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HOW I DID IT

How I Did It: Rachel Ashwell, Shabby Chic
 

Rachel Ashwell was a single mother when she opened her first Shabby Chic boutique in Santa Monica, California. Then the financial crisis hit.

Empire Rebuilding Rachel Ashwell built a powerful retail brand. Then she lost it all.

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Rachel Ashwell was a single mother when she opened her first Shabby Chic boutique in Santa Monica, California, in 1989. By 2008, she had six stores selling comfortable but stylish furniture and a licensing deal with Target. But when investors persuaded Ashwell to expand, the move backfired as soon as the financial crisis hit. Shabby Chic went bankrupt, the stores closed, and more than 200 people lost jobs. But Ashwell rebounded, opening four high-end boutiques while working closely with Shabby Chic's new owners, Brand Sense Partners.

I grew up in London and had a very frugal upbringing. My father was an antique book dealer, and my mother restored antique dolls. As a child, I was dragged through flea markets and learned the importance of quick decision making. Want it? Negotiate and buy it.

When I was 19, I came to California to do styling for advertising and television and met my husband. My daughter was 2 and my son a few months old when we separated. I wanted to work, but I wanted something where I could drag the kids around with me. I had these simple slipcovers made for my couch, because I wanted something that my kids could climb on with sticky fingers and dirty feet and that I could put in the washing machine. My friends constantly asked, "Where did you get those?" And they asked about the flea-market furniture I scavenged at the Rose Bowl in L.A. I started thinking, Oh, maybe there is a need here.

I opened a shop in Santa Monica in August 1989 and filled it with flea-market furniture that I had slipcovers made for. A friend hooked me up with a real estate person in New York, where we opened a second store in October. Both were huge hits. I added San Francisco and Chicago—and got $100,000 credit lines for each store.

I never hired a publicist in those days. But the press was great. Friends borrowed some furniture and mentioned us on TV. A few celebrities had my stuff in their homes that was photographed. I never would have said, "Hey, Julia Roberts just bought a ton of things," but it nevertheless got out that that was going on.

A publisher asked me to do a book. I thought, What book can I do about a sofa? But it was the best decision I ever made. The book was about homes that relied on the Shabby Chic formula: cozy, comfortable, vintage, and pretty. It has been a great way to extend the brand. Then, E! offered me my own TV show. I did that from 1999 to 2003, and it put me on the map.

When Oprah picked our T-shirt bed sheets for her "Favorite Things" show, our phones jammed. We had $1 million in orders. The exposure opened up our wholesale business.

By 2008, we had six stores, two big licensing deals, 65 employees, and $20 million in revenue. I hired a CEO. He took care of day-to-day business, and I took care of the creative side. My kids were about to go off to college, and I started thinking, What next?

I met with several investment groups. I liked one in particular—I thought, They're young, they're virile, they aren't going to want this to fail. They showed me endless debt and equity ratios, which were difficult for me to understand. They wanted to expand to 57 stores over five years. I decided to sell them a minority interest in the company. I liked the way they handled my frustration. There were days when I would just cry and say, "Compound? What are you talking about?"

Their approach felt wrong to me. What got me through hating myself for ignoring my intuition was looking at these kind, smart men who had put a lot of money into my company. I kept thinking, They know what they're doing.

Over a year and a half, we opened nine stores. There were endless meetings: buy plans, forecasts, and expanded categories. Before, I would buy things I liked. Suddenly, we had to have the same frigging soaps everybody else sold. Shabby Chic was losing some of its soul.

Then the home industry crashed. I didn't understand what our balance sheet meant until it was too late. The guys were saying, "Let's slow down" and "Let's cut inventory." We started doing discount sales. For a while, my entire job was designing e-mail blasts.

By January 2009, we filed for bankruptcy and started closing stores. The guys by now had gone. The banks put liquidators in charge. We even had to close L.A. The humiliation and sadness over people losing their jobs because of me was just awful.

I had already been in conversation with Brand Sense Partners, a licensing company, about managing my media career. Following talks with the bank, Brand Sense and I joined forces, with their focus being licensing and mine retail, which allows me to do my own exclusive design work.

I started four Rachel Ashwell Shabby Chic Couture stores, which I own. I handpick everything sold in them: vintage pieces, upholstery for our custom-made couches, artisan-crafted chandeliers. I consider this the crème de la crème of our brand. Brand Sense's Shabby Chic licensing programs are diffusions of that. For instance, Target sells a collection of Shabby Chic bed and bath linens.

We closed Santa Monica in April 2009 and reopened the following September. There's nothing in the new store that I don't want to take home—that's a very good benchmark for me. We had nothing as far as stock. So we had to regroup and get our little guy around the corner making things for us again. When you have everything stripped away, you can come back a bit more objectively and think, What is worth bringing back?

By last October, I had three stores—New York, L.A., and London. Twice a year, I go to a flea market in Round Top, Texas, about 80 miles from Austin, to find vintage goods and get new ideas. The lady who owned the bed and breakfast I always stay at there told me she wanted to sell her place. I said, "OK, I'll buy it."

What's beautiful about this B&B is it has six diverse buildings, which allows me to show different Shabby Chic experiences: One room is feminine, another is bohemian. And another is ranch. In February, I'm going to do a workshop on creativity, inspiration, and business.

All our rooms are filling up. People come for the local flea market but tell us that they actually want to buy everything in the room. We opened our fourth store there. We're also thinking of starting our own flea market on the property. There's still tons to do. I feel like I am just getting started.

IMAGE: Misha Gravenor
From the November 2011 issue of Inc. magazine




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