Careismatic CEO Sid Lakhani Talks Supply Chain Post Bankruptcy

Sid Lakhani took over the reins at Careismatic Brands Inc. (CBI) in December 2023. The following month, the company filed for Chapter 11 bankruptcy court protection. The firm successfully exited bankruptcy last month.

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In this interview with Lakhani, Sourcing Journal discusses how the restructuring process helped to improve the sourcing and supply chain options for the world’s largest medical apparel provider.

Sourcing Journal: You joined the company when you sold your family’s scrubs business Healing Hands to CBI. Tell me about CBI’s business at the time.

Sid Lakhani: CBI in 2020 acquired Healing Hands, where I was serving as CEO. I joined Careismatic as part of the sale. Healing Hands was founded by my father after he suffered a medical emergency, [and his] vision was to offer nurses more comfortable, fashionable, and functional scrubs, enabling them to focus on what matters most, their patients.

The COVID-19 pandemic was an unprecedented moment for the medical apparel industry and the healthcare sector at large. During this period, we doubled our efforts to stand by and support frontline workers and found new ways to elevate them by providing high-quality apparel and personal protective equipment.

The surge in demand for medical apparel during the pandemic resulted in supply chain disruptions and delays. These challenges, combined with the post-COVID softening demand and changing customer patterns , greatly impacted our financial performance.

SJ: Tell me where the company sources its products and inputs, and where are they manufactured? How did the supply chain issues play a role in the company’s need to file for Chapter 11 in January?

SL: At Careismatic, we source our products globally, having developed an extensive supply chain of high-quality fabrics and materials which enables us to manufacture industry-leading products for our global customer base….While not the primary reason for our financial restructuring, pandemic-related supply chain disruptions significantly impacted our company’s performance over the past few years. These challenges imposed new costs and put additional pressure on margins.

We are actively taking steps to reinforce our supply chain. This includes implementing advanced inventory management systems to ensure better forecasting and more accurate stock levels, diversifying our supplier base, streamlining our logistics operations by partnering with third-party logistics providers, and investing in supply chain technologies such as real-time tracking, data analytics, and automation.

We are exploring the possibility of moving some of our distribution operations closer to key markets to better serve our customers locally. These strategic initiatives are designed to create a more resilient and efficient supply chain that is capable of supporting our growth objectives.

SJ: The Chapter 11 was a financial restructuring. Who are the new owners, and how does the new balance sheet position the company for long-term growth? How is CBI’s business transforming to meet your customers’ needs?

SL: The financial restructuring was a crucial—and very successful—step in our corporate transformation. We eliminated all third-party debt and significantly strengthened our financial position, setting us up for long-term success.  Our new balance sheet provides CBI with a strong liquidity position, enables investment in product innovation, and ensures a sustainable financial foundation for future growth.

The new owners are a group of investment funds led by Nexus Capital Management. They have been dedicated partners throughout the restructuring process and have supported our strategic plan to return to operational excellence and profitability.

Our strengthened balance sheet provides us with the liquidity needed to invest in product innovation and business excellence. This enhances our ability to serve CBI’s global customer base more effectively and ensures a sustainable financial foundation for future growth.

Our customers remain our top priority. We are undertaking several transformative initiatives to best meet their evolving needs. We continue to prioritize research and development to introduce advanced medical garments, such as those incorporating cutting-edge fabrics with properties like 360-degree stretch and integrated antimicrobial technologies. We also are investing in customer service improvements to ensure a seamless shopping experience for our healthcare professional customers.

SJ: Tell me about CBI’s channels of distribution. Is the distribution primarily wholesale or direct-to-consumer (DTC)? How big is CBI’s wholesale business and in what countries?

SL: We deploy a comprehensive omnichannel distribution strategy to reach our customers. This includes a combination of wholesale partnership, DTC sales via our brand websites, and marketplace partnerships.

Through our wholesale business, we have strong relationships with over 2,300 specialty medical apparel customers in the U.S. These customers distribute our products through brick-and-mortar stores and online platforms. Through these partnerships, CBI sells products in over 70 countries, supported by key distribution contracts.

