Oshkosh B'Gosh Inc.

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OshKosh B'Gosh Inc.

founded: 1895

Contact Information:

headquarters: 112 otter ave.

oshkosh, wi 54901 phone: (920)231-8800 fax: (920)231-8621 toll free: (800)282-4674 url: http://www.oshkoshbgosh.com

OVERVIEW

OshKosh B'Gosh earned its initial fame as the producer of the bib overall. The company was founded in 1895 as a manufacturer of sturdy working clothing for Midwestern farm and railroad workers. From those roots, OshKosh began to develop its own chain of retail outlets in 1981. The company today is best known as a producer of quality children's wear, which accounts for about 95 percent of OshKosh B'Gosh's sales.

The company experienced some difficult times during the 1990s. In 1992 OshKosh began a two-year slump when sales declined in the northeast and in California, two of its key markets. Not long afterward, sales of children's apparel slipped, a decline the company blamed on its failure to maintain its lead in the design of such clothing for the fashion conscious. Although the company continues to supply its clothing lines to a wide range of U.S. department and specialty stores, one of its biggest customers today is its own chain of more than 110 discount and specialty stores.

OshKosh's largest market at the end of the 1990s was children's apparel. This product line accounted for only 5 percent of total sales as recently as 1974. The company had manufactured bib overalls for children as far back as the early 1900s, but it was not until the early 1960s that they became more than a novelty item. Miles Kimball, an Oshkosh, Wisconsin-based mail order house, decided to feature the kids' overalls in its national catalog. OshKosh was totally unprepared for the strong demand for the children's overalls. It did not hesitate, however, to capitalize on this new market by offering them to children's specialty stores. Soon thereafter, some of the country's leading department stores were clamoring to carry the children's product line, which was expanded to include infant wear and knit tops.

COMPANY FINANCES

OshKosh B'Gosh posted net earnings of $22.6 million on revenue of $395.2 million in 1997, compared with a net of $1.1 million on revenue of $444.8 million in 1996. In 1995 the company reported net income of $10.9 million on revenue of $432.3 million, compared with earnings of $7.0 million on revenue of $363.4 million in 1994. In 1997, 2 percent, or $7.0 million, of the company's total sales were derived from international operations. Domestic wholesale operations accounted for 54 percent of the company's total sales, while its retail outlets brought in 44 percent of total sales.

HISTORY

When it was founded in 1895, the company was first and foremost a manufacturer of clothing for working men, especially farm and rail workers. Most popular of all its products were the sturdy bib overalls. Much change occurred over the next century, but throughout the years the demand for OshKosh's premier products remained constant. The company still sells more bib overalls than any company in the world in the late 1990s. Overalls can be purchased in a broad range of sizes, small enough to fit an infant and large enough to accommodate a 60-inch waistline.

The company was well into the second half of the twentieth century before the essential nature of its business began to change. The bib overalls never went away, but they began to take a back seat to the manufacture and marketing of apparel for children. The company had manufactured bib overalls in children's sizes as far back as the early 1900s, and the overalls were the extent of its offerings for children. The decision of mail order marketer Miles Kimball, an Oshkosh neighbor, to feature the company's child-sized bib overalls in one of its national catalogs in 1962 changed all that. The response was overwhelmingly positive. Heartened by the obvious demand for this item of children's clothing, OshKosh began offering the kids' overalls to specialty stores, and later to some of the country's largest department stores.

In 1974 the company's sales of children's wear accounted for merely 5 percent of total sales. After the initial success in the children's apparel market in the 1960s, OshKosh began expanding its children's clothing line to include knit tops, dresses, sweaters, swimwear, footwear, and activewear. Also added was a separate line of infant wear and layettes for newborns. Further expansion of the product line has been achieved through the negotiation of licensing agreements with a number of outside manufacturers. Under these arrangements, accessories such as eyewear, hats, hosiery, bedding, and plush toys are produced.

The leap from manufacturer to retailer came in 1981 when the company opened its first outlet store. By 1998 the number of OshKosh retail outlets had grown to more than 110 outlet and specialty stores throughout the country. The company in 1994 opened flagship stores in both Paris and London to better showcase its product lines to the international audience. In 1997 OshKosh transferred its European retail operations to a licensee.

STRATEGY

OshKosh B'Gosh undertook a major strategic planning initiative beginning in late 1995 in order to position itself better for future growth. Through much of 1996 and 1997, the company worked diligently to put additional components of this plan into effect. The aim was to increase OshKosh's competitiveness and profitability. As part of its planning initiative, the company analyzed all its existing operations, as well as potential opportunities, against a number of criteria. These included: the impact on brand equity; fit with existing core competencies; long-term strategic fit; future growth prospects; meeting income and return-on-investment thresholds; and past and present financial performance. The company said that the short-term strategy emerging from this analysis could be characterized as consisting of two key elements: stabilizing and edging out. For OshKosh, stabilization meant ensuring that each of the company's business units is in order and that a firm foundation is in place to properly support future growth opportunities. Edging out involved stepping up the expansion of four current businesses marketing products under the company's brand names, as well as businesses that operate within its existing core competencies.

As part of its effort to stabilize existing operations, the company mandated an emphasis on the pursuit of excellence in product development. This effort goes hand in hand with the company's continuing efforts to improve on the price/value relationship of its products. Another element of the stabilization campaign was to enhance brand presentation at the retail level. To that end, the company rolled out new fixtures and signage to key department stores carrying its product line, which more clearly communicated the "core values and personality of the OshKosh brand."

