Premium Wear, Inc.

views updated

Premium Wear, Inc.

5500 Feltl Road
Minnetonka, Minnesota 55343-7902
(612) 979-1700
Fax: (612) 979-1717
Web site:

Public Company
Incorporated: 1887 as Northwestern Knitting Company
Employees: 265
Sales: $42.45 million (1998)
Stock Exchanges: New York
Ticker Symbol: PWA
NAIC: 315211 Mens & Boys Cut & Sew Apparel Contractors; 315212 Womens, Girls, & Infants Cut & Sew Apparel Contractors; 315999 Other Apparel Accessories & Other Apparel Manufacturing

Premium Wear, Inc.s core business is the designing, sourcing, and marketing of apparel as a licensee of the Munsing-wear brand for the promotional products/advertising specialty industry. The company re-entered the green grass professional golf shop market in January 1998 using its Page & Turtle brand. The company is what remains of one-time underwear king Munsingwear, Inc.

Comfortable Underwear Yields Big Business: 1880s1960s

George D. Munsing left New York in 1886 to establish a textile factory in Minneapolis, Minnesota, along with two associates from the Massachusetts Institute of Technology, Frank H. Page and Edward O. Tuttle. While superintendent of Rochester Knitting Works, back in New York, Munsing had experimented with knit fabrics and ribbing and hit on a process to plate silk on wool, thus creating an itchless material. The companys first products were knit underwear for women and men. Patent attorney Amasa C. Paul served as president of Northwestern Knitting Company, incorporated on February 15, 1887. Munsing was vice-president.

Munsing was concerned primarily with the technological aspects of the business; consequently, the areas of manufacturing and merchandising were neglected at first. The fledgling company sometimes failed to meet shipping deadlines, which resulted in cancelled orders. Furthermore, the retail customers they served were provided little information about the range of products the company was capable of producing. The investment of a number of prominent Minneapolis businessmen helped the company stay afloat during the difficult early years.

Patents helped Northwestern establish a foothold in the industry. Munsings plated, elastic knit fabric was patented in 1888 along with patents for knit undershirts and drawers. A patent for a crocheting machine, used for trim or finish, followed in 1891. The turning point in the firms fortunes, however, came with the production of the union suit in the early 1890s, making the business the first knitting company in the United States to make and market knit union suits in a large way, wrote Marcia G. Anderson in Munsingwear: An Underwear for America.

The one-piece, cream-colored garment became the companys signature product. Early print ads showed families gathered around the fireplace: men, women, kids, all wearing their union suits. The new product was manufactured out of the companys Lyndale Avenue plant in Minneapolis. Northwestern moved there in about 1890 or 1891 following a number of relocations. The firm would go on to manufacture its products there for nearly a century.

In 1894 Munsing left the company; the other founding partners were gone as well by this time. Northwestern put its merchandising efforts in overdrive and grew rapidly over the next two decades. New products were added, and the manufacturing plant was enlarged. Big long underwear orders for U.S. troops fighting in World War I gave the company widespread recognition.

By 1917, the company was producing 30,000 garments a day. One-tenth of all U.S. made union suits were produced by the Minneapolis company and its predominantly female workforce. Incidentally, the company was recognized for its humane working conditions during a time when factory work often was performed under deplorable conditions.

Munsing returned to the company he helped found in 1919, this time as a research specialist. That year the company was renamed Munsingwear Corporation. Munsing stayed with the business until his death three years later.

Around this time, Munsingwear established a design department; it was one of the first apparel makers to do so. Offerings grew broader as the industry began its move to modernize styles. The 1922 price list included 102 styles of underwear made in various models of wool, cotton, silk, knit, and woven fabrics, and fashioned for all age ranges.

In 1923 the company changed its name to Munsingwear, Inc. and began selling stock on the New York Stock Exchange. The Minneapolis-based company was the worlds largest producer of underwear under a single trademark. Three presidents had led the company during its rise. P.M. Stowell, who started out as a shipping clerk, guided Munsingwear from 1913 to 1932.

