I make the tough decisions. I back them up, spending my own money. Nicolas whoa, whoa, whoa, whoa. Stephanie where did you learn to negotiate . Nicolas its just gonna be thrown inside boxes. Lemonis its not always pretty, but this is business. I do it to save jobs, and i do it to make money. This is the profit. Greenwich, connecticut, is one of the wealthiest towns in the country. Its shops cater to a fashionable clientele. Noemi wow, look at that. Lemonis the goureau family opened courage. B in 2008 and have been designing and retailing upscale clothing ever since. Noemi voila. Lemonis noemi has been the chief designer behind courage. B. Noemi look all the detail inside. This is what i love. You understand that . Lemonis her son, nicolas, oversees the operations. Nicolas did you make the labels for these yet . Lemonis while her daughter, stephanie, manages the finances and just as often plays the role of referee. [ both shouting in french ] stephanie stop. Stop, stop. Stop, stop. Lemonis despite generating 5 million in annual sales, courage. B is losing 500,000 per year. Stephanie were losing money. Nicolas calm down. Lemonis and with the losses mounting, so is the tension. Noemi when i wear this color, i dont need makeup. Nicolas you know what colors i care about . Red and green. And im trying to get this company back in the green. Lemonis if i cant figure out a way to break through all the family conflict. Noemi no, no, no, no, no, no, no. Miss stephanie . Lemonis . Courage. B will completely unravel at the seams. When i arrive at the greenwich store, the first thing i see is a handwritten 60 off sign not the greatest First Impression. I cant believe what im seeing. I feel like im in absolute chaos. Feels like a flea market. I see pants randomly plopped on a table. I see a crowded jewelry display. I see things on sale everywhere. And i see soap for sale . Theres so much product jammed on the racks that its hard to focus on a single piece of anything. Do you shop here . Woman no, no. I have a store right around the corner. Its actually my first time in. Lemonis she owns a business in this neighborhood and shes never been in this store . Well, that really tells me something. Whats your First Impression . Woman feels a little too busy for whats going on. Can you pick out one thing you would buy . Woman um. I probably would have walked out. [ chuckles ] lemonis really . Woman yeah. Lemonis okay. Thats great feedback. Thank you very much. Woman thank you. Nice to meet you. Lemonis have a great day. How you doing . Im marcus. Noemi ah. Lemonis how are you . Nice to meet you. Youre french, so you kiss . Noemi yep. Lemonis okay. How many years have you been doing this . Noemi i decide to dont talk more than 20. I think i born with this talent. I understand woman. A woman my age, you know . Shes 35, you know. Lemonis shes 35. Noemi [ laughs ] lemonis that was good. Stephanie hi. Noemi voila. This is my babies. Lemonis how are you . Im marcus. Your name . Stephanie stephanie. Lemonis stephanie, nice to meet you. Nicolas hi. Nicolas goureau. Lemonis nicolas, nice to meet you. Marcus. And so you deal with the operations. Nicolas i deal with the overall management of the entire business, stephanie finances, and my mother the product. Lemonis everybodys got a role. Nicolas theyre my captains, you know, if you want to call it that. Lemonis and youre the general. How many stores do you have . Nicolas so, currently, courage. B has seven retail locations. Lemonis and the business will do how much in sales this year . Stephanie we are shooting to do 6 million. Lemonis last year, how much . Nicolas 5 million. Lemonis and so theres some substance to that number. And how about margins . Nicolas 50 . Lemonis okay. Stephanie last year, we lost. Nicolas we lost a lot of money last year. Lemonis how much . Stephanie a half million. Lemonis okay. Industry average of margin on clothing is about 70 . In 2013, courage. B had margins of 50 . They do over 5 million a year in sales. If we can just get courage. Bs margins to increase by 20 , thats 1 million in gross profit. Courage. B would go fromloss of 500,000 to a profit of 500,000. All of the seven locations are cashflow positive . Nicolas correct. Stephanie no. Nicolas we did the numbers yesterday, stephanie. Stephanie fopps is losing money. Nicolas, thats its losing money. Nicolas okay. Lemonis what did the fopp stand for . Stephanie a fopp is a very elegantly dressed woman. Nicolas yeah. Lemonis a minute ago, i thought that courage. B had seven locations. Now im finding out that one of the locations isnt even callcourage. B. This business is looking more scattered by the minute. Nicolas there was a store that had been around for 20plus years, which was my mothers store. And through poor