Nygard the company faces tough task to distance itself from Nygard the man, experts say

A Winnipeg marketing expert says Peter Nygard's eponymous company is facing a disaster following sexual assault allegations against the fashion mogul and they'll need to work quickly to avoidtarnishing the brand beyond repair.

Earlier this month, 10 women filed a civil class-action lawsuit seeking damages from Nygard, accusing him of raping them and running what they called a "sex trafficking ring."

None of the allegations havebeen proven in court, and there are no criminal charges associated with any of the claims.

In an emailed statement, Nygard's spokesperson Ken Frydmansaid the businessman stepped down from his company hours after FBI investigators raided his New York offices to prioritize "the welfare of the thousands of Nygard employees, retail partners, loyal customers, vendors, suppliers and business partners."

'It's a disaster'

Brand expert Peter George said it doesn't take much time for allegations of inappropriate behaviour to tarnish a brand soNygard International will need to work quickly to save its reputation.

"From a brand perspective, it's a disaster. You couldn't have anything worse happen to your brand," said George, who is the CEO of Winnipeg-based ad agency McKim Communications Group.

"It's a big company [with] lots of employees and lots of customers, so there's going to be a lot of fallout from this, one way or the other."

In Nygard's hometown of Winnipeg where the fashion magnate first made a name for himself, and where he is most well-known his face has covered billboards across the city. That includes some at theWinnipeg James Armstrong Richardson International Airport that were recently taken down after their contracts ran out.

Winnipeg Airports AuthorityspokespersonTyler McAfeesaid the last of the Nygard ads came down in June.

Nygard International has also been involved with local charities, includingthe CancerCare Manitoba Foundation and theCanadian Breast Cancer Foundation (before it merged with the Canadian Cancer Society).

When contacted by CBC News, representatives for both said the organizations do not have formal relationships with Nygard or his company.

In 2008, former Winnipeg mayor Sam Katz gave Nygard a key to the city which a spokesperson said Mayor Brian Bowman wants back if the claims are proven in court.

Marketing expert George said there are a few options that might help change public perceptions of Nygard International's brand, like changing the name or selling the business. But no matter what path they choose, he said there is likely still a tough road ahead.

Risk to brand

Marketing professor Fang Wan said the case demonstrates the risk of positioning a personal brand so close to a company's brand.

"There should be some distance, just because the founders are humans. And, using finance terms, they're risky," said Wan, who teaches at the University of Manitoba's Asper School of Business.

According to the company's website, Nygard International has more than 150 retail stores in North America including seven in Manitoba and ships close to 400 million garments annually. The company also has facilities and studios in Los Angeles, Toronto, Winnipeg, New York and Shanghai.

The Nygard group of brands include Peter Nygard, Nygard Slims, Bianca Nygard, ADX, TanJay, Alia and Allison Daley.

Wan said with a companythat carries the name of its founder, there are huge business implications if that namesake ends up in the news whether it's because they die, commit a crime or find themselves embroiled inscandal.

"All these will have a tremendous impact on the company brand if the two brands are not separate strategically, and in this case, that is precisely the situation," she said. "I think there's a huge crisis."

Distance from founder

Robert Warren, a marketing instructor at the University of North Dakota, said the allegations against Nygard won't be enough to destroy the company's reputation because he isn't as well-known outside Winnipeg.

"People buy the clothes because they like the designs, not because of the direct connection to Nygard," said Warren, who also served as the director of the University of Manitoba's Stu Clark Centre for Entrepreneurship until 2012.

Warren said because the company only uses Nygard's family name, it providesa bit of leeway that could allow it to use other family members as representatives.

"I'd start to bring out other people and, especially given these particular charges, I'd try and show that we have powerful women in the company that have played key roles," he said.

"So if they've got a good PR team, they will be heavily out there trying to create distance and talk about the Nygard team, or you'll see them bring back [his daughter] Bianca's name."

Warren said he thinks there will still be a small initial blow to the company's bottom line, pointing to U.S. department store chain Dillard's severing ties with Nygardas an example.

"I'd be worried about his sales through Dillard's, because that's his big department store he's still hooked up with here," he said. "[But] overall, I think that was a smaller percentage of their sales."

Warren said if more accusers come forward, the Nygard company could find itself in financialtrouble because it's a privately held companyclosely attached to its founder.

"He may have to tap corporate resources to pay those things off. And if he does that, then that has much broader ramifications in terms of the company's ability to bring out new designs [and] continue to fund stores.

WATCH | Sam Samson's report:

Nygard the company faces tough task to distance itself from Nygard the man, experts say

5 years ago

Duration 2:45

A Winnipeg marketing expert says Peter Nygard's eponymous company is facing a disaster following sexual assault allegations against the fashion mogul.