zimmerino. Nice to meet you. Lemonis jeanette, nice to meet you. And so i arranged for him to work at a Digital Printer so he knows any idea that he has can be printed. Giordano right now, we want to center our collection around this style of shirt, and, for us, if we can nail this material, i think thatd be great for us. Lemonis after giving rocco time to organize his inventory, im heading back to the Storage Space because i wanted to see if hes actually followed my process. Giordano so everything that was in the garage is down here. Lemonis theres a lot of jackets here, man. Giordano theres 96 jackets here. Lemonis how many hats are here . Giordano close to 5,000 hats. However. Yes, yes. A lot of these hats so, how we got to this point. Lemonis so 5,000 hats at an average cost of what . Giordano six and a half dollars. Lemonis and so how much is that . 5,000 hats. Giordano its about 30,000. Lemonis well, how much is it exactly . Giordano five thousand times 6. 50. Its 32,500. Lemonis the fact that theres 5,000 hats here is a big deal. Hes supposed to be selling inventory not hoarding it. And furthermore, he should know how much inventory he has there. I dont know how long i can tolerate this. Lemonis you understand how this flies in the face of everything weve been talking about . Okay, show time. Giordano so, this piece might not be for everyone. Its very fashionforward. Svendsen it would be a pretty hard sell to bring that in. Lemonis you understand how this flies in the face of everything weve been talking about . Giordano i understand that. Liquidate all of the hats. Wasnt that our deal . Giordano thats our deal. Lemonis thats got to happen. Giordano so i got to move this inventory. Lemonis focus, man. You got to focus. Whats up, bearded men . Giordano how are you, buddy . Lemonis how you doing, my man . Joe pleasure. How are you . Lemonis its been a couple weeks, and rocco has done a decent job in starting to sell some of the inventory down, but theres one thing that i really want to know. So ive asked rocco to meet me at joes garage. Im anxious to see whats inside. Joe good. Lemonis theres no inventory here. Joe no, absolutely not. Lemonis okay. When are you getting married . Giordano very soon. Lemonis did you get a ring . Giordano working on it. Lemonis why dont you sell some of that [bleep] in the basement and buy a ring . Giordano yeah. She deserves it. Lemonis yeah. Giordano were going to have the first profit wedding. Lemonis its going to be a nonprofit wedding. Youre not making any money on it. Okay, buddy. Giordano see you, buddy. Lemonis ill see you back there. See you, brother. Joe thank you. Lemonis thank you. Im meeting rocco at the cutandsew facility because i want to check on his progress and see if hes actually focused on the assignment. Whats the good word . How you doing, brother . Bieder im doing great. Lemonis youre doing good . Bieder yes. Lemonis good. And i have to be honest, if he doesnt have this right, im sort of running out of patience. Thats cool. Giordano i think no one is really doing this. Lemonis so the idea is to have, like, a little hoodie baked in there. Giordano its more fashionable now. I like it this pattern because it makes sense. Lemonis i kind of dig it. Giordano and then another option is without the hood and add a sleeve to it underneath. Lemonis i like it. Giordano yeah. So this is the collection. One thing thats not ready yet is in a hat. All this fabric. Lemonis all digitally printed. Giordano thats something i created. Its a camouflage. Its a light camo, and then i take the same material, put it on the hat to tie it all back together. Lemonis thats badass right there. Giordano thank you. Lemonis im really liking what im seeing rocco put together, and i always knew he was talented, but now that hes tied all the products together, i know that itll make sense to buyers. Theyll be able to understand the story and the look that hes going for. Giordano twelve cutandsew, to six hats, the six hoodies, and the six tshirts to put it all together. Lemonis there you go. I think the work that you did was amazing. I want you to write a onesheet narrative on who the customer is. I want you to create a person in your mind. Giordano okay. Lemonis so, when you go pitch to a national company, theyre going to need something that brings people in. Theyre going to need something that makes your collection something they have to have. You need to tell them whey they have to believe in you. Giordano i can definitely do that. Lemonis see you soon. Today, im taking rocco to minneapolis to visit my business, the house. Ive arranged for him to put a whole collection together and to pitch it to their buyers. This is for the blue one . Giordano this is for the blue. Lemonis the house is a catalog and web site business that specializes in skate, streetwear, board wear, things that are exactly who roccos audience is. Giordano these all go together. This whole collection goes together. Lemonis and while i may own the business, i dont influence their purchases. Want to put them in order . Giordano put them in order. Lemonis when you take them through the collection, stay focused. Deal . Giordano deal. Lemonis rocco is completely on his own here. If they like the product, theyll sell it. If they dont, they wont. Okay, show time. Giordano hello. Currier hello. Giordano im rocco, creative director and owner of faded royalty. Currier hi, im chris. Giordano chris, nice to meet you. Behind me is a mixture of 60s mod english, like that vintage, the who feel with new york edge. My demographic is 16 to 30, a lot like yours, mid30s. Hes someone thats social. Hes someone thats out there, but he wants to stand alone. He doesnt want to have the same clothes everyone else is wearing. He wants to be a little different without being a distraction. Right now is the best time to bring those two worlds together. The quality is amazing, and for the most part, this averages at 55 margins, which is pretty