Holdings is affiliated with Roy Disney, and Stanley Gold was part of the team that helped turned Disney around in the 1980s. Mark Goldston was a former marketing executive at Reebok, one of L.A. Gear's primary competitors, before moving to the company in 1991.
As with most athletic/leisure shoe manufactures, L.A. Gear does not produce locally, but imports shoes from Asia, usually Korea. In 1991, when the new management team was brought in, L.A. Gear had more than 12 million pairs of shoes in inventory and only $1.5 million in cash. By 1993, the company reduced its costs by 38 percent and had no debt other than debentures and convertible preferred stock totalling $150 million.
Goldston accomplished this turnaround by shutting down production at overseas factories for 70 days (several Korean shoe companies went out of business as a result). Apparel, which the company had begun marketing some years earlier but which had never been a money maker for L.A. Gear, was dropped. Inventory was sold at low prices, which hurt the brand image, but which brought needed cash into the organization.
Having focused on immediate short-term operational problems, Goldston then changed the marketing strategy of the company. Where the company had once sold its shoes at swap meets and discount outlets, Goldston embarked on a program that would include only full-price department and shoe stores. This had the short-term effect of
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