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How Babylegs got broke

By Jeremiah | March 05, 2009 | 3 comments / Comment now

Photo by girlonthewire, shared via Flickr.

Manufacturers who sell big wholesale orders often rely on credit to bridge the gap between sending goods out for sale and getting paid for them. Now that lending has dried up (one of the core economic problems the bank bailouts were intended to solve) companies like Babylegs are being hit hard. My brother, Joshua McNichols, interviewed Babylegs founder Nicole Donnelly and reports that the company is now down to nine employees, from 26 last year, and despite earnings of $4 million last year, Donnelly recently had to borrow $125,000 from a friend to stay in business.

Donnelly: "So in December we shipped product to what Target considers all their stores. 1517 stores. So we tripled our business with Target."

Donnelly placed a huge order with her manufacturer.

Donnelly: "So I had to pay for the inventory, pay for the shipping, everything, and then sent to the stores, and then I'm cash strapped until Target pays me."

Before the economic crisis, that was pretty normal for small businesses. They pay for everything up front. And the bank covers them until the money from sales starts coming in.

Donnelly: "We knew we wouldn't have money. And that was in the plan, to not have money at that time and borrow from the bank. Because the next month we'd have the money."

But instead, the bank froze Donnelly's line of credit. Suddenly, BabyLegs was broke.

Head to the KUOW website to listen to the full story (4:33) or read the transcript.

My assumption is that any company like Babylegs is in trouble during an economic downturn for one simple reason: Knee-high socks are cheap and cute ones are easy to find, and if you aren't a perfectionist, you can make your own Babylegs in the time it takes you to grab the scissors.

Categories: kid and baby accessories

1. Cecily T [3/05/09]

I think BabyLegs are very cute, but you are right, even before the economic crisis, I would not have paid full price for them, and especially not now. I’m sorry for them not being able to stay in business though.

2. smurfett [3/05/09]

my mom bought some from Asia (not China) when she went there and they were way cheap and even cuter than baby legs. One reason I don’t buy from them whenever I get the urge.

3. Leighann of Soy is the New Black [3/05/09]

Between my two children we have at least half a dozen pair of BabyLegs. My daughter wears them as leg warmers with skirts, as arm bands when playing, and of course as leg warmers to dance class.

All of ours were ordered online from Target.

They do have great styles and they are very cute. I never even thought to buy a different brand.

At 12 bucks a pop (or around that) they are a bit of a splurge. But since we buy so many of our clothes second hand, it’s nice to have some cute accessories. And I have to say that some of our pairs we have had and worn for 4 whole years now. I think we got our money’s worth.

I will say that I received a pair of Leg Huggers for review and they are made of bamboo and are very soft.

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