Incorporated: 1906 as Jostens Manufacturing Company
Sales: $876.4 million
Stock Exchanges: New York
SICs: 3911 Jewelry & Precious Metals; 2741 Miscellaneous Publishing; 7372 Prepackaged Software; 2329 Men/Boys’ Clothing Nee
A giant in the education products industry, Jostens is best known as a manufacturer of high-quality class rings for high school and college students. Since 1960, the company has also produced specially commissioned rings for contestants in the World Series, the Super Bowl, the NBA Championship, and the NHL Stanley Cup. Despite such high-profile coups, however, Jostens’ core ring business (as well as its yearbook, photo, and awards segments—all part of the $546 million School Products Group) has experienced declining growth as a direct result of enrollment decreases throughout the 1980s and early 1990s. Fueling hopes for the future is Jostens Learning Corporation (JLC), a wholly owned subsidiary, created through a continuing chain of acquisitions, that leads the field of computer-based instructional technology. In fiscal 1992 revenues for JLC totaled $172 million, or approximately 20 percent of all corporate gross income. An agreement to merge chief competitor Wicat Systems into JLC promises to further speed growth in this area, in which CEO H. William Lurton expects to see an increase of about 25 percent annually. Lurton is often accorded most of the credit for maintaining the health and profitability of the company in a difficult market through savvy decision-making, diversification as well as divestment, and operational cost-cutting. Expectations that enrollment figures will rebound and show small but steady increases through the remainder of the 1990s further support the prevailing opinion that Jostens will continue to remain healthy with Lurton at the helm.
Begun in 1897 by Otto Josten, Jostens was originally a small jewelry and watch repair business located in Owatonna, Minnesota. In 1900 the founder began manufacturing emblems and awards for nearby schools and in 1906, the year of incorporation, Josten added class rings to his product line, to be sold to schools throughout the Midwest. The company remained small and relatively inconspicuous until Daniel C. Gainey, a former teacher and football coach, was hired in 1922 as the first full-time Jostens ring salesman. The rings at the time carried no gemstones and were all one size. Yet Gainey, with his dynamic and winning personality, secured sales of $18,000 within his first year. The amount was so large that he was forced to return to Owatonna to personally ensure that production demands could be met. By 1923 Gainey had enlisted four more sales representatives—all part-time—and revenues quickly rose to $70,000. Thus class rings became the central concern for the Jostens Manufacturing Company. In 1930 the watch-making and repair business was sold and the capital used to construct the company’s first ring manufacturing plant. Three years later, with sales approaching the $500,000 mark, Gainey was elected chairman and CEO, positions he held until his retirement in 1968. According to several accounts, Gainey’s greatest contribution to the company was his establishment and motivation of a nationwide sales force. Direct sales through independent representatives remain the primary source for the company’s virtually uninterrupted growth.
During World War II Jostens contributed to the war effort by adapting its plant and equipment to manufacture precision parts and other materials. Major expansion came following the end of the war. In 1946 the company added graduation announcements to its offerings; in 1950 Jostens launched the American Yearbook Company. Both moves further tapped the education market and made the company less dependent on seasonal sales from rings. In 1958 the company made its first acquisition, purchasing the Ohio-based Educational Supply Company, a manufacturer of school diplomas. Jostens went public the following year and a seemingly unending series of acquisitions, which fortified the company’s dominance of the high school and college products markets, characterized the next ten years. Sales for 1962 totaled $26 million; three years later the company obtained its listing on the New York Stock Exchange. In 1968 the company expanded into the Canadian photography market with the purchase of Winnipeg-based National School Studios. By this time Jostens was the undisputed domestic leader in both class ring and yearbook sales. Gainey’s retirement, however, coupled with Jostens’ relocation to Minneapolis in 1969, triggered a tumultuous period that nearly shipwrecked the then nearly $100-million-dollar company.