Our DTC business is an exciting and growing part of our business, and we are continuing to invest in the channel as a complement to our wholesale operation.

We also sell through several key partners, including Walmart and Amazon.  Whether through our robust support systems, tailored solutions, or proactive communication, we continuously strive to ensure that our partners can rely on us to meet the evolving demands of the healthcare industry.

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SJ: How many brands does CBI own, and how many brand licenses does it have in its manufacturing operation? How big is your private label business? Given the consumer focus on value, has private label become a bigger component of CBI’s overall business?

SL: We have an extensive portfolio of owned, licensed, and private label brands that position us to effectively meet the diverse needs of the healthcare apparel market, ensuring both quality and value for our customers.

CBI owns a diverse portfolio of 25 well-known brands in the medical apparel sector. Some of our most notable owned brands include Cherokee Uniforms, Infinity, Healing Hands, Med Couture Medelita, Infinity, and ScrubStar.

In addition to these owned brands, we hold licenses for several popular and recognizable brands, including Dickies Medical, BBC Studios, Disney, Dr. Seuss, NBCUniversal, Peanuts Worldwide LLC, Sanrio, Sesame Street, and Warner Brothers.

We also manufacture private label products such as Sanibel Scrubology, Beyond Scrubs, and AllHeart. Our private label segment is an increasingly important component of CBI’s overall business. Over time, we have noticed more consumers are focusing on value and demanding the high-quality, yet affordable products that our private label offerings deliver.

SJ: What is CBI looking at in terms of future innovations? Will the focus be more on fabrications? What about performance and comfort? What is the future of sourcing and supply chain options for CBI?

SL: CBI is deeply committed to continuing our legacy of innovation with a strong focus on fabric, performance, and comfort. We are advancing fabric technologies that enhance the functionality and durability of our products. This includes fabrics with properties such as 360-degree stretch, antimicrobial treatments, and moisture-wicking capabilities.

We are also investing in the development of new product lines that cater to the specific needs of healthcare workers, including designs that offer better fit, enhanced mobility, and improved breathability. The goal is to provide apparel that not only meets the stringent requirements of the healthcare environment but also offers superior comfort and performance.

Since our Chapter 11 filing, we have made significant adjustments to our sourcing and supply chain operations. The restructuring process provided us with an opportunity to streamline and optimize these aspects of the business, ensuring greater efficiency and resilience.

Our goal is to continue to enhance our supply chain through our transition to third-party logistics center, cart.com. This transition aims to unify all our brands and inventory under one roof, optimizing product shipping and enhancing the customer experience.

Looking ahead, we see the future of sourcing and supply chain options for CBI as being increasingly integrated and technology-driven. We will continue to leverage advanced inventory management systems, real-time tracking, data analytics, and automation to ensure we can meet the evolving demands of the healthcare industry efficiently and effectively. This commitment to innovation and efficiency will help us maintain our leadership position in the market and ensure a bright future for CBI and our customers.

SJ: Where do you see CBI five years from now? And what else should we know about CBI?

SL: I see an exceptionally bright future for CBI five years from now as we continue to relentlessly focus on our customers and serve as the leading provider of medical apparel globally.

CBI plans to implement a model that emphasizes local operations, ensuring that products are closer to our end customers. This includes partnering with local retailers within the US, positioning inventory in strategic locations to minimize shipping costs, effectively acting like a local supplier with the strength of global brands. Additionally, we are expanding our duty-free footprint to streamline international operations and reduce costs for our customers. We have already seen positive results from this approach in the European market and are eager to replicate this success in other key regions, including the Middle East, Latin America, and Canada.

Lastly, we are deeply committed to serving the healthcare community, not just through our products but also through meaningful social impact initiatives. This includes donating uniforms during crises, promoting nursing education in developing countries, and supporting healthcare workers globally. We believe in connecting profit with purpose, ensuring that our financial success translates into significant contributions to society. I hope over the next five years we expand these initiatives and increase CBI’s impact and support for healthcare communities worldwide.

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