business management, if you want to call it that. The business was starting to go into debt. She called me. Shes like, i just want to design. And i said, fine. I can build the business. So, i started courage. B. Lemonis im finally starting to understand the goureau family business. Noemi has actually owned an Apparel Store in manhattan for decades. Courage. B started in 2008 when noemi decided to step back from management and just focus on design. Well, i want to get more of a tour. Can you kind of give me a tour of the rest of the place and nicolas may i . Lemonis yeah. Nicolas we built this store fully finished. Lemonis mmhmm, and when you open a new store, who does the merchandising . Stephanie the merchandising is done by the employees in the stores but run by the managers themselves. Lemonis look, i have hundreds of businesses all over the country, and even my best manager cannot be left to do the merchandising. If youre gonna be a national brand, you have to have a National Look and feel. I want customers to be able to travel the country and land at any of our locations and have the exact same experience. Thats what a brand is about. Im fascinated by how all this stuff gets from someones head and how does it land finally on the shelf . Nicolas so, ill walk you through, for example, our handbags. Finest craftsmanship. You can probably just see the way that they are. The, um. Okay. Lemonis but who came up with the design . Nicolas okay, so for example, this bag right here lemonis just answer that. Nicolas noemi came up with the design for this bag. We mainly stephanie, myself, will come up with what connects to the rest of the merchandise that were producing for that season. Stephanie noemi is the one who is constantly looking out in the world at what the trends are. But for the last five years, noemi has, you know, made a lot of designs and brought a lot of things in. Many times not all things have come in that weve taken hits on. Nicolas right. Lemonis wheres all this bad inventory . Is there storage, stock room . Nicolas we have a storage room downstairs. Lemonis can i see what you have here . Nicolas lets go. Stephanie yeah. Nicolas so, the inventory that we have down here this is what didnt make it. Lemonis and so, because im not in your business, i just see cash. Stephanie yes. Lemonis thats what i see. Who designed, like, these two things right here . Stephanie noemi did. Nicolas noemi did. Noemi its funny. You pick two things. Its, like, popping out. It doesnt belong in this pile. Nicolas well, we could probably pick 100 things like that. Noemi we liquidate that. Nicolas it doesnt matter if we liquidate. Dont try and justify it. It wasnt correct. Lemonis and you know whats even more amazing to me . Youre doing 5 million with this product. Can you imagine what you would do if your product was right . And so what is the problem . How did it happen . Nicolas obviously, its a family business, so the problem is that noemis work wasnt up to par, and noemi i had a very bad year. Nicolas noemis work wasnt up to par. We were still depending on that product, and we ate it. Lemonis how much do you think its cost . Nicolas almost a quarter of a million dollars. Lemonis and who signed off on them to be designed . Nicolas nobody checked. Lemonis the fact that theyve lost 250,000 is alarming, but whats more alarming is the reason they lost it. You have one person designing it, and nobody is check and balancing that process. Anything else i should know about whats down here . Golf clubs, luggage . Nicolas no, those are my dads golf clubs. Lemonis is your dad still around . Nicolas no, he passed away. My mom raised us by herself. Lemonis cause i didnt know all of that. Stephanie in 87, they opened fopps. My father and her opened a small boutique on lexington, and six months later noemi he got sick. Stephanie . He got sick with cancer and died. Noemi the year after, he died. Very young man. Stephanie 38 years old. Noemi and he left me with stephanie, was 4, and nicolas was 7. Stephanie she got remarried. Nicolas two years ago, he divorced her. Because he was married to her, and he started suing us, and. Stephanie the little bit she had left, she put into this business. Noemi its why when we talked about the design, also, it was a part of that. Stephanie she checked out a little. Nicolas it was just bad. Lemonis for everybody. You could not have built this business without her. Period. Nicolas period. Lemonis you know, it seems like this business really thrives when noemis at the top of her game. When shes engaged, things are really good. The real courage to start the business came from you putting all your poker chips on the table. By the way, thats the courage. But i dont give you credit for whatever this is. All