Publication: X-Biz News (www.xbiz.com)
Date: March 31, 2006
Title: Good Vibrations Restructures, Seeks Investment
Author: Matt O'Conner
Summary: Good Vibrations restructures from employee-owned coop to a business corporation.
Good Vibrations Restructures, Seeks Investment
SAN FRANCISCO - Adult toy and novelty retailer Good Vibrations has restructured from an employee-owned cooperative to a general business corporation in order to seek outside capital to fund plans for national expansion.
Good Vibrations new corporate structure is the first of its kind in California, according to CFO and acting General Manager Theresa Sparks.
"What makes the conversion unique by any standards is that we have ensured through institutionalizing our value statement and code of conduct into our new bylaws that a future board of directors cannot change the fundamental progressive values of the company - only the shareowners can do this, if they choose," Sparks said. "The decision to restructure will give us the opportunity to take our vision to more people, have access to growth capital and respond to the market more quickly."
Founder Joani Blank opened the first Good Vibrations store in 1977. In 1992, Blank sold the company to 15 workers, converting it from a sole proprietorship to a worker-owned cooperative. The company's emphasis on creating a "clean, well-lighted place" to buy sex toys and videos, and especially its focus on attracting female customers and couples, allowed it to become a multimillion-dollar operation with double-digit profits, open up new locations and expand into publishing, video production, wholesaling and ecommerce.
In 2003, Good Vibrations began hiring a professional management team with experience expanding retail companies. Under their direction, the company closed down unprofitable enterprises and focused on its core retail business.
According to the company, Good Vibrations has had to use its owners' cash to fund these new ventures. Sparks said it became clear that continued growth in the face of industry competition would require outside investments, prompting Good Vibrations to change its capital structure. "The restructure will allow the company to move as fast as the public-at-large is moving in a growing comfort of owning sex toys," Sparks said.
In February 2006, Good Vibrations opened its first East Coast store in the greater Boston area, which the company said was profitable within the first month of operation.
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