Back in 2000, a chill wind was blowing at the North Face Inc.’s San Leandro, Calif., headquarters. The maker of high-quality climbing and mountaineering gear was near bankruptcy after a series of missteps that would have brought any retailer to its knees.
A switch to a third-party owned distribution center had stopped shipments in their tracks. A new computer system wasn’t working well enough to spit out the numbers that managers needed to run the company.
And a disastrous decision to move the company’s design, research and development and marketing departments to Colorado disrupted practically everything else.
By March 2000, North Face was out of cash, and employee morale was at an all-time low. Executives found themselves faced with two unpleasant alternatives: Seek bankruptcy protection or be sold to someone else.
Luckily for North Face, which has a Chicago store in the John Hancock Center, it took Door No. 2 and was acquired for $150 million by VF Corp., the maker of Wrangler and Lee jeans as well as Vanity Fair lingerie.
VF’s lacy bras and panties might seem wimpy company for North Face’s rugged expedition tents and Mt. Everest climbing suits. But VF did contribute some things North Face desperately needed: financial resources and operating systems that got orders shipped on time.
“VF is extremely disciplined and good at product management, forecasting, planning and inventory control. You wrap that together, and it’s really the supply chain,” says Mike Egeck, North Face’s president who was recruited by VF two years ago. “The supply chain was really the company’s problem.”
Within 14 months of being acquired, North Face’s inventory backlog was reduced by 60 percent.
Getting operations moving again allowed North Face to focus on what it does best–developing new products and designs for serious outdoor enthusiasts. Its marketing is back on track as well. The company is now sponsoring 80 athletes, including long-distance runners, skiers and snowboarders, who wear and test its products.
All that authenticity has turned North Face into a crossover brand. Couch potatoes who rarely leave the city limits are donning its backpacks, athletic shoes and jackets as fashion statements. If you can’t have the body, you can at least dress like an athlete.
North Face’s new trendiness should help it succeed in the unlikely spot chosen for its eighth store: one block off Rodeo Drive in tony Beverly Hills, Calif. But Egeck vows that North Face will never take the road that Eddie Bauer did–chucking its rugged roots in favor of being a lifestyle brand.
“What’s key for us is authentic functionality,” he says.
The company is now profitable again and exceeding VF’s corporate goal of growing revenue at 6 percent annually. Although Sept. 11 temporarily hurt sales, the attacks boosted sales by increasing interest in outdoor activities.
“It brought people together, focused them on personal values and in some ways, helped our business,” Egeck says.
Suiting up: The tough economy may be a boon to the beleaguered men’s suit industry. Back in the go-go days of the 1990s, business attire became so casual that flip-flops and jeans were considered adequate in some techy workplaces.
But with layoffs continuing at many major U.S. companies, dressing up may be coming back in style. A recent survey by the Men’s Apparel Alliance in New York found that 70 percent of senior executives at large companies said employees who are professionally attired project a better image for the company. Sixty-eight percent agreed that men in jackets and ties “are more likely to be noticed.”
———-
E-mail schandler@tribune.com.