right. Nicolas lets move along. Lemonis now im going to visit fopps, the familys first location in manhattan, and it also happens to be the biggest financial drain. They should have called it flops. Stephanie these are the pants we just sold if you want to just replace that. Lemonis so, tell me about this location. Noemi okay, this is the first location we opened in new york and my first store. Lemonis this store suffers from the same issues as the one in greenwich no thought process, no merchandising, product all over the place, crammed into every crack and corner you can find. I couldnt imagine a 30yearold coming here and buying this stuff. Whats a good sales day here numberswise . Raquel would be like about 1,500 a day. Noemi but not enough for the rent we pay. Lemonis 10,000 . 12,000 . Noemi no. You must be joking. Stephanie [ chuckles ] noemi were talking about almost 30,000. Lemonis how much . Noemi almost 30,000 a month. 28,000 a month, yes. Lemonis 28,000 a month . Nicolas yeah. Lemonis if their average daily revenue is about 1,500, that means on a monthly basis, theyre doing about 45,000. Lets assume that their margins are 50 . Their rent is 28,000 a month. Before you pay any bill of any kind, including labor, theyre already cashflow negative. No wonder they got a problem here. How do you make that work . Nicolas well, were eating up profits from the other locations. The lease has about another year and a half left on it. This is the only manhattan location . Nicolas this is the only manhattan location, yes. Lemonis after visiting two courage. B locations, the picture is much clearer on how this company got in trouble. Even though they were smart enough to pick excellent retail locations, bad merchandising and design inconsistencies is why this company is all over the place. Now i need to meet the family at their corporate offices and dig into the financials. Well, this looks a lot different than the store. Nicolas yeah. Stephanie yes. Lemonis looks nice. Nicolas thank you. So, this is home base, if you want to call it. Lemonis yeah. Nicolas this is our Conference Room showroom. Lemonis i like it. I walk into their corporate office, and im surprised how different it is than the two Retail Stores ive been to. It looks like an edited collection of what courage. B actually stands for. Its much cleaner, and its much clearer. Stephanie this product is our bestselling product. It is just an easy hanging cardigan, in essence, that we call the duster, cause it literally kind of dusts the floor. Lemonis who designed it . Nicolas mom did. Lemonis retail price on that . Nicolas 99. Lemonis cost . Nicolas 11. Lemonis look, theres very few businesses in the world where the margins are as explosive as they are as the clothing industry. Fashion is a feeling. The better they feel, the more theyll pay. If you can take a product for 11 and sell it for 99 a 900 markup those are amazing margins. Youre not gonna find that in very many industries, and thats why i think theres a great opportunity here. I like it, but im gonna tell you something youre not gonna like. I think that the fit and finish, cause i looked at it on her, could use a little tweaking. Noemi exactly. Nicolas right here is the aspen bag in all the various different colors. Lemonis thats almost like a signature design. This is a good product. Did somebody bring you this design . Noemi no, this is me. Lemonis well, im noticing that noemi has a keen sense of fashion. But while noemis talent tells me this company has a real shot at success, these financials are telling me a very different story. The loss on this statement shows 500,000, which is what you told me. Stephanie exactly. Lemonis okay. Professional fees of 250,000. Stephanie we went through a tough lawsuit last year. Lemonis was it the divorce . Stephanie yes. Lemonis ah. So, this is not a recurring. Stephanie no. No. This does not happen normally. Lemonis so, if i look at the financials for last year, i take out the lawsuit, which means i still lost 250,000 for the year. We have about 900,000 of inventory. How much of that would you say is wrong . Stephanie right now were stuck with about 400,000. Lemonis you have cash tied up in inventory that isnt right for your business. I understand that they lost 500,000 last year 250,000 from a lawsuit and 250,000 of bad inventory. But thats not the real problem. The real problem is the company doesnt have the right product on the ground, and if i can fix the product Going Forward and then merchandise it in a creative way, i know i can make money immediately. Youre at a very weird place. This has the makings of being something great, but the Business Needs money, and all i have to get my head around is were talking about changing the product and changing the process, and