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The Timberland Company

The Timberland Company

200 Domain Drive
Stratham, New Hampshire 03885-2575
U.S.A.
Telephone: (603) 772-9500
Fax: (603) 773-1640
Website:http://www.timberland.com

Public Company
Incorporated: 1933 as Abington Shoe Company
Employees: 5,600
Sales: $1.18 billion (2001)
Stock Exchanges: New York
Ticker Symbol: TBL
NAIC: 316213 Mens Footwear (Except Athletic) Manufacturing; 316214 Womens Footwear (Except Athletic) Manufacturing; 316219 Other Footwear Manufacturing; 448210 Shoe Stores

The Timberland Companys ascension in the rugged footwear industry was sometimes rocky, but savvy marketing, excellent products, and extraordinary luck eventually turned an obscure bootmaker into a worldwide symbol of rustic chic. The first hint of widespread interest came in the early 1980s, when Italian trendsetters made Timberland hiking boots the ultimate in style and sophistication. The resulting European buying frenzy sent U.S. retailers scrambling for Timberland footwear, sparking the first of many fashion booms. Although Timberland became a household name through a fluke of fashion, the companys outdoor footwear and accessories also became synonymous with quality, dependability, and a return to nature. Along the way, the company also became well-known for its commitment to community service.

Early History: From Abington Shoe to Timberland Company

In 1952 Nathan Swartz, a shoe stitcher by trade, bought half-interest in the Abington Shoe Company of Abington, Massachusetts, a firm that had been incorporated in 1933. Within three years, Nathan acquired the remaining interest in the company for $20,000 and brought his youngest son, 19-year-old Sidney, aboard. Within the year, Nathans elder son, Herman, returned from a stint in the navy and joined the business too. For the next decade, father and sons produced and sold handmade footwear to discount outlets and stores that put house labels on them. In 1965, after researching alternatives to the expensive art of hand-stitching soles and uppers together, the Swartzes purchased an injection-molding machinea new binding process that chemically molded and attached soles to uppers. Injection molding not only produced footwear for 50 cents less per pair, but it also allowed Abington to charge about 20 cents more because the new footwear had some water resistance. Now selling boots for $5.75 a pair wholesale, Abington was able to generate a small profit rather than just break even.

In 1968 Nathan retired, leaving Abington in his sons capable hands. Two years later, the brothers moved the company to New Hampshire and set their sights on producing tough, thoroughly waterproof boots capable of standing up to the worst weather and the ravages of time. Surprisingly, they found a prototype right under their nosesAbingtons maintenance man wore rugged work boots year-round that were comfortable, durable, and water-resistant. The boots, made in Canada and distributed in the United States by the Vermont-based Dunham company, inspired fierce loyalty in their owner. The Swartzes bought a pair, dissected them, and were determined to make their own, even better version.

After persuading Goodyear to design a synthetic rubber sole capable of withstanding the harshest elements, the Swartzes used injection molding to bond the polyurethane soles to genuine blond leather uppers. To test for water resistance, the brothers tried everything from weighting boots with metal and submerging them in a bucket to filling the boot itself with dyed water and waiting for leaks. The result was Abingtons first truly waterproof boots, which the company began marketing under the brand name Timberland in 1973 and guaranteed as water-resistant. Targeted at blue-collar workers and sold in army-navy stores, Timberland boots were a serendipitous hit on college campuses.

Never big on advertising, Abington hired the Boston firm of Marvin & Leonard to help market Timberland boots. Len Kan-zer, the agencys president, convinced the Swartzes to appeal to upscale buyers via ads in the New Yorker. As a result, Timberland boots sold remarkably well at highbrow retailers such as Bergdorf Goodman, Lord & Taylor, and Saks Fifth Avenue, and the company produced 5,000 pairs in 1974. By 1975, production jumped to 25,000 and sales neared the million-dollar mark. By the late 1970s, the company was producing 400,000 pairs of Timberlands annually, which prompted the Swartz brothers to consider expanding their product line. Abington Shoe Companys principal output was now Timberland boots, with no-name boots amounting to only about 20 percent of 1978s production. Now on the map with its own brand, Abington discontinued manufacturing for others and concentrated on Timberland boots.

While diversifying was indeed a gamble, Herman and Sidney decided to risk it. First, taking full advantage of their rugged footwears brand recognition, they renamed the Abington Shoe Company as The Timberland Company and incorporated in 1978. The newly christened company then introduced its first casual shoes for men with handsewn uppers, solid brass eyelets, and water-resistant full-grain leather. Next came 1979s boating or deck shoe, which went toe-to-toe with the industry leaderSperrys perennially popular Top-Sider brand. Timberland aggressively marketed its product, polling dozens of sailors and eventually winning endorsements from hardcore yachters William F. Buckley, Jr., and Ted Kennedy.

