Friday, July 27, 2001

Crazy Shirts courts buyers

By Tim Ruel

Locally born Crazy Shirts Inc. is shopping around for outside investment, and recently entertained a purchase offer from mainland clothing firm Big Dog Holdings Inc.

Crazy Shirts has been looking for a cash infusion for the past year but is in no hurry to make deals, said Randy Yeager, the company's president and co-chairman.

Crazy Shirts stepped back from talks with Santa Barbara, Calif.-based Big Dog three weeks ago to look at another offer, though Big Dog remains interested, Yeager said. No agreements have been reached.

A few months ago, Crazy Shirts said it had hired an investment banking firm to raise capital. The retailer has also put out a sheet listing its assets for review, although there is no exact purchase price, Yeager said.

Hawaii philanthropist Rick Ralston established the first Crazy Shirts shop in the back of Waikiki's International Market Place in 1964. Ralston's company had explosive growth in the 1970s and 1980s, but ran into trouble in the late 1990s.

In 1997, the company started losing money and said it would fire 140 of its 600 Hawaii employees, close its manufacturing plant in Halawa and move headquarters to Tustin, Calif. Crazy Shirts also began closing stores in Hawaii and on the mainland. Later, the firm returned its administration to Hawaii, but left its manufacturing in Tustin. A new board stepped in last year, replacing a board of outsiders that had clashed with Ralston.

Crazy Shirts tidied itself up for sale when the Bank of Hawaii took over the former Aiea Sugar Mill property in May, releasing the retailer from a $38 million loan. Crazy Shirts had bought the 19.4-acre property in 1994 for $19 million, and Ralston had a vision of renovating the historic mill into a manufacturing and retail sales outlet.

Ralston's vision fell apart, however, after he discovered it would cost $38 million to clean up the property. Crazy Shirts razed the mill, broke up the property and put it on the market in 1996. Twice, the city moved to purchase the land for about $8 million -- less than half what Crazy Shirts had paid -- chasing away prospective private buyers, the company said at the time.

The deal with Bankoh brought an end to Crazy Shirts' land holdings in Hawaii.

Crazy Shirts now has about 42 stores in Hawaii and on the mainland.

The Hawaii retailer is not alone in seeking outside ownership. Earlier this month, Cincinnati-based Federated Department Store Inc. paid about $200 million for Liberty House. Federated is converting 11 Liberty House department stores and seven specialty stores to the Macy's West brand.

Big Dog products, known for its logo of a panting Saint Bernard, hit the market in 1983. Controlling stockholders acquired the brand in 1992 and grew the chain from 5 stores to 198 by December 2000. Big Dog has one Hawaii store at the Waikele Premium Outlets on Oahu.

The company's annual profits peaked at $5.2 million in 1999 and retreated to $1.8 million last year.

In the first quarter of this year, Big Dog reported a loss of $2.8 million, a 22 percent increase from a loss of $2.3 million in the year-earlier period.

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