During the 1930s, the company sold sleep-and-lounging garments, hosiery, knit coats, pull-ons, and foundation garments for women, as well as its traditional underwear. Munsingwear introduced the elastic fabric girdle to the market in 1932.

Significant manufacturing facilities joined the growing company during the 1940s and 1950s. Among them were the Vassar Company of Chicago, which was, in 1958, combined with Hollywood-Maxwell Company of California to form the Hollywood Vassarette Intimate Apparel Division.

Along the way Munsingwear continued to seek out innovations in fabrics and design. The company introduced nylon tricot to its womens line in 1947 and patented the nylon reinforced neck band in shirts in 1950. Trademarks also were being established. In 1955 Munsingwear put the penguin logo on its knit golf shirts. Stay-There foundations with Ban-Lon appeared in 1958.

In the 1960s, through its David Clark subsidiary (a company purchased in 1941), Munsingwear produced apparel for NASAs Gemini and Apollo programs. Using new fabrics and manufacturing techniques, the company added swimwear and mens and boys products during the decade, and in the 1970s introduced cross-country ski wear.

Times Change, Munsingwear Does Not: 1970s80s

In 1974 sales were $104 million. Mens and boys wear provided 57 percent of revenue, womens apparel 37 percent, and the David Clark subsidiary six percent. The mens and boys division had grown about 11 percent a year from 1968 to 1974. Munsingwears Grand Slam knit sport shirt was estimated to be the largest selling golf shirt in the world. The Vassarette Division, on the other hand, had lost ground. A new generation of women had abandoned the foundations and other garments worn by their mothers and grandmothers.

Net earnings began to slip in the second half of the decade, but the company hung on to its top 20 ranking among the countrys 15,000 clothing manufacturers. From 1932 to 1979, Munsingwear and its five presidents had weathered the Great Depression, union strife, World War II, expansion of operations into new regions, the advent of sales to foreign countries, rapidly changing fashions, and an oil embargo. The industry in which they operated was highly fragmented and highly competitive.

Ken Johnson wrote in a 1975 Corporate Report Minnesota article, The fact that Munsingwear has survived, profited and grown for many years should, therefore, not be taken lightly. Its success is a tribute to establishing brand names associated with quality, style and a reasonable price, and the ability to keep costs under control.

Sales continued to rise slowly during the last years of the decade, but net earnings had begun to slide. Ray Good, a former executive vice-president with food giant Pillsbury Co., came on board as president in October 1979. Munsingwears massive Minneapolis plant, a city landmark, was shut down two years later.

The closing of the Minneapolis factory, a decision made by the directors in spite of appeals from Mayor Fraser and the local textile union, was a shocker, not only to the 400 employees laid off but to the citys many elderly residents. They remember with nostalgia the winters of childhood in the one piece union suit, which made life cozy, wrote Evadene Burris Swanson for Hennepin County History.

Good viewed the plant as a major drain on the company, which was being crippled by heavy short-term debt, overcapacity, and money-losing operations. But the shutdown and other measures, including licensing deals, technological upgrades, a bumped-up ad budget, and a cut-back product line, failed to prevent a flow of red ink. Munsingwear lost $3.8 million on $134 million in sales in 1980.

Company Perspectives:

Throughout history, the Munsingwear name has stood for quality and innovation. Whether its been the creation of a new fabric, the development of a new manufacturing process or the introduction of never-tried-before sales or marketing techniques, the company will continue to be successful based on a tradition of satisfying customer needs and responding to market changes.

Our mission is simple: To be a leading provider of branded knit and woven shirts to the Special Markets and Golf industries through total commitment to quality in people, value in products and excellence in service to our customers while delivering superior return to our shareholders.

Designer jeans and logoed sport shirts had flooded the market, backed by sophisticated advertising creating must have brands. Manufacturers had moved in droves to cheaper offshore production. Munsingwear steadfastly remained production oriented, operating its own fabric plants and manufacturing facilities. The company did not even have a marketing department, according to a 1981 Corporate Report Minnesota article by William Souder.