Becoming an International Fashion Brand

Also in 1979, an Italian goods distributor named Giuseppe Veronesi visited Timberlands New Hampshire factory and ordered 3,000 pairs of boots. Veronesi, the president of Ritz Firma, a subsidiary of FinRitz SpA (which was responsible for the Louis Vuitton brand and Ralph Laurens Polo line for women), figured Timberland boots would be a perfect fashion accessory for well-heeled Italians. After testing the market in haute couture shops in Milan and Rome, Veronesi soon began selling Timberland boots in boutiques throughout Italy. Though Timberland products were still selling well in pricey U.S. department stores, the Italian craze caused even more U.S. retailers to jump on the Timberland bandwagon. Boot production rose to 1.8 million pairs in 1983, with a price tag between $70 and $80 per pair in the United States, and nearly double that in Europe.

In 1984, Timberland was flush with success and poised for more. As a company on the move, moreover, it had caught the interest of several acquisitive conglomerates. The VF Corporation, which had holdings including Lee Jeans, was the first to approach the Swartzes with a buyout offer of $60 million. Herman, nearing 60 years of age, wanted to accept the package and retire. Sidney, however, was not interested in selling and wanted Timberland to raise its own funds for a major expansion. Before the brothers could reach a compromise, the offer was withdrawn. Despite what may have been a lost opportunity, it was business as usual at Timberland. The company planned a further expansion into international markets, hoping to capitalize on its continued boom in Italy, where 490,000 Timberland boots were exported in 1984. Soon Timberland began shipping products to France, Germany, Hong Kong, Switzerland, and Turkey. Not only did Italian sales continue to climb, reaching 540,000 in 1985, but worldwide sales soon hit $68 million.

In the early months of 1986, Timberland was again faced with the possibility of acquisition. This time a former partner of Morgan Stanley & Company proffered a bid of about $60 million. Again, the brothers were at odds: Herman for the buyout, and Sidney steadfastly against it. In order to reach an agreement, Sidney sought financing and came up with $34.5 million from Merrill Lynch to purchase Hermans share of Timberland for roughly $30 million. Herman left Timberland and retired, while Sidney became chairman, president, and CEO of the company.

After 30 years, Herman was no longer at his brothers side as Sidney moved forward with both domestic and international expansion. In 1986, Timberland hoped to claim $20 million worth of the lucrative Japanese consumer goods market. Sidneys 29-year-old son Jeffrey joined the company as head of the international sales division to help steer the companys growing Asian and European presence. Less than a year after Herman sold his stake in Timberland and retired, Merrill Lynch sold 3.35 million Timberland shares, roughly 30 percent of their holdings, at $14 each in an initial public offering. When Sidney and Jeffrey made a public offering on the American Stock Exchange in mid-1987, they kept the B shares, with ten votes each, in the family, and dispersed only A shares, which held one vote apiece.

Late 1980s: A Too Rapid Expansion

Meanwhile, Timberlands expansion continued unabated, and the Swartzes started to lose control of their vast empire. By rapidly introducing 160 new models, bringing Timberlands total product line to about 500, the company caught its factories unprepared. Inventory control and customer service suffered, frustrating retailers and consumers. Despite the fact that revenues climbed by 24 percent and total sales reached $85 million by the end of 1986, profits fell 14 percent to $4.8 million. In an effort to stem manufacturing and customer service problems, Timberland created a worldwide customer relations department in 1987 to make good on its commitment to quality products and service.

Company Perspectives:

Here at Timberland, things are different from other companies. At our corporate headquarters, employees work hard to make some of the worlds most innovative products, then use paid time-off to make a difference in the community. Children play in our in-house day care center. The committed young people of City Year New Hampshire, a national youth corps that recently set up shop within Timber-lands walls, are hard at work. And throughout the entire company, its evident that doing well and doing good are inextricably linked.

Also in 1987, Marvin & Leonard Advertising made Timberland the first boot producer to advertise its products on television. One memorable commercial featured rural bootleggers extolling the virtues of Timberland boots for hiding from Treasury agents in swamps. The wry ads gained plenty of attention, propelled sales, and solidified Timberlands reputation as a producer of fashionable footwear.