good. Lemonis you see how they are like, yeah, buddy. We like margins. Giordano money is good. So lets so start with this, our mandarin collar. Here, take a feel. The retail on this is 70, wholesale 35. Now, the margin is 50 . However, this shirt is made in america. Heres something where we changed the yoke on it. The buttons are clear. The yoke is different. Its like a throwback to a bowling shirt. Currier yeah, this print is really great, yeah. Lemonis you like the print . Svendsen yeah, i like it. Giordano embellished with our star logo. Rohlfing simple. Giordano simple. Rohlfing i feel, like, the quality of it, too, you just feel like you can bang around in it and not worry about worry about it, right . Giordano exactly. Its a really great shirt. Currier i think the madein america, too, adds value to it. People like to support that. Svendsen i mean, thats pretty easy. Currier call that out clearly, and you can sell that. Svendsen thats definitely something to call out. Giordano now, this piece might not be for everyone. Its very fashionforward. Try this on. Currier here you go, buddy. You look like you want to wear this. Lemonis who asked for a robe . Giordano its got a twoway heavy zipper on it to make it more masculine. Lemonis wasnt me. Giordano you got the hat if you wear a hat, but i think that looks good. Lemonis and honestly, it was ugly, really ugly. Rohlfing this is tough for me, just personal preference. But i think your fashionforward kid would be into it, but its a very niche market for that. Giordano it is a niche market. Svendsen it would be a pretty hard sell to bring that in. Breitenfeldt its all too fashionforward for us. Definitely. Lemonis for exclusives, extras, and business advice, visit theprofit. Cnbc. Com. Rohlfing but i think your fashionforward kid the big events are back. Xfinity is your home for the return of live sports. Would be into it, but its a very niche market for that. Giordano it is a niche market. Svendsen it would be a pretty hard sell to bring that in. Breitenfeldt its all too fashionforward for us. Rohlfing and i mean, its an interesting piece for giordano its not for everyone and lemonis and it wasnt part of the assignment. Giordano well, it was the hoodies. Lemonis well, thats not a hoodie. Just because it has a cape on it. Theres no question that roccos creative, so he gets an a for creativity, but he gets an f for showing up to one of my businesses with a robe. I mean, honestly, dude, i dont know where the robe came from but no robe. Giordano so heres the experimental. This is a great tshirt. Lemonis sublimation. Giordano the sublimation. And they actually make the material, which is pretty unique. Feel that. Rohlfing is that your logo thrown in there . Giordano my logo is thrown in there. Lemonis so can you guys do me a favor . If you could go through the racks, left rack is something that you would buy thats a style or you like the concept. Right side would be something that, even if you changed the color, even if you its just not going to work. Svendsen yeah, we can keep that. Yeah. And i think thats something interesting. I think you could work with it. Giordano all right. Those are pretty good odds. Lemonis are you surprised . Breitenfeldt yeah, i was actually going to say it was pretty scattered online but now, knowing, like, the color stories and everything kind of fits together. The cohesiveness now, it makes a lot more sense. Lemonis assuming that the pricing and the margins are clear, assuming that youre able to only buy the ones that you want, do you think this is something that could sell to your customers . Breitenfeldt yep, definitely. Lemonis okay. Giordano i put my heart and soul into this. Im glad you guys liked it, and i look forward to working with you guys and doing a lot of business with you and making some money. You know, money is good. Lemonis thank you very much. Breitenfeldt yes, yes. Thank you. Lemonis i think that rocco is always going to push the edges of creativity, but through this process, he was able to get rid of his inventory and really put together a cohesive line. Its now clear to me that his brand stands for something. I feel like hes come a long way. Do i ever want him to suppress his creativity . No. Do i want him to make robes . Definitely not. I thought your presentation today, compared to the first day i met you in your store. Giordano oh, its night and day. Lemonis if i was grading the presentation, i would give it a nine out of 10. This on clinton street is going to do very well, and it will do very well online. It will do well in chris store. Itll do well in all of their businesses. What did you learn through this process . Giordano what i learned is stay focused, and i think what came out of it is just a stepping stone. I think whats to come is going to be even better. Lemonis quick question, by the way. Did you get engaged . Giordano soon, soon. Lemonis whats soon mean . Giordano i got how its going to be done really set down. Lemonis so you get the ring yet . Giordano i didnt get the ring. Lemonis get your ring. Get your [bleep] together. Giordano thank you. Lemonis im real proud of you. All right . Giordano thank you. Lemonis okay, buddy. Giordano thank you. Im gonna just tell you, that cornbread is legit. At a packagedfood business, known for its flavorful mixes. Erica we have flavors like berry cobbler, bourbon salted pecan. Lemonis . The owner has bitten off more than she can chew. Andre if youre not capable of running the business and making it successful erica who says im not capable of running the business . Lemonis she spent way too much money. Andre shes been running the business for five years, and the profitability is close to zero. Lemonis now, colossal debts have clogged her cash flow. How much debt do you have . Erica its probably about half a million. Andre shoot. Half a million dollars. Lemonis . Bringing her business and her family to the brink. Erica why should i share information with him