Thomas Andruskevich, the longtime president and CEO of Birks & Mayors who announced his resignation last week, very generously gave me some time to speak about where he sees his company going and his views on the industry. Highlights of our conversation follow:
As you prepare to step down, where do you see your company going?
I think that the first priority of Birks & Mayors is to make sure that we become a strong profitable company again. That is a goal we hope to achieve at the end of this fiscal year. We are obviously interested in continuing to grow and build the Birks product band and Birks product assortments. Down the road, we envision Birks to be an international company that will grow well outside North America. There is also a big country in the United States and there are a lot of states we are not in.
Your company has made some acquisitions in recent years but the pace seems to have slowed down.
We had been in acquisition mode prior to the recession. We backed off a couple of deals because we just ran into a brick wall when the whole industry did. We felt it was better to be defensive than offensive. We have been in defensive mode up until the beginning of this fiscal year. Now we are really looking at longer term growth plans that include expanding in North America and China.
Can you update us on your China plans?
We are still in the evaluation phase. We have spent a lot of time and effort and money on doing research. It is probably something that is still two or three years down the road.
Is the high growth rate there the attraction?
The high growth rate, and it’s such a new market. It would be easier for us to expand in a market where a lot of the consumers are unfamiliar with the top luxury brands than to compete in an established market like Paris or London.
Where do you see the industry right now?
I feel after the last recession there was a layer of consumers who were buying jewelry and timepieces that were completely eliminated from the market. Just as there were people who were getting mortgages who shouldn’t have, there were people getting credit who were over-leveraged and spending some of that money on jewelry and other luxury products. I think a large segment of that market has been wiped out. Those people don’t have jobs anymore or can’t get credit. As a result our market has shrunk.
I think we are going through a social revolution with social media and with technology. I think that the jewelry industry is lagging behind in this regard. I believe our stores are still much too traditional. Technology has to play a bigger role in the future.
I think China will play a much bigger role and that will impact companies in the United States. We are already seeing that happen. A lot of the products that retailers used to bring to the United States since the recession has been going to China.
I see some companies raise their prices several times in one year. A lot of that is driven by the increases in precious metals and diamonds but also because of currency fluctuations due to the weakness of the U.S. dollar. At what point does the consumer say it’s too much? Although consumers have not shown a lot of price resistance yet, at some point I think they might.
What are you proudest of in your years at Birks & Mayors?
I think I’m proudest of the team and the board we have. We have all worked hard to build a team of some of the best and brightest professionals in the industry, both on the retail side and the corporate side.
The Birks brand back in 1996 was in a sad state of disarray. It was selling all sorts of products, and it was not focused. We worked hard to build a strategic plan and create a new mission and vision for the company and build a team that could execute them. I don’t think we ever got it 100 percent right; I don’t think we were ever perfect. But we are far better than where we were when I came here in 1996.
In 2002, Mayors was going through an extremely difficult time. It was bleeding money with a lot of unprofitable stores. People were worried about losing their jobs. Here we are, 10 years later. I think the Mayors retail brand is the strongest brand in luxury fine jewelry in the Southeastern United States.
Did the Mayors acquisition work out the way you planned?
It did, plus some. At the time, Birks as a company had penetrated the Canadian market almost as fully as it could be penetrated. We had stores across the entire country. We had actually looked at Mayors as a target company for about a year or two before it was available. Birks had been through a series of acquisitions but they chose companies that were at various tiers. We thought that was a strategy that didn’t work. We thought we needed a company that was in the same position as the Birks brand and we felt Mayors was around or slightly above Birks in that regard.
The one thing that we looked at is the culture. I heard an interview with [former GE chairman] Jack Welch and he said his biggest mistake was the acquisition of Kidder, Peabody because it had a different culture than GE. When we were fortunate enough to take control of Mayors, we really tried to understand the people at the company, their values, and how they were trained, and make sure their brand values were consistent with what Birks stood for.
Was integrating Mayors into the company in 2002 the biggest challenge you faced?
It was extremely challenging and we worked at it for several years. I remember the first management conference that we did. We had the Mayors and Birks teams and it was little uncomfortable for everyone. It was a little bit of “we” and “they.” But little by little, we started to integrate our training programs and we started to have some of our VPs be responsible for both Birks and Mayors, and I think that was a real key turning point. We also used an approach of best practices. Usually, in the acquisition process, the acquiring company automatically runs the departments. But we chose the best practices approach. We still have two corporate headquarters. Today, it’s completely seamless. If you are in the Birks stores and the Mayors stores the approaches are completely the same.
On a personal level, why are you stepping down?
Next year I will be turning 61. It will also be my 16th year at the company. This job right now has a level of intensity that means being available 24/7. You really have to give everything you have—not just for clients, but for your employees and your shareholders.
In personal terms, I don’t want my life to pass me by. I want to be able to do the things I love to do. Right now, I can only spend time with my wife and family on weekends. I want to change the dynamic in the way I live. I have an interest in golf and traveling and I don’t get to do as much of those things as I would like.
I do have some other ideas about how I might like to spend my time. Going back to my Tiffany days, when we did a leveraged buyout, we had an equity company by the name of Investcorp. They owned a portfolio of companies. I always thought it would be fun to maybe team up with a private equity firm that either owns high-end luxury companies or jewelry companies and be a member of a team that goes in and analyzes businesses, provides advice, and perhaps act as an advisor or a mentor to a CEO.
I am also looking to perhaps increase the number of boards of directors I sit on. I want to keep active in the industry and keep my mind and career active.
When is your last day?
It hasn’t been determined yet. As soon as we find my successor, I will work with them for a few months and then, when we all feel comfortable they are able to take over the reins, I will quickly step aside. This will all happen sometime in the Spring.
Anything else you want to say to the industry?
I think this has been an industry I have been really fortunate to be a part of. I have been fortunate enough to have participated in several organizations like JA, JVC, and Jewelers for Children. We are blessed to have so many dedicated and professional leaders in this industry who really make our industry stand apart from other industries.
My career in this industry started by luck. I was just in the right place and the right time. It is one of the most special industries I could ever imagine being a part of. I just hope that everyone in our industry understands how special it is and does everything they can to keep it the special industry that it is.