Good Vibrations Bought Out by GVA-TWN

SAN FRANCISCO — Landmark adult retailer Good Vibrations has been acquired by Ohio-based adult wholesaler/distributor GVA-TWN , on the heels of a report posted on SFGate.com that said that the Bay Area “sex-positive” retailer was in financial hardship.

“GVA-TWN is actually buying out the business,” GVA-TWN CEO Rondee Kamins told XBIZ, “but we look at it more like a partnership because we need each other to move forward successfully. We are retaining all employees.”

Kamins said more details would be revealed at completion of escrow.

A recent letter to Good Vibrations shareholders confirmed the merger with GVA-TWN and stated that, the decision to go with GVA-TWN was influenced by the GVA-TWN’s apparent commitment to upholding cultural and educational values that were the core of Good Vibrations’ business model.

“Good Vibrations' success in cultivating a women /couple-friendly adult shopping environment along with their commitment to extensive staff training, quality products, community outreach programs and sex-positive stances makes them a perfect fit for GVA-TWN's Midwestern retail operation which are sorely in need of the deep training methodologies that Good Vibrations has developed," Kamins said.

"This, coupled with our extensive distribution network, large buying power and supportive infrastructure, will increase the margins necessary for Good Vibrations to achieve financial security.”

A statement issued by Good Vibrations said: “Good Vibrations, which has evolved into a business that serves women, men and couples of all orientations, celebrates its 30th year in business in 2007, while GVA-TWN has been an industry mainstay since the 1960s, helping to develop the positive business conditions in the U.S. for wholesale and retail sales of adult products that assisted operations like Good Vibrations to enter the market and thrive. This new relationship will allow rapid expansion of Good Vibrations retail stores into new markets, a step both companies agree will help build Good Vibration’s unique heritage brand into a national presence.”

The article The SFGate.com article posted on Sept. 7 was spurred by a “letter to friends” that Good Vibrations had posted on their website, explaining its financial situation to customers and appealing to outside investors who might provide funding.

At the time, Good Vibrations CEO Theresa Sparks said the company had fallen on financial hard times due to a variety of factors, mostly having to do with increased competition and declining Internet sales.

“The online customer is getting more savvy and more mature, and so what they're doing is coming to our site, they’re reading all the information, and then they’re going to other websites that do comparison shopping, putting in the description and they’re buying it the cheapest place they can buy it,” Sparks told XBIZ.

“The other piece is that in the last six months, there have been the laptop sex sites — there are a couple of companies that sell them, and they come along, sell you a website, and you can put your colors and your name on it, and the orders go to the distributor and they ship it under your packing slip,” Sparks said. “These people have the ability to price way, way lower than a sole proprietor because the distributor are able to purchase on a huge scale. And the person with the laptop can do it with a 5 or 8 percent markup, because they have no overhead.

“Consequently, we’re getting hammered on both sides — on the bottom end by some of these laptop companies and on the topside by Amazon and some of these mass-marketers,” Sparks said.

Sparks indicated that the situation was dire enough for the company to be considering all options but said that loyalty to vendors prevented the Good Vibrations board members from pursuing bankruptcy as last resort.

“To our credit and to the industry’s credit — nobody wants Good Vibrations to go under. I think in many cases, we’ve been a good client, for over 25 years in some cases. Other vendors, we’ve helped open their companies,” Sparks said. “If we went under, we’d take a lot of these companies with us and that’s not going to happen.”

Sparks said that the company had been seeking investors since changing from a co-op business model to a corporation in February 2006, and that due to increasing pressures, was pro-actively pursuing potential partnerships with two major adult novelty companies. It had hoped to have a deal inked by mid-September.

The recent letter to Good Vibrations shareholders stated that competitor Babeland also had made an offer, but that Good Vibrations had declined.

The letter indicated that if Babeland were to take over operation of Good Vibrations that there might be a restructuring of the Good Vibrations’ management, which the company sought to avoid.

At the time of posting, Sparks was unavailable for comment.

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