its extreme, and putting money in at the same time. Im gonna study these a little bit more. Thank you. Stephanie thank you very much. Lemonis yep. Stephanie [ sighs ] lemonis well, you know, ive spent the last couple days asking you guys a lot of questions. While i struggle a lot with the product, you guys have spent a lot of time working really hard, but the business is really in trouble. I mean, you do 5 million of sales. But at the end of the day, last year, you lost money. Stephanie how do you envision the growth of this business . Lemonis its about changing every single product that you have. You have 900,000 tied up in inventory. Half of it should go into the garbage. How long can you survive . Nicolas were trying to be as lean as possible. I have about three months where i wont be able to pay my rent at home. Lemonis how much money do you think this Business Needs . Nicolas i believe it needs around 1 million. Its 20 of what we do on an annual basis. Lemonis well, its 20 of what you sell. My offer is 800,000. I have full control. Theres 100 of the stock today. Ill have 50 of it. Noemi [ gasps ] stephanie whoa, whoa, whoa. Nicolas whoa, whoa, whoa. Stephanie we away off. Nicolas at this point, its gonna be 50 for you and 50 for me. Lemonis im at 50 . Nicolas marcus. Lemonis and before you answer, just know that if you dont do a deal with me, you may not make it. Nicolas no. You want all of the accolade without doing any of the work. Stephanie nicolas. I dont want him to walk out that door because of this. Here, hello starts with hi mple. How can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Lemonis so, 800,000. My total offer to courage. B is 800,000. I feel they need 300,000 in renovation, 300,000 in inventory, 100,000 in working capital, and another 100,000 to pay off existing debt. How much equity in your business is that worth to you . Nicolas 10 . Lemonis im insulted. At 10 , ill give you a halfamilliondollar loan and take the stock of the company as collateral. I mean, if you default, ill take the business. So, you dont want that option. The option that you want is you want me to be just as excited as you are. Nicolas is it just because you want 50 . Lemonis forget about what im asking for. Nicolas so, lets get close. Lemonis you wanted me to have skin in the game. But at 10 , i dont really care. Stephanie i was just gonna say that. Lemonis i dont really care. Nicolas 25 . Lemonis it aint even correct at 25 . It aint gonna happen. Are you willing to give your sister equity . Nicolas absolutely. Lemonis does she have equity today . Nicolas no. Lemonis okay, so im willing to come off my 50 if i know she has equity. Does your mom have equity . Nicolas no. Lemonis im willing to come off my 50 if everybody has equity. And so, my final offer it is it is im comfortable with you having the most. No doubt about it. Youll have 40 of it, ill have 30 of it, stephanie will have 15 , and the lady that founded the business, your mother, will have 15 . Let me be very clear. Im gonna be 100 in charge. We have a deal . Nicolas i accept this. Stephanie wow. Lemonis partner. Stephanie thats right. Thats right. Lemonis partner. Im gonna write a check to courage. B for 800,000. Were gonna be partners. And well let the fun begin. Nicolas ive never seen a check that big before. Stephanie [ chuckles ] lemonis youll be making checks much bigger than this. So, you guys want to get everybody together and we can tell them whats happening . Noemi lets talk. Lemonis you guys may or may not know why im here, but im here to make an investment in this business. And i believe in the potential of this business, and so im investing 800,000 to be a partner with them. Woman oh, my god yes lemonis i will be a 30 partner. Nicolas will have 40 , and stephanie and noemi will each have 15 . Everybodys gonna have very defined roles, but noemi will not be controlling design. Noemi okay. Got it. Lemonis i actually think that the foundation for the business is sound. People, process, and product my three principles. The people are awesome, and so thats why im standing here today. The process to design merchandise is broken. We are going to rebrand and remerchandise all of the stores. Woman wow. [ cheers and applause ] lemonis and we are gonna install a planogram system. Stephanie i have been saying planograms to nicolas for six years. Lemonis a planogram is a visual merchandising tool used by retailers. It ensures that the product is displayed properly. It also ensures that multiple locations have a consistent look and feel. Since courage. B has seven locations, this is the first step in creating consistency across all their stores. We have hundreds of thousands of dollars in mistakes in inventory. We will never make those mistakes again. I