The company has had three straight years of deficits and has changed presidents more frequently than styles: three in the last two years, wrote Eleanor Johnson Tracy for Fortune in September 1984. President number three, George K. Hansen, a seasoned apparel executive, put the Munsingwear house in order well enough to bring the company back to profitability. But when Hansen decentralized operations, creating a holding company structure, and then tapped into the junk bond market to acquire three apparel companies, weakness in Munsingwears two main divisions became apparent.

The mens and Vassarette divisions, which produced half of total sales, were missing delivery dates and carrying big excess inventories. In addition, the companys traditional customers, the department stores, thought the apparel supplier had weakened the brand by selling products with the Munsingwear label in mass merchandising channels.

Drastic Measures: 1990s

By the end of the decade, debt-ridden Munsingwear was on the brink of closing its doors. Munsingwears revolving-door management has been blamed for the bulk of the companys woes. The firm has lost more than $50 million in the past three years, analysts have stopped following it and its own accountants earlier this year expressed concern about whether the company could stay in business, wrote Ann Merrill in a 1990 Minneapolis/St. Paul City Business article.

Charles Campbell, hired in 1989 to head the companys mens apparel division, was named president and CEO one year later. Considered an apparel turnaround king by some in the industry, he began by trimming down the company and then led Munsingwear through a Chapter 11 reorganization in 1991.

The company, which once had more than 3,000 employees worldwide, six divisions, and $200 million in sales, held only its mens activewear line with the Grand Slam, Munsingwear, Penguin Sport, and Penguin Club labels. Campbells plan for the new and much smaller company was to build on its golf shirt legacy.

Robert Sharoff quoted Campbell in a 1992 Daily News Record: Munsingwear practically invented the golf shirt in the country. At one time, we had a very big presence on the pro circuit. I have a picture in my office of Bing Crosby, Bob Hope, Jack Nicklaus and Arnold Palmer standing arm in arm, and all four are wearing Munsingwear shirts. We decided to get back into that business.

Campbell had moved Munsingwear from a production-driven to a marketing-driven concern, with few remnants of the past. Munsingwear no longer sold its original product, underwear, in any shape or form. The legacy ended when the mens underwear business was licensed to Fruit of the Loom in 1991; the famous union suit had gone by the wayside back in 1969. Munsingwear reported its first full-year profits in six years in fiscal 1992. Campbell left the company to head another apparel concern in 1993.

The company produced mixed results over the next several years, losing $2.3 million on sales of $51.5 million in 1995. The next year, Munsingwear sold its trademarks for cash and exited the retail and pro shop markets. Included among the labels sold to Miami-based Supreme International Corp. were all Munsingwear brands and the Penguin and Grand Slam names.

Renamed Premium Wear, Inc., the company continued to operate its special markets business, which it entered in 1994. Premium Wear licensed back the Munsingwear and Penguin trademarks for use on apparel made for that segment. Premium Wears 1996 sales in the special market area were $27 million, up 75 percent from the previous year.

The multibillion-dollar advertising specialty market handled merchandise for business promotions and employee incentives. Premium Wear sold to distributors and dealers, which in turn supplied companies and institutions with apparel bearing their logos or names. The company sold to the much smaller uniform market via giants such as Cintas Corp., which supplied uniforms for a wide range of workers, including those in the retail, medical, and restaurant businesses.

The overhaul was led by retired Wolverine World Wide Inc. (Hush Puppies) CEO Thomas D. Gleason, who had joined the board in mid-1995. The company had a net worth of $13 million at the time, with approximately the same amount of debt, and could not compete in apparel arenas requiring heavy design and advertising spending and frequent inventory replacements.

