Author Topic: Johnson Publishing Assets Update--  (Read 174 times)

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Johnson Publishing Assets Update--
« on: April 08, 2019, 06:04:15 am »

https://www.chicagobusiness.com/marketing-media/slow-motion-decline-johnson-publishing-accelerating?fbclid=IwAR1cLgRa_qTzD7a1t7HiBZaL2YTrWlstykBnglX7raDQ3HFfVO7KUuoNAms

Is the slow-motion decline of Johnson Publishing accelerating?
The forced liquidation of a U.K. division is an ominous sign for a historic Chicago company.
Johnson Publishing was once the most powerful African-American company in the country, but now its iconic magazines Ebony and Jet have been sold, its Fashion Fair cosmetics have vanished from stores and the late founder's Michigan Avenue office suite has been chopped into modest apartments.

The demise of 77-year-old Johnson Publishing unfolded over more than a decade, with the death of founder John Johnson and despite his daughter Linda Johnson Rice's efforts to buoy the business by selling assets. Now operations have essentially halted, say former employees, as the family empire has been overtaken by changing times and widespread competition for black consumers. Beyond the decline of a historic Chicago company, the slow-motion dismantling of Johnson Publishing represents the loss of a sometimes Pollyannaish, sometimes controversial 20th-century avatar of black business and black upward mobility.

Johnson Publishing "was the model for everything," says former Ebony editor Ronald Childs. "Everybody knew that Chicago was the hub of black business in those days, but it all just went away."

The forced liquidation, ordered late last year, of the U.K. unit of Johnson's Fashion Fair cosmetics division is an ominous sign for a company that Johnson Rice, 61, still maintains will recover its footing.


Johnson Publishing's South Michigan Avenue headquarters—the first in the city designed by a black architect and owned by a black businessman—was once a bustling, 11-story monument to the success of Johnson Rice's father, with an avant-garde decor and celebrities from Sammy Davis Jr. to Michael Jackson strolling through its lobby. In addition to publishing and cosmetics, the company once included a hair-care-products division, radio stations and the beloved traveling Ebony Fashion Fair show.

Today, the landmark building's thick, curvaceous brass door handles are wrapped with a chain and lock. Inside, the high-ceilinged lobby is empty and dark, aside from the shiny brass points and arms of a display clock overhead keeping time since 1971.

Johnson Rice, chairman and CEO of Johnson Publishing, sold the building in 2010 for $8 million to Columbia College Chicago, which sold it seven years later for $10 million to a real estate developer now converting it to apartments. She also sold an equity stake in the company to JPMorgan Chase in 2011, put its historic photo archives up for sale in 2015, shed the magazines in 2016 and put the family's sprawling Palm Springs, Calif., mansion on the market this year.


She declines to comment on what remains. Interviews with a half-dozen former employees as well as executives who did business with the company suggest only a handful of employees are left. The founder's death in 2005, the decline of print media, rising competition and management missteps felled the business, those interviewed say.

A turning point came with the 2016 sale of the company's Ebony and Jet titles to a Texas investment firm, CVG Group, run by Michael Gibson and Willard Jackson. That left Johnson Rice overseeing the Fashion Fair cosmetics line from a smaller office on Michigan Avenue, under the Johnson Publishing moniker, though she retained a small stake in the new Ebony Media Operations.

Even though Fashion Fair had become a bigger source of revenue than the publishing arm in recent years, sales declined year after year, says Lance Clark, a top Johnson lieutenant for 43 years until 2010. At its height, the international cosmetics business had about 100 full-time U.S. employees, plus more abroad, and paid hundreds of department store workers hawking its products, generating about $55 million in annual revenue, he says.

While former CEO Desiree Rogers tried to revive the struggling brand with new colors and marketing, inventory snafus mounted and she left in 2017. Today, none of the nine Dillard's and one Bealls stores listed on Fashion Fair's website have any of the product, except one with clearance items.

The company's packaging supplier, World Wide Packaging, sued Johnson Publishing in Cook County Circuit Court last year over $642,942 in unpaid invoices. "We had a great relationship," says the Florham Park, N.J.-based supplier's CEO, Barry Freda, who worked with Fashion Fair for nearly 20 years. "It was a shame to watch such a great brand decline."