In 1988 the company entered the mens and womens clothing and accessories market. Versus Ralph Lauren, we have a degree of authenticity, Jens Bang, Timberlands executive vice-president, explained to Advertising Age. The clothing lines, like Timberland footwear, were designed to perform under extreme conditions yet remain stylish. Though sales sputtered initially, apparel and accessories eventually claimed about 20 percent of Timberlands net sales. Later that year, the company began opening specialty stores: the first on Newbury Street in Boston; a second on Madison Avenue in New York City; and a third on New Bond Street in London.

Finishing the year with profits of $8 million on revenues of $133 million, Timberland also posted record exports of $39 million. The majority of exports were still shipped to Italy528,000 pairs of footwear worth $21 million wholesale. Despite runaway sales, however, Timberlands profit margin continued to erode; from 1987 to 1989, profits fell from $9.4 million to $6.4 million. The company had too many products, too little focus, and even less corporate restraint. I nearly drove this company under the ground, Sidney Swartz admitted to Forbes in 1989. Though his ideas and intentions were good, the reality of Timberlands rapid expansion had proved burdensome for a company still adjusting to its previous growth. My optimism sometimes gets the better of me, Sidney said as he envisioned Timberland backpacks, canoes, and sleeping bags. And were not ruling out mountain bikes.

Luckily for Sidney, his son was a capable business manager. The two set out to regain control of their product line and eliminate costly manufacturing snafus. The company also stopped trying to capture two disparate marketsthe fashion elite who wore Timberland boots simply for effect and the outdoor crowd who wore them to get fit and explore the natural world. Eschewing trends, the company stepped up advertising to the outdoorsy men and women its rugged footwear was originally designed for. Integrating its marketing efforts, Timberland also began to stress corporate responsibility and a growing community awareness. The company reemphasized its commitment to consumers interested in hiking, climbing, camping, adventure travel, and environmental protection by backing local and national service organizations such as the Wilderness Society, the Boston-based City Year, and Alaskas legendary Iditarod dogsled race.

Timberlands growing relationship with City Year was not just public relations posturing; what began as a request for 50 pairs of boots had turned into a $1 million investment by 1992, enabling the company to expand into four states. As a company, Jeffrey noted, we have a responsibility and an interest in engaging the world around us. By doing so, we deliver value to our four constituencies: consumers, shareholders, employees, and the community. The company furthered this commitment by granting all employees between 16 and 32 hours of paid time off each year for community service. The Swartzes also broadened their sensitivity to environmental issues by joining the EPAs Green Lights Program, Businesses for Social Responsibility (BSR), and the Coalition for Environmentally Responsible Economics (CERES) in 1992 and 1993.

Key Dates:

1933:
Abington Shoe Company of Abington, Massachusetts, is incorporated.
1952:
Shoe stitcher Nathan Swartz buys half-interest in Abington.
1955:
Swartz buys the remaining interest in the company; his sons Sidney and Herman soon join the firm.
1968:
Nathan Swartz retires, leaving the company in the hands of his sons.
1973:
Abingtons first truly waterproof boot is introduced under the name Timberland.
1978:
Abington Shoe Company is renamed The Timberland Company and is incorporated; company expands into casual shoes.
Early 1980s:
An Italian craze for Timberland boots turns Timberland into a fashion brand and ignites an explosion in sales.
1986:
Herman Swartz sells his share of the company and retires; Sidney Swartz becomes chairman, president, and CEO; Sidneys son Jeffrey joins the company as head of international sales.
1987:
Timberland goes public.
1988:
Mens and womens clothing and accessories are added to the product mix; first Timberland specialty stores are opened.
1995:
Timberland closes its U.S. factories, shifting much of the production to outsourcers; the company posts its first loss.
1997:
Company holds the first annual Serv-A-Palooza, a one-day, companywide community service event.
1998:
Jeffrey Swartz is named president and CEO, with his father remaining chairman.
1999:
The Timberland PRO line of work boots is introduced.
2000:
Sales surpass the $1 billion mark for the first time.

Resurgent Growth in the Early 1990s

In 1989 sales topped $156 million, of which exports represented 30 percentdespite Timberlands withdrawal from China after the Tiananmen Square massacre. In 1991, 31-year-old Jeffrey Swartz was named Timberlands chief operating officer. Overseeing daily operations, Jeffrey implemented several corrective measures to restructure the company, cut waste, boost profits, and maintain shipping schedules. The biggest of these adjustments was the switch from assembly-line manufacturing to teamwork, which cut production time by as much as two-thirds. This year also featured two other milestones: the companys commencement of trading on the New York Stock Exchange, and the fall debut of Elements: The Journal of Outdoor Experience, Timberlands slick, 32-page biannual magazine. Translated into four languages and distributed in nine countries, the magazines content was written by celebrated outdoor enthusiasts and edited by mountaineer John Harlin III.

