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64 www.bus-ex.com January 08 Bringingbackvalue Since acquisition by a private equity firm in 2005, Specialty Catalog has changed its focus away from discounting toward value. Keith Regan learns from CEO Ron Fabbro how investing in quality, customer service and innovation should have a long-term payoff Specialty Catalog Corp. has been selling hair fashion, mainly though direct marketing to its female target audience, since 1978. Over time, it grew to be one of the largest sellers of wigs, extensions, hair pieces and accessories in both the UK and North America. In early 2005, EdgeStone Capital Partners, a Toronto-based private equity firm with experience in the specialty products and hair niche (having bought and later sold Hair Club for Men and Women), purchased Specialty Catalog, recognizing that the company had significant potential for new growth. EdgeStone brought Ron Fabbro on board as chief executive officer and tasked him with growing the company’s revenue and profits. “They felt the previous CEO had done a good job of being a caretaker CEO, driving out a lot of the

January 08 www.bus-ex.com 65 this on my own.” Fabbro readily acknowledges that the hair fashion business flies under the radar of the business world. As a fashion accessory, wigs had their heyday in the 1960s, though some contemporary celebrities are helping to bring them back into fashion by wearing extensions and weaves. Meanwhile, an aging population, with millions of baby boomers about to turn sixty and facing health issues that often prompt people to turn to wigs or hair pieces, will almost certainly boost demand over time. Specialty Catalog operates two main brands in the wig business, the Paula Young line and the African-American-focused Especially Yours. The company has expanded the Especially Yours lineup to include accessories and even apparel, with a line of church wear selling well through the brand. It has also grown a second business line that offers online continuing education to nursing professionals, known as Western Schools, SpecialtyCatalog “We have a great team in place right now. I’m not doing this on my own” costs in the business,” Fabbro notes. However, the company had also become addicted to discounts. “The business had been basically dependent on deep discounting to drive sales. You can only do that for so long. There’s only a certain amount of business you can get out of the marketplace by using that type of business model. They needed someone to come in and get them off the discount spiral.” Fabbro was that person, having worked with some of the EdgeStone partners on previous endeavors—including the creation and launch of the Air Miles affinity program in Canada—and having a background in direct marketing. His team quickly moved to change the focus to value and with the financial and strategic support of EdgeStone has made aggressive moves to round out product lines, including bringing back higher-end offerings. He is quick to recognize the value added by his management team, too. “We have a great team in place right now,” he says. “I’m not doing