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Vancouver-based Herschel parts ways with CEO, shifts focus to selling direct to consumers

Co-founders return to leadership role as backpack seller says goodbye to CEO John Hoerauf
lyndonandjamiecormack-bivfiles-22
Lyndon (left) and Jamie Cormack founded Herschel Supply Company and have stepped back into having "direct leadership"

Vancouver backpack maker and seller Herschel Supply Co., which has been one of B.C.'s biggest retail success stories, has parted ways with CEO Jon Hoerauf.

BIV has also been told that the company terminated staff but the company did not respond to a request for comment how many jobs were cut, and how many employees are currently on the payroll.

Herschel says that it plans to shift its business focus toward selling direct to consumers and away from being "a traditional wholesale business." Direct to consumer sales include those in corporately owned stores and via the company's website.

Herschel did not put out a press release, but when contacted by BIV, it confirmed that Hoerauf is no longer with the company. 

"Central to this organizational reshuffling is the departure of the current CEO," Herschel said in an email. "The company believes this is the opportune moment for its co-founders, Jamie and Lyndon Cormack, to reassume direct leadership roles and guide Herschel into its next chapter."

Herschel had praised Hoerauf when it hired him in March 2021.

Hoerauf brought experience as president of apparel at Arc'teryx's parent, global sporting-goods giant Amer Sports, which also has brands such as Salomon, Peak Performance, Atomic, Suunto, Wilson and Precor. Before that, Hoerauf was president of Arc'teryx.

Neither of the Cormacks were available for an interview. Instead, the company sent a statement from Jamie Cormack saying that he is "excited to be fully engaged with our amazing teams, continuing to build off of the foundation that we have established over the past 13 years."

The Cormacks incorporated Herschel in November 2009 and first had products in stores in July 2010.

Its first stores were all through partnerships. It opened 45 Herschel-branded stores in Europe and Asia through third-party distributors.

It waited to open Herschel-branded stores in North America until it was able to own them corporately, and not through partners. 

Herschel in June 2018 opened its first wholly-owned retail location – a 5,000-square-foot store at 347 Water Street in Vancouver's Gastown neighbourhood that was the largest Herschel-branded store in the world. Its plan was then to corporately own all of its North American Herschel-branded stores.

It now has 13 Herschel-branded stores across North America, including new ones in New York and Los Angeles that Herschel told BIV in an email it was "proud" to open. The company did not say if any stores would close, either those of partners or its own ones.

Before it opened Herschel-branded stores in North America, its products were available in that region via resellers, such as the Hudson's Bay Co. That remains true today, and Herschel did not comment on whether it would stop providing its products through that wholesale channel. 

BIV today spoke with BDC's chief economist Pierre Cléroux, who has been researching consumer trends and who plans to release a report tomorrow. 

He said consumers want to be able to buy products online as well as in bricks-and-mortar locations so if Herschel were to cut back substantially on its number of physical stores, and on third-party resellers who operate physical stores, that would be a mistake.

DIG360 retail analyst David Gray agreed. Herschel does, however, have to up its game when it comes to its own physical stores, he added.

"I don't think their stores are great," Gray said. "They are bland. They do not tell a brand story. It's like a boxy place where there are some quirky features that they have spent money on but I'm not getting a storyline out of them."

Gray said Hoerauf's departure makes clear that something was not working at the company, and that the problem could be that they remain primarily known for their backpacks, and that new items that they have branched into selling are not providing sufficient revenue or profit. 

In 2019, the company sold a minority stake in itself to a consortium of private-equity investors. The value of that sale was not released but one of the consortium's investors, Eurazeo Brands, said its investment was US$60 million.

Gray said that the executive shake-up may have stemmed from those newer investors being unhappy.

Retail Insider Media Inc. owner and retail consultant Craig Patterson said many other companies are also trying to increase direct-to-consumer sales because it boosts profit margins.

Canada Goose Holdings Inc. (NYSE:GOOS) and Nike Inc. (NYSE:NKE) are some companies that have said on recent earnings conference calls that they plan to up their game in terms of selling direct to customers. 

Herschel did not elaborate on Hoerauf's departure other than to say that it provides for a "renewed focus on retail presence."

The Cormacks named their company Herschel after the Saskatchewan town where their Scottish great-grandfather, Peter Cormack, immigrated in 1906.

gkorstrom@biv.com

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