By 1992, Timberlands print and media gambits carried the company logo and a social message, such as the Give Racism the Boot campaign it ran in the United States and Europe. Complete with billboards in New York City, as well as T-shirts, posters, and pins (proceeds from the sale of which went to City Year), the campaign fueled company growth of 22 percent in the first half of the year. To keep its lead in the footwear and apparel industry, Timberland started retooling factories with the latest technology and applied a few tricks of the trade learned from Japanese manufacturers. Companies that dont adapt wont be around, Sidney told U.S. News and World Report. Its Darwinism at its best. We will adapt and we will survive. By the end of 1992, Timberlands sales topped $291 million, and its products were sold in 50 countries, 12 retail stores, and over 225 department store concept shops worldwide.

As the 1990s progressed, the popularity of Timberlands footwear spawned many imitators. Adidas, Nike, and Reebok all came out with rugged footwear in an attempt to compensate for sluggish athletic shoe sales. According to market analyst Scott Davis in USA Today, however, Timberland is No. 1 in this market. Everyone else is playing catch-up. As proof, Timberland stock rose 280 percent in 1993 and was named one of the New York Stock Exchanges best stocks by Business Week. Near the end of the year, Timberlands creative advertising campaigns once again struck a chord with television viewers when Mullen Advertising introduced its inspired Muddy Waters campaign. Rife with shots of Mother Natures mood swings, the quirky, pun-filled commercials drew cheers from fellow agencies and consumers alike.

Timberlands 1994 revenues were even more incrediblesurging 52 percent, to $637.5 millionpartly because of a sizeable increase in its advertising budget, which approached $25 million worldwide. Timberlands increasingly aggressive media blitzes paid off handsomely. The Swartzes strengthened Timberlands market share even more by slashing prices as much as 25 percent on Waterbuck casuals, with plans for more value pricing. Domestic production climbed from three to five million pairs annually; combined with improved inventory control and faster delivery, this production helped Timberland secure more business in the U.S. Midwest and South, the companys fastest-growing regions for the third quarter of 1993.

While several prominent athletic shoe manufacturers continued to expand their rugged footwear lines, even Harley Davidson and Caterpillar announced their intentions to join the fray. Yet Jeffrey Swartz was not overly concerned: We transcend language and geography, he told USA Today at the end of 1993. We represent something thats more than a product; its also a point of view. Whether its the 60s or 70s, whether its grunge or hip-hop or be-bop, it still snows and it still rains and youre going to get dressed for the snow and the rain. Timber-lands revenues bore this out, and the company maintained its quest to make even better products. One advance was Timber-lands introduction, in January 1995, of its exclusive Active Comfort Technology (ACT), which was soon to become part of its high-performance hunting and hiking boots.

Community service, too, became a bigger part of Timber-lands corporate life. The company made a $5 million pledge to City Year in 1994 and participated in several area events, including the Seacoast Hospice clean-up, a City Year-sponsored Serv-A-Thon at the Thurgood Marshall School in Atlanta, and work at the YMCAs Camp Gundalow in both 1993 and 1994. In the latter effort, Jeffrey Swartz and his three young sons (ages six, four, and one) were among over 175 Timberland employees who pitched in to help prepare Camp Gundalow for the upcoming summer season. As an employee, you dont draw strength from some corporate guy making a speech, Jeffrey told a local newspaper covering the event.

Mid- to Late 1990s: Overcoming Another Rough Patch

Timberland hit another rough patch in the mid-1990s. Profits began falling in 1994, even as sales surged, because the price cuts that had been instituted resulted in a margin squeeze. Sales slumped in the winter of 1995-96 because of mild weather and a sluggish retail environment. Inventory surged to more than $200 million as the companys distribution and tracking systems were unable to keep up with the higher volumes of merchandise the company was now handling after the rapid sales gains of the early 1990s. In response to these travails, Timber-lands stock price plummeted from a peak of $85 in November 1993 to $22 in May 1995.

To turn the company around, a wide-ranging restructuring was launched in early 1995. To cut costs, Timberland closed its two domestic manufacturing plants in North Carolina and Tennessee, resulting in the elimination of 500 jobs, and cut back on its workforce at its factory in the Dominican Republic. Like other footwear makers, Timberland would now outsource much of its production. The company also overhauled its product lines