But he became impatient with Johnson Publishing CFO Steven Isaacson. "We TRULY appreciate our long standing partnership," Freda said in a December 2017 email to Isaacson disclosed in the litigation. "With that said, I have been as lenient as any vendor could be, and I have been so, for a long long time. FF average days to pay is 232 days—the worst of ALL of my customers." Freda added that not one CEO or CFO at Fashion Fair "has stayed on course."

World Wide Packaging refused to ship new orders until the bills were paid. The case is pending. Isaacson didn't respond to a request for comment.

In the United Kingdom, another unhappy Fashion Fair creditor that provided recruiting services forced the cosmetics company into liquidation. That petition shows net liabilities of $9 million at the end of 2016.

Fashion Fair became "fairly notorious for not paying vendors, or paying them late," says Christopher Thomas, a former vice president of sales who sued the company in 2017 because it didn't reimburse him for about $40,000 in expenses after a company reorganization cut his job. Eventually, he was paid in installments, he says.

Disappointed Fashion Fair customers begged in social media posts for information on where to find their favorite makeup, but its "Unapologetically Bold, Unabashedly Beautiful" website says only: "Please accept our apologies, we are unable to process orders at this time. We appreciate your patience, and anticipate resuming normal processes, as soon as possible." It also offers the option to sign up for email updates.

"We had a very, very faithful customer," says Edith Poyer, who worked at Fashion Fair from 1990 to 2012.


Eunice Johnson, the founder's wife, conceived of the product line when she saw African-American models in her Ebony Fashion Fair shows blending products to create the right tones for their skin, says Poyer, a makeup artist who became an account executive.

Paradoxically, desegregation, a more open society, more competition and technological advances combined to weaken the entire Johnson enterprise, says Tom Burrell, founder of Chicago ad agency Burrell Communications Group. Burrell, who worked with John Johnson regularly, also notes that the business depended heavily on its founder. "I don't care if you're offspring or a sibling, a lieutenant or acolyte—you can't be him," Burrell says.

REORGANIZATION

After her father's death, Johnson Rice reorganized Johnson Publishing, hiring Anne Sempowski Ward as Fashion Fair's first president. She also made a big investment in remaking the look of the cosmetics line just as massive department store consolidation set in.

"As the stores continued to close, our revenue was less and less because that's where we were making all of our money," Poyer says. Meanwhile, rivals like Estee Lauder and Elizabeth Arden became more inclusive in their ads, marketing to people of color—a welcome cultural advance, but one that further undercut Fashion Fair's reason for being. Another factor in the brand's decline: As the digital era dawned, "our online presence wasn't as significant as it could have been," Poyer says.

The appeal of the magazines also began to wane in the 1990s, after peaking with coverage of the 1960s civil rights movement. John Johnson rejected new cultural styles like hip-hop as anathema to the black middle class, says former Ebony editor Charles Whitaker, now interim dean at Northwestern University's Medill School of Journalism. Mainstream competitors like Esquire and new digital outlets like Root encroached on black readership.


Whitaker faults Johnson Rice for a "series of blunders" in hiring editors who didn't have a 21st-century vision for the titles. "That consigned them to forever being your grandmother's magazine," he says.

Almost all of Fashion Fair's employees were dismissed last year, some without a final paycheck, say former employees. Separately, Ebony and Jet freelancers sued the Ebony Media owners in Cook County Circuit Court over unpaid earnings and reached a settlement last year paying them $80,000. Johnson Rice had been CEO of the operation but exited that role last year, while remaining chairman emeritus.

It's a striking contrast to the generous benefits offered by John Johnson, say former employees. They still rave about the employee dining room that offered a different menu every day at minimal cost. Their loyalty to the company persists at an annual alumni summer picnic.

As Fashion Fair foundered, Johnson Rice joined the boards of other companies, including local food delivery outfit Grubhub and Palo Alto, Calif., electric-car maker Tesla.

In response to earlier Crain's queries about the U.K. liquidation, Johnson Rice suggested there's more to come. "This is just the unfortunate part of a much longer process that will have to occur for us to be where we want to be at the end of the day," she says.

Where that will be seems unlikely to measure up to where it was.
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