Star Tribune columnist Dick Youngblood, reflecting back on this period, wrote: “Jostens had been in turmoil since the late 1960s, when company patriarch Daniel C. Gainey, a major stockholder, pretended to retire as CEO. The trouble was, Gainey remained active enough over the ensuing four years to force the resignation of three chairmen and a president, including his own son.” In 1970, amidst the turmoil, a top-performing Jostens salesman and division manager was appointed executive vice-president and effectively became the company’s chief operating officer. His name was Bill Lurton. Unbeknownst to senior management, however, including Lurton, Gainey had begun negotiations with acquisition-hungry Bristol-Myers. Once Gainey’s plan surfaced, several top Jostens officials tendered their resignations; Lurton was among the few who remained. Although Bristol-Myers halted negotiations after the management fallout, Jostens remained in peril under the leadership of replacement CEO Richard Schall. A former top official at General Mills and Metro Goldwyn Mayer, Schall, according to Corporate Report editor Terry Fiedler, “presided over Jos-tens for about 18 months before the advent of what amounted to a palace coup.” An outsider with little knowledge of the business, Schall had brought in his own management team and had radically disrupted the friendly, teamwork-oriented corporate culture and threatened to move the company too quickly into new, uncharted territory. “The Lurton-led old guard demanded that Schall leave, threatening to leave themselves if he didn’t. The directors sided with the old guard and in February 1972 Lurton became CEO of Jostens.”
Twenty-one years later, Lurton remains in the position, well-liked by his employees and greatly esteemed by his fellow Minnesota CEOs. During his early tenure he moved quickly to reestablish Jostens as a thriving, focused company. Diversification beyond educational products, thought to be the key to the company’s future, was renewed only for a short time before being largely curtailed. In 1974 Lurton divested Jostens of a greeting cards manufacturer and a men’s accessories business. Five years later he also rid the company of interests in wedding rings and library supplies. Jostens Travel, first organized in 1972, was also dissolved before the end of the decade. Jostens did keep at least one peripheral acquisition, Artex Enterprises, for the long term. A manufacturer of custom-imprinted athletic and casual wear, the Artex label survives within the Jostens Sportswear division and is marketed primarily through mass merchants.
Aside from the aftermath of the Gainey debacle, Lurton’s greatest challenge as a CEO came in the late 1970s and early 1980s, when demographic studies clearly showed that the last of the baby boom generation had graduated from high school and therefore beyond the core products line. According to Jackey Gold in Financial World, “Lurton’s worry was that declining high school enrollments would shake Wall Street’s faith in the company’s ability to perform. Jostens’ board of directors, too, became infected by such concerns and in August 1982 approved Lurton’s proposal for a management buyout.” The decision to go private was, for lack of financing, never realized; neither, however, was the company’s forecasted decline.
Instead, Lurton launched a concerted campaign to impress Wall Street and counteract potential downswings in profits by boldly entering the proprietary schools business. Beginning in 1983, he acquired San Gabriel Colleges of California and Metridata Education Systems of Kentucky. Three additional private, vocational schools were acquired in 1984. That same year Jostens also entered the audio-visual learning and educational software fields by acquiring the Educational Systems Division of Borg-Warner Corporation, which it later renamed Jostens Learning Systems. The new flurry of purchases carried sales to over $400 million in 1985, when Jostens was accorded Fortune 500 status for the first time. In 1986 the company acquired Illinois-based Prescription Learning Corporation (PLC). A developer of customized computer hardware, software, and support services for the educational market, PLC was merged with Education Systems Corporation three years later to form JLC.
Meanwhile, to the consternation of several analysts, Jostens divested itself of its burgeoning list of proprietary schools, all 36 of them. The company sold the schools to CareerCom Corp. in 1987 for a sizeable profit. As then Education Division spokesperson Gary Buckmiller explained, “We didn’t view the sale as getting out of the proprietary school business, but rather as changing the way we’re involved in the business.” The involvement, through JLC, has become one of support and service for, rather than management of, instructors and curriculum. Jostens’ one remaining non-educational venture, the Business Products Division, was also sold in 1987, for a gain of $40 million. Now 90 years old, the company had returned to its roots in its service emphasis. By this time Jostens boasted an employee work force of some 9,000, in addition to an independent sales force numbering approximately 1,400.
