There was nothing warm or fuzzy about the financials four years ago at the Vermont Teddy Bear Company. Even after its big Valentine’s Day rush, the company was well on its way to racking up a $2 million deficit for the fiscal year. Cash was so tight the directors were forced to sell the new custom-made facility in Shelburne in a “sale leaseback” arrangement that generated desperately needed operating capital, but cost the company $600,000 in transaction fees. From a high of $19 a share, stock prices had plummeted to around a dollar. And right in the middle of it all, the Walt Disney Company came out with some grizzly competition — the Pooh gram — that threatened to maul the company once and for all.

“Hanging on by our fingernails,” is how board chair Fred Marks describes the situation back in the spring of 1997, when the beleaguered Vermont Teddy Bear Company was still under the direction of Pat Burns. A mail-order expert who had worked with Disney, J. Crew and L.L. Bean, Burns came with a plan to build a consumer products empire around the Vermont Teddy Bear, much as Disney had done with Mickey Mouse. His vision — which necessitated costly catalogue mailings, a retail outlet on Madison Avenue and trips to Hollywood — nearly bankrupted the company and eventually cost Burns his job.

Finding his replacement turned out to be easy, though. The woman who would lead Vermont Teddy Bear out of the woods was already on the job. When Elisabeth Robert wasn’t crunching numbers as chief financial officer — she masterminded the life-saving money-for-land deal — she was pinch-hitting for her boss. She had learned the operation, gained the respect of its employees and educated herself in the rudiments of radio, Teddy Bear’s primary marketing method. When Burns took off on a three-week, phone-free vacation that summer in the middle of a crucial financial audit, Robert decided, “If I have to deal with this, without him, then I am ready and able. I want the whole thing.”

Forty-five-year-old Robert — pronounced like the French “Ro-bear” — recalls approaching the board about the job she concedes “most sane people would have thought was too risky to take on.” She explains her motivation, “It was partly my own realization that something had to be done, and partly the support of employees who had started to come to me and say, ‘Liz, you’re the only one who can do it. You’ve got to step up to the plate.’”

A former varsity lacrosse player at Middlebury College who runs “compulsively” every morning, Robert was also thinking strategically. With characteristic frankness, she says, “I didn’t have a whole lot to lose. Replacing a Disney superstar who had driven the thing into the ground, I was either going to end up in a situation that he caused and I simply couldn’t turn around, or I was going to turn it around and end up with the opportunity of a lifetime.”

With an approach she sums up as “down to earth, behind the scenes, get the job done,” Robert pulled out the latter. Two years after she was promoted from CFO to CEO, Teddy Bear had recouped its prior losses and broken ground on a new factory in Newport, which now employs about 80 people. In fiscal 2000, sales increased 50 percent to generate a profit of $3.7 million. Over this Valentine’s Day, which still accounts for 25 percent of the company’s annual revenue, the factory churned out 107,000 bears in 13 days — up 26 percent from last year. Robert authorized over $2 million in radio marketing expenditures — just in the month of February.

In her modest Shelburne office, adorned with posters of her favorite “Mama’s Boy” teddy in blue jeans and sunglasses, Robert discusses Teddy Bear’s corporate comeback with an openness informed by business-school smarts. She comes off as a compassionate capitalist, as ready with dates, numbers and nautical metaphors as she is to come to the aid of needy employees. The door of her office stays open for the duration of our interview, as the conversation meanders from manufacturing in China to her two teenage daughters from a previous marriage with now-retired Middlebury English prof Robert Hill.

Tomboy-svelte in khaki slacks and sensible shoes, Robert maintains the same friendly professionalism later, addressing 220 employees at a “Meet the Prez” company lunch. Perched above the crowd, she starts out analytical, explaining the quarterly earnings in terms everyone could understand. Then she turns inspirational, recounting the rush of riding in the tractor that towed a “big-ass” plane full of teddy bears out onto the runway at Burlington International Airport on Valentine’s Day eve.

Finally, she is fiscally conservative, announcing plans to postpone a pre-planned expansion in Shelburne as a result of the recent economic downturn. “We are going to make adjustments,” she tells her lunching workers, “to make sure that we don’t get out in front of ourselves… like we did a long time ago.”

---

It’s been 20 years since John Sortino stitched his first Vermont-made teddy bear — a nationalistic response to his realization that all the stuffed bears on the market were made overseas. Two years later, he starting selling his creations out of a cart on Church Street, eventually offering packing and shipping services in what amounted to the first “Bear Gram.” Almost accidentally, he made the discovery that people were willing to shell out big bucks for a well-dressed bear as long as it was a personalized gift.

In 1990, he took the mail-order Bear Gram concept to New York City in anticipation of Valentine’s Day, and bought ads on Z-100 that were read live by deejays. The reaction was phenomenal. The company made its annual sales goal in one day. Two years later, it would place 80th on Inc. magazine’s list of fastest-growing companies in the United States. Thirteen months later, it went public, opening at $10 a share on its first day of trading.

“John didn’t understand what he had until then,” says Robert, explaining the evolution of his entrepreneurial idea from “selling teddy bears” to a “creative alternative to flowers.”

Robert makes that distinction because it echoes the epiphany she had shortly after taking over the company: “Burns was wrong and Sortino was right,” is how she sums it up. Burns was moving the company away from the basic Bear Gram back to a more retail-oriented approach to selling stuffed animals. “No matter how hard you try, you can’t sell a $65 teddy bear,” Robert says. “It can be made in America, it can have astounding brand, you can position it on Madison Avenue, but you can’t compete with bears selling for $20 or $30 because they are made overseas.”

