Spokanite heads surge by clothier
Jones serves Cutter & Buck, a stock market darling, as chairman, CEOOctober 1st, 1998
Former Spokane clothier Harvey Jones is heading a fast-growing Seattle-based sportswear company that now is working to build a worldwide distribution network.
The company, Cutter & Buck Inc., hopes to make its clothing a prominent international brand, such as Ralph Laurens Polo label or the Donna Karan brand, while marketing its casual fashions to affluent baby boomers, Jones told a Spokane Stock & Bond Club audience late last month.
The publicly traded company, of which Jones is chairman and CEO, saw its net sales jump to $70.1 million in the fiscal year ended April 30, up from $46.6 million in the previous year. In its first quarter of fiscal 1999, Cutter & Bucks revenues shot up 42 percent over the year-earlier period. The company employs about 300 people nationwide.
In short, we find ourselves in the sweet spot of an expanding market at a perfect time, Jones told shareholders in the companys just-released annual report.
Cutter & Bucks stock has received strong reviews from analysts for sometime. John Olinski, senior vice president of research at Wedbush Morgan Securities, in Los Angeles, says, I think the brand is very strong as a niche brand and accelerating. Two or three years ago no one knew who they were. Wedbush Morgan said in a research report published last month that, Early fall re-orders and preliminary spring 1999 bookings suggest continued brand momentum.
The companys shares, which are traded on the Nasdaq system, have climbed from about $7 a share three years ago to around $25 recently. At its recent price, the stock was trading at about 23 times earnings.
The company currently markets its golf clothing in about 3,200 golf pro shops nationwide, up from 2,700 in 1997. Jones estimated there are about 15,000 golf pro shops in the U.S., and said during his recent visit here that his companys goal is to market its clothing in 5,000 of those shops. In 1996, Golf Pro Merchandiser magazine called Cutter & Buck the fastest growing clothing brand for men in the golf industry.
Though Cutter & Buck makes sportswear rather than just golf wear, Jones said it has become especially well-known in that increasingly popular sport. The companys golf wear accounts for 55 percent of its sales, he said.
Cutter & Buck was selected by the U.S. Golf Association as a licensee for the 1998 and 1999 U.S. Open tournaments and as a merchandise vendor for the 1998, 1999, and 2000 U.S. Open, Senior Open, and Womens Open.
Now, Cutter & Buck is attempting to sink eagle putts in new markets, such as womens clothing and retail.
To meet the demands of the increasing number of women golfers, the company introduced its first line of womens clothing at golf shops and resorts this summer.
Three additional womens collections will go to specialty stores and golf shops next spring, Jones said.
Meanwhile, Cutter & Buck will launch its first retail store in Seattles Pacific Place shopping center at the end of this month, Jones said. If the store is successful, the company will consider opening other retail stores in the downtown districts of major metropolitan cities, he said. The company currently doesnt have plans to open a store in Spokane, but its clothing is marketed at several Spokane-Coeur dAlene area stores, including Harveys Fine Clothing, Moose Lake Co., and the Coeur dAlene Resort.
Eye on the pin
Raised in Spokane, Jones got his start in the clothing industry at Harveys Fine Clothing, which his father, Clair, opened in 1955 at what is now NorthTown Mall. His father named the businessand his sonafter an older brother who had died at a young age. Patrick Jones, a brother of Cutter & Bucks chairman and CEO, now owns Harveys Fine Clothing.
As a brother Im extremely proud of what Harvey has done, says Patrick Jones, This country has opportunities, and sometimes you succeed and sometimes you dont. Hes done both. Cutter & Buck is the No. 1 selling brand in Harveys Fine Clothing stores, Patrick Jones says.
In the early 70s, Harvey Jones moved to Los Angeles and together with a partner started a pair of jeans manufacturing companies, called Sticky Fingers and San Francisco Riding Gear. Later they merged the two companies under the San Francisco name. The company continued to manufacture its products in the U.S. at a time when it was difficult to compete, Jones said. All I saw ahead was a very difficult time.
In 1982, Jones sold his interest in the company and joined Union Bay Sportswear in Seattle to help it set up contracts with factories overseas to manufacture its clothing.
Four years later, Jones again ventured out, and, with a partner, started a company in Seattle called Bench Co. Ltd., which was a predecessor to Cutter & Buck. That venture was not successful, Jones said. Bench Co. had been contracting with a factory in Taiwan to manufacture its clothing when Taiwans currency plunged. It was difficult to maintain margins for a start-up company, Jones said.
In the fall of 1989, Jones and a Seattle-based venture capital company called Roanoke Capital Inc. launched Cutter & Buck.
With the financial backing, Jones said the company was able to contract with factories overseas to manufacture its classic American sportswear for men. The upscale clothing is made in Hong Kong, China, Saipan, Thailand, South America, and the Middle East.
The recent devaluation of Asian currencies hasnt hurt or helped the business, Jones said, because the company took great care to be in strong factories with strong banking relationships.
Cutter & Buck also performs custom embroidery work on its clothing for its clients, which include golf courses, resorts, and corporations. It launched that operation in Seattle last year. The company previously had contracted with overseas factories for that work.
Jones claimed that Cutter & Buck already is one of the top-selling golf-wear brands in Europe, and said the company has bought a distributorship in Amsterdam that had been distributing its clothing in Europe. The company plans to use the distributorship to market its products throughout the continent.