(NEXSTAR) — Remember the black-walled, neon-lit stores that populated so many malls back in the 1980s and 90s? It was the clothing store with the goofy name: Gadzooks. The Carrollton, Texas-originated retailer was known for selling lots of T-shirts and for having a full-size Volkswagen Beetle replica inside every store.
It’s probably not news to you that you don’t see Gadzooks stores anymore — and you likely haven’t since the mid-2000s. But did you know that there’s one business decision widely believed to be the teen fashion retailer’s downfall?
In 2003, Gadzooks — which was founded in 1984 — decided to change its branding after two fiscal years of losses (around $62 million, according to the company’s bankruptcy filing). To refresh the brand, the company decided to stop carrying men’s clothing and dedicate its stores to women’s clothing only, particularly the “juniors” category for women ages 16-22.
Gadzooks wrote that it hoped the shift would help them serve customers fully and with more focus and that it anticipated taking a hit. But sales didn’t recover.
The company filed for bankruptcy a year later, with many crediting its re-brand as a major factor for its financial woes. At that time, the chain had around 400 operating stores. Per Gadzooks’ Chapter 11 bankruptcy filing with the U.S. Securities and Exchange Commission, in the years leading up to the dropping of men’s clothing, these items equaled about 40% of its merchandise sales.
In its filing, Gadzooks explained that changing over its inventory and branding — not to mention investment in short-lived sleep/loungewear stores called Orchid — contributed to the losses.
Regret over the brand’s business pivot wasn’t lost on Gadzooks itself.
“We literally gave away half our business because we were half male before that,” said Chief Executive Jerry Szczepanski, according to Los Angeles Times. “Unfortunately, it came back slower than we thought.”
The brand was acquired by Forever 21 in 2005, with the company buying Gadzooks out of bankruptcy for an estimated $33 million, as reported by Los Angeles Times. As part of the deal, Forever 21 took over about 150 remaining Gadzooks locations. The locations were ultimately shuttered or converted into F21 stores.
While rebranding and refreshing businesses is important for any company, it can often be tricky — ask Coca-Cola. The beverage giant has a webpage in its archives dedicated to its ill-fated launch of “New Coke.” The unpopular 1985 flavor change is known as among the most disastrous marketing decisions in business history. Luckily, Coca-Cola reversed course before it was too late.
What was Gadzooks’ ‘look’?
Since many people may not even remember seeing a Gadzooks store in a mall, you may be wondering what exactly the retailer sold. Back in 1998, Gadzooks’ clothing offerings were recommended for “nouveau hippies,” by the Wall Street Journal.
WSJ matched several styles/personas to several then-popular clothiers, some of which are still around (Urban Outfitters, Hot Topic). Others, like Delia’s, Wet Seal and Gadzooks, are not.
Gadzooks’ love of Volkswagen Beetles was said to match its style philosophy, which WSJ said included contemporary updates of 1960s styles like bell bottom jeans and some very 1990s hemp jewelry. And if you’re thinking “No wonder they went out of business,” think again. Many of Gadzooks’ fashion staples have come back into fashion as recently as 2016. Gadzooks!