Tightly Focused Future

The company had reluctantly exited the growing golf apparel business when it sold its trademarks in 1996, but then re-entered the segment in January 1998. Premium Wear placed its Page & Turtle linenamed after two of the companys original co-foundersin 500 of the countrys approximately 15,000 golf club shops. The PGA and LPGA player-endorsed line competed with brands such as Ash worth, Ralph Laurens Polo, Izod, and Nike. But the golf shop segment did not require the level of design and marketing expenditures inherent to other retail apparel. The pro golf shop segment had been growing by five to ten percent over recent years, while the rest of the apparel market had remained relatively flat.

The promotional products/advertising specialty end of the business grew by 22 percent in 1998, and the company netted $1.5 million on about $42.5 million in total sales. The company expected the industry as a whole to continue to grow at a double-digit pace. Premium Wear planned to offer its new more upscale Page & Tuttle brand to its special market customers beginning in 1999. The company further tightened its focus in 1999 with the closure of its North Carolina cut-and-sew operation. Production done at that plant was scheduled to be outsourced offshore.

Further Reading

Anderson, Marcia G., Munsingwear: An Underwear for America, Minnesota History, Winter 1986, pp. 15261.

Beulke, Diane, Heads Roll As Munsingwear Tries for Another Comeback, Minneapolis/St. Paul CityBusiness, October 21, 1987, pp. 1, 27.

Betting on the Bang Theory, Corporate Report Minnesota, December 1979, p. 65.

Feyder, Susan, Premium Wear New Golf Shirt Wont Include the Penguin, Star Tribune (Minneapolis), January 9, 1998, p. ID.

Hillbery, Rhonda, A Better Kind of Bankruptcy, Minneapolis/St. Paul CityBusiness, November 25, 1991, pp. 11, 18.

Johnson, Ken, The Munsingwear Fit, Corporate Report Minnesota, February 1975, pp. 2930.

Merrill, Ann, Campbell Tailors a New Munsingwear, Minneapolis/St. Paul CityBusiness, September 1723, 1990, pp. 1, 22.

_______, Munsingwear Sews Up Deal to Supply Sears with Shirts, Minneapolis/St. Paul CityBusiness, January 612, 1992, pp. 1, 15.

Munsingwear a Supreme Buy: Miami-Based Company Has Big Plans for Branded Golf Labels, Daily News Record, May 24, 1996, p. 1.

Munsingwear Falls Deeper into Red, Daily News Record, April 9, 1996, p. 9.

Munsingwear Reduces Loss in 4th Quarter to $298,000, Daily News Record, March 13, 1995, p. 2.

Munsingwear: Scoring on Comeback Course, Daily News Record, May 11, 1992, p. 10.

Munsingwear Selling Marks for China, Vietnam, Macao, Daily News Record, July 2, 1996, p. 10.

Munsingwear Shows $1.2 Million Profit in Year, Daily News Record, February 19, 1993, p. 2.

Peterson, Susan E., Campbell Will Leave Munsingwear to Become CEO of Crystal Brands, a Larger Competitor, Star Tribune (Minneapolis), July 16 1993, p. ID.

Premium Wear Has Strong Quarter, Daily News Record, March 2, 1998, p. 11.

Premium Wear, Inc., Corporate Report Fact Book 1999, p. 377.

Premium Wear Names James Murphy General Manager of Golf Division, PR Newswire, July 28, 1999.

Premium Wear Net Skyrockets in 4th Quarter, Year, Daily News Record, April 9, 1999, p. 12.

Premium Wear to Close N.C. Plant, Star Tribune (Minneapolis), April 27, 1999, p. 3D.

Souder, William, Munsingwear on the Mend, Corporate Report Minnesota, August 1981, pp. 4751, 13440.

Swanson, Evadene Burris, Dont Say Underwear, Say Munsingwear, Hennepin County History, Winter 1987, pp. 319.

Trachtenberg, Jeffrey A., The Minnow and the Basses, Forbes, February 25, 1985, p. 75.

Tracy, Eleanor Johnson, Stodgy Munsingwear Changes Its Underwear, Fortune, September 3, 1984, p. 67.

Youngblood, Dick, Smaller Is Better, Star Tribune (Minneapolis), January 26, 1998, p. ID.

Kathleen Peippo