Sal Loretta grew his Queens, New York-based embroidery business into a broad conglomerate. On paper, it sounded great, but the ultimate result was a haphazard, unfocused disaster of a company that did more to confuse than sell. Up to $2 million was raised via the selling of personalised caps and T-shirts. Sal turned a neighbouring warehouse into a sign firm, a restaurant, and a sports facility — (?!) – all with his own money.
Sal came to Marcus Lemonis and The Profit to see if he could assist Artistic Stitch to turn things around since the company was failing to generate a profit and was over $1.5 million in debt.
Profit With A Creative Stitch
Episode 10 Of Season 2 Of The Profit
Marcus began his adventure at the Artistic Stitch Sports Complex. He could feel the pressure on the staff’s shoulders and the moral burden that all that debt was causing. He met with Sal and Nick, his sales manager, to look through their accounts and attempt to work out their financial problems. Profits had plummeted from $900,000 to only $100,000, a staggering loss. They owed over $600,000 to various suppliers and were $140,000 in debt each year. Sal had been putting his personal funds and spending on hold in order to pay his staff and keep the company afloat.
Sal had paid $3 million for the property, but it was now worth $3 million more. Marcus considered the debt involved in its acquisition and concluded that Sal was engaging in a high-stakes poker game with Citibank and Chase. Marcus informed Sal that he had no desire to invest in real estate. He was a small business investor, and he wanted to know that if he was going to work with Sal, Sal was serious about addressing the difficulties in his company. Above all, Sal would need to have faith in Marcus, since he would need to assume absolute control of the firm and 50% ownership in order to salvage it.
Sal ultimately warmed up and agreed to Marcus’ requirements, despite his initial scepticism. These conditions included giving a loyal employee called Fabio, who had been with Sal from the beginning of the embroidery business, a 10% stake in the company. Marcus handed Sal a check for $600,000 to pay off the company’s obligations after the conditions were finalised and agreed upon.
Marcus informed the gathering group of workers that he had assumed command and advised that they get some corporate accounts for the embroidery business, which was the most profitable part of the firm.
Sales Pitches For Artistic Stitches
When Marcus started questioning Nick about how they went about obtaining new business, it became painfully evident that Nick lacked the answers. Nick informed Marcus that he usually looked for customers in the Yellow Pages. Fabio seemed to have a far better understanding of the sales process and history than the sales manager. Nick had never personally presented Artistic Stitch to any large firms and was paid a salary with no commission built-in, despite the fact that he was unwilling to recruit a sales crew.
Marcus was eager to watch Nick in action, so the two went to a nearby fire station to see his presentation firsthand. Nick had no idea how to market the business and lost his cool, tripping and shouting in front of Marcus while speaking with the customer. Marcus felt forced to take over the discussion and inquire about their company and its relationships with other fire companies in the region.
Sal was informed by Marcus that improvements in the sales department are required. Nick had no idea how to make a sales presentation, so Marcus decided to place him on a 100% commission plan based entirely on what he sold, pledging to provide Nick with all the tools and help he needed to come on board with the sales side of the company.
Marcus stated the company’s emphasis would be on the embroidery and silk screening sector, as well as growing out a retail apparel product line, in order to remove the legs of the business that weren’t bringing in money and develop the ones that were.
Sal had informed Marcus that the firm was responsible for all of the debt, but after speaking with the accountant Giovanni, Marcus learned that Sal and his wife had used the corporate credit card for personal expenditures. Marcus was taken aback and informed Sal that he would not be financing Sal’s personal loan.
Marcus, willing to give Sal a second opportunity, told him that he couldn’t lie to him and that he was on the verge of cancelling his contract with Artistic Stitch.
Marcus established a design studio and purchased equipment to enable consumers to produce their own silkscreen designs.
The Financial Situation Is Worse
Marcus made a startling discovery when the actual area of the structure began to fill up. Artistic Stitch’s financial situation was worse than he had been informed, with the company owing over $150,000 in unpaid taxes and rent. Marcus was soon losing patience and met with the building’s landlord, who, like Marcus, suspected Sal of being dishonest in his interactions with him. The landlord informed Marcus that Sal lacked a certificate of occupancy for the property and that he had received a summons to criminal court because Sal had failed to execute the necessary renovations.
Sal claimed that he lacked the power to make the agreement he did with Marcus and that Artistic Stitch was operating under an expired certificate of occupancy. Sal’s right to acquire the building was being denied by the landlord. Because of his terrible and dishonest interactions with him, Marcus warned Sal that his landlord may potentially go to prison.
Marcus turned Artistic Stitch’s lobby into Queens Vibe, a retail area where he attracted bigger customers like AT&T and invested over $100,000 in improvements.
What Happened To Them? After The Profit, An Artistic Stitch
Against all odds, Artistic Stitch seems to be clinging to life…by a thread.
Despite the fact that Sal went against Marcus’ advice, Artistic Stitch seems to be prospering in spite of itself. They still own the facility, and the rock wall and batting cages have sold over 300 Groupons. The Artistic Stitch Sports Complex, on the other hand, gets mixed ratings on Facebook, with individuals saying that Sal is operating fraud and not paying his expenses.
Their website is still up and running, including posters for a basketball clinic in April 2020. The fact that this event (and all others) would have been cancelled due to COVID-19, and yet the website makes no mention of the COVID-19 problem or any rescheduling, makes this reporter exceedingly doubtful of the business’s health.
Royal Pitch is not linked with Artistic Stitch, The Profit, or any of its subsidiaries, and the material presented in this article is only for educational purposes.
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