Reasoning along those same lines, one of the first actions Robert took as CEO was to shut down the Vermont Teddy Bear store on Madison Avenue. In analyzing the first sales report from Manhattan, she saw that 70 percent of the bears were being shipped from the store, making the high-rent retail outlet “the most expensive fulfillment center in the world.” The factory store in Shelburne, by comparison, did $2.8 million in sales last year.

Robert also pushed Teddy Bear Company to import more materials from overseas — a cost-saving move that flew in the face of Sortino’s original American-made mission. Teddy Bear had begun buying outfits from Colombia in May 1997. By the next year, about half of its raw plush fabric was coming from China. “It was an easy decision to make,” Robert says with only a hint of defensiveness. “It was about complementing an operation in growth mode and being able to benefit economically.” She translates from business speak, “We did it to save the company.”

In the same self-preservationist spirit, Robert also found two “renegade lawyers, like right out of A Civil Action,” to file suit against the Magic Kingdom for trademark infringement. Teddy Bear got a little national publicity out of it, but Disney came to the table almost immediately — not with money, but with a serious concession: In September 1997, they agreed to limit the way in which they marketed the rival Pooh grams.

It was definitely territory worth protecting, as Robert proved five months later. “Valentine’s Day blew the doors off this place,” she recalls about the moment of teddy-bear truth in February 1998. The resulting profits not only validated her overall pro-Bear Gram business strategy, but bought the company a year to get back on track. “It was pretty clear that we were going in the right direction,” she says. “The rate at which this thing turned around was unbelievable.”

How she actually maneuvered this economic about-face is a bit more complicated. “She’s hands-on,” says developer Bob Miller, who owns Teddy Bear buildings in Shelburne and Newport. “She’s been able to take her people and really get the most out of them. She’s out there with them, out on the line. She empowers people to discover they have more talents than they may realize themselves.” Robert calls this process “mentoring.”

Asked if gender makes a difference in how Robert runs her business, Director of Manufacturing Cathy Carlisle offers, “I think I can relate to her more because she’s a woman.“ Once an administrative assistant, the 39-year-old says Robert is “certainly as tough as any man, but also tender.” For example, “she understands how important it is to attend a Christmas party at your kid’s daycare, or whatever, because she’s a mother herself.”

Miller has a different view. “There’s no bullshit,” he says with a chuckle. “I’d take her over 10 men I’ve done business with, any day of the week.”

---

Robert grew up in northeastern New Jersey in what she describes as an “entrepreneurial family.” Her Swiss-born father, who had studied mathematics at Princeton, ran a precision-tool manufacturing company in New Jersey with a remote facility in New Hampshire. Her mother, a Smith grad, supported herself for years in New York City when most women of her generation were going the wife-and-mother route. She worked for years as a photo editor at Time Life.

Her grandmother — an Armenian living in Switzerland — was also a trailblazer, who overcame sexism and ethnic prejudice to become one of the first female pediatricians in Geneva. It wasn’t until she was asked to speak to the Vermont Women’s Fund last year that Robert really took stock of “the strong female role models in her life.” And she told the crowd what they probably never expected to hear: “Never at any point in my life — even when I was knee-high to a grasshopper — did I imagine that I couldn’t do whatever I wanted to do because I was a woman.”

Describing herself as more of a jock than an intellectual, Robert proved herself in athletics. At Middlebury, she majored in French — which she already spoke fluently — so she could concentrate on field hockey, lacrosse, skiing and ice hockey. Like so many successful business people, she sees plenty of parallels between playing on a sports team and coaching a corporation to maximum efficiency. “I learned that even when you are down two points, with 40 seconds left, you can pull it off,” she says.

You definitely notice a lot of women running around at Vermont Teddy Bear Company. They are not just stitchers, who are traditionally female, but also executive types. Seven of nine senior managers at the company are female, Robert notes, owing primarily to her “promotion from within” philosophy. She offers another reason, too. “We are in the business of emotion,” Robert says. “I really do think that women — and this is not a sexist comment — are more comfortable dealing with emotion than men are.”

Robert’s employees describe her as a person who listens as well as she leads. And if she stops short of describing her anti-hierarchical managerial approach as “female,” Robert doesn’t object to the suggestion that women handle power differently than men. She could be describing herself when she offers, “I think there is little ego in the way we run the business. There is no throwing weight around. You have to be willing to do everything, including what’s not in your job description.”

That attitude has certainly bolstered Robert’s own impressive resume. Fresh out of business school, she went to work for Vermont Gas, where she developed new models for budgeting and forecasting and negotiated a long-term gas supply contract for the state of Vermont. In the process she met Louise McCarren, who was planning a bid for lieutenant governor. Robert ran McCarren’s campaign, organizing volunteers, fundraising and handling the media.

But even politics was tame compared to the “dog-eat-dog” experience of starting up a computer technology firm in Williston. Robert spent four and a half years at Air Mouse, where she teamed up with an MIT engineer to finance and market a wireless computer mouse. It was draining. “My modus operandi was to get a dollar out of every dime we had, because we didn’t have very many dimes. We had hundreds of dollars’ worth of dreams.” The venture tanked three years after she left to join Teddy Bear in September 1995.

Managing people and fundraising under constant financial stress was ideal training for her first few years at the Vermont Teddy Bear Company. That, and raising two teenage girls as a single mom in Charlotte. Both girls are out of the house now — Ruthie is at prep school and Catie is at college. At work, the financial outlook is bullish, not bearish. There is plenty of money in the corporate account.

But Robert is not one to rest on her laurels. Nor is she inclined to return any of those headhunter phone calls. “You couldn’t pry me out of Vermont with a crowbar and a million-dollar contract,” she promises. “I have a much bigger plan, and much bigger dreams, for this company. There’s plenty of opportunity right here.”