Jostens’ nearly 27 percent average return on investment between the years 1983 and 1989 brought kudos from all corners for the CEO. Fortune magazine highlighted Jostens among its 500 in 1989 as one of the “Companies That Compete Best.” In 1990 Lurton was accorded the honor of “Executive of the Year” by Corporate Report Minnesota’, further recognition came the same year from Industry Week, which celebrated Lurton as one of “America’s Unsung Heroes.” Until fiscal 1992 the news regarding Jostens and Lurton continued to be highly favorable. The 1990 purchase of Gordon B. Miller & Co. (the oldest recognition products company in North America) and Lenox Awards augured well for the company, as did its multi-media agreement with Western Publishing’s Little Golden Books. Even the 1992 performance reports were respectable, considering the lingering effects of a recession: net sales increased two percent, while net income showed a four percent decline. The announced consolidation of jewelry manufacturing and photo processing operations are expected to contribute to a quick rebound. The Jostens organizations hopes that rising school enrollment, an improving economy, and a new management team for the Sportswear group will improve the company’s performance.
Whether or not the company can meet Lurton’s goal of returning to “double-digit growth in sales and earnings,” it is likely the company will continue to prosper through its customary reliance on both acquisitions and service-oriented sales and marketing. JLC, operating in a marketplace that experts estimate is only 15 percent tapped, appears poised for fast-paced growth, especially considering its August 1992 purchase of Wicat Systems and its arrangement with Texas-based Dell Computer to market a Jostens line of 386 and 486 systems. Jostens’ intention is to emerge as a leading, full-service provider in its selected markets. In any event, Jostens Inc. enters the 1990s securely entrenched as a leading manufacturer in the education product industry.
American Yearbook Company, Inc.; Artex Manufacturing Company, Inc.; Jostens Canada, Ltd.; Jostens Engraving, Inc.; Jostens Learning Corporation; Jostens/ Massachusetts, Inc.; Jostens Photography, Inc.; S. C. Cap & Gown, Inc.; Wayneco Enterprises, Inc.
Greenbaum, Jessica, “Lord of the Rings,” Forbes, May 21, 1984, pp. 108-10; “Jostens Moves to Head of the Class,” St. Paul Pioneer Press & Dispatch, October 14, 1985; Fierman, Jaclyn, and Jeffrey Rayport, “How to Make Money in Mature Markets,” Fortune, November 25, 1985, pp. 46-50; Josten’s Today (special 90th anniversary issue: “90 Years of People, Progress and Pride”), August 1987; Raley, Marcia A., “Dain Bosworth Research Capsule: Jostens,” January 25, 1988; Saporito, Bill, “Companies That Compete Best,” Fortune, May 22, 1989, p. 36; Fiedler, Terry, “H. William Lurton: Modesty That Rings True,” Corporate Report Minnesota, January 1990, pp. 45-51, 92; Gold, Jackey, “How to Make a Cash Cow Dance,” Financial World, June 12, 1990, pp. 38-9; Benson, Tracy E., “America’s Unsung Heroes,” Industry Week, December 3, 1990, pp. 12, 22-23; Youngblood, Dick, “In a Shrinking Market, He Gently Led Jostens to New World of Growth,” Star Tribune, March 18, 1991; Moylan, Martin J., “Jostens Learning Gives Stock an Edge,” St. Paul Pioneer Press & Dispatch, August 12, 1991; Byrne, Harían S., “Jostens Inc.: Demographics Offer an Earnings Kick,” Barren’s, October 14, 1991, p. 38; “Highlights from Josten’s History,” Minneapolis: Jostens, 1992; Foster, Jim, “Jostens Plans Consolidation Moves,” Star Tribune, January 29, 1992, p. 3D; Gross, Steve, “Jostens Learning Expanding PC Line,” Star Tribune, April 15, 1992, p. 3D; “Jostens Has Lower Earnings, Sales,” Star Tribune, January 19, 1993.
—Jay P. Pederson