During 1997 the company abandoned several business units that had underperformed. The existence of these could no longer be rationalized from a long-term strategic perspective. The company's chain of Genuine Kids retail stores was discontinued, with 65 locations closed down, and another 27 either converted to OshKosh B'Gosh outlets or integrated into existing OshKosh stores. The company's retail business in western Europe was transferred to a newly formed corporation called Genuine Article Europe Group, which will represent the company's children's wear brand in Europe. Finally, to further improve its profitability and return on investment, the company downsized its menswear business to focus only on the company's core heritage products such as bib overalls and dungarees.

For OshKosh, the second part of its initiative, edging out, means simply to grow where it makes sense. The company plans to leverage its strong brand name and core competencies in four key areas: retail, brand and product extensions, licensing, and international.

INFLUENCES

In late 1995, as part of the research that led to the development of its strategic planning initiative, OshKosh B'Gosh asked consumers which new products they would like to see bearing the company's label. Getting the most votes was clothing for older children, a market the company had earlier served but dropped in the early 1990s. Based on this response, OshKosh introduced apparel for older boys and girls in its Genuine Kids product line in 1996. The response was encouraging. As a next step, the company introduced clothing for older children under the brand names Genuine Blues for boys and Genuine Girls in its company-owned stores in early 1997. Further expansion in this area of children's apparel was expected.

FAST FACTS: About OshKosh B'Gosh Inc.

Ownership: OshKosh B'Gosh is a publicly owned company traded on NASDAQ.

Ticker symbol: GOSHA

Officers: Douglas W. Hyde, Chmn., Pres., & CEO, 46, $375,000; Michael Wachtel, Exec. VP, COO, & Assistant Secretary, 43, $310,000; David Omachinski, VP, Finance, CFO, & Treasurer, 45, $205,000; Barbara Widder-Lowry, VP, Product Development, 46, $254,000

Employees: 4,000

Chief Competitors: OshKosh B'Gosh's principal competitors include: Benetton; BugleBoy; Burlington Coat Factory; Fruit of the Loom; The Gap; Guess?; Gymboree; L.A. Gear; Land's End; Levi Strauss; L.L. Bean; Reebok; Toys 'R' Us; VF; and William Carter.

CURRENT TRENDS

To stay on the cutting edge of children's clothing design, OshKosh announced in May 1998 that it was using Citrix Systems' WinFrame thin-client/server software to accelerate its time to market. Using the software developed by Citrix, OshKosh was able to cost-effectively deploy its computer-aided design (CAD) pattern, making application over existing low-bandwidth lines to remote offices. This new practice substantially sped up the design process for its clothing line. Before installing the Citrix software, OshKosh had been forced to print out the designs produced by its CAD program, then mail those designs to remote locations. Commenting on the time saved by using the Citrix software, OshKosh network analyst Robert Lemke said, "Running the CAD program on our 56K lines was an impossible task until we found Win-Frame. WinFrame has enabled us to deploy the technology without upgrading our network. WinFrame is also reducing our total cost of application ownership, since all application updates are centrally implemented at the Win-Frame server."

PRODUCTS

OshKosh B'Gosh manufactures and markets apparel under a number of brand names, including Baby B'Gosh, Genuine Blues, Genuine Girls, OshKosh, and OshKosh B'Gosh. Among the products in its children's clothing line are bib overalls, blouses, dresses, footwear, jeans, jumpers, knit tops, pants, playwear, shirts, shorts, skirts, and sweaters. The menswear product line includes bib overalls, carpenter pants, coats, flannel shirts, jackets, jeans, and work shirts. OshKosh has licensing agreements with outside companies for the manufacture of such products as educational toys, children's eyewear, children's outerwear, children's bedding, and apparel accessories.

CORPORATE CITIZENSHIP

OshKosh B'Gosh is always on the lookout for opportunities to give something back—not only to the communities in which it operates but to the nation as a whole. OshKosh employees are encouraged to offer their time and donations to worthwhile causes. When Bobbi and Kenny McCaughey of Carlisle, Iowa, suddenly found themselves the parents of septuplets, OshKosh was among the scores of companies that came forward with offers of help. The company announced it would supply clothing for the septuplets, as well as their two-year-old sister, for several years.

CHRONOLOGY: Key Dates for OshKosh B'Gosh Inc.

1895:: The company is founded as Grove Manufacturing Company
1897:: Becomes Oshkosh Clothing Company
1911:: Changes name to Oshkosh Overall Company; starts labeling its bibs OshKosh B'Gosh
1937:: The company assumes the name of OshKosh B'Gosh Inc.
1962:: Bib overalls for children are included in the mail-order catalogue with remarkable success
1971:: Bloomingdale's begins offering OshKosh children's overalls
1981:: OshKosh opens its first outlet store; adds infant wear and knits to its product line
1994:: Flagship stores in London and Paris open
1997:: International operations are sold to a licensee

GLOBAL PRESENCE

Foreign sales accounted for 2 percent of OshKosh B'Gosh's total revenue in 1997. In 1994 the company opened flagship stores in Paris and London to showcase its products "to international trend-setting audiences." In 1997 OshKosh B'Gosh transferred its European retail operations to a licensee. In addition to its manufacturing facilities in the United States, the company operates a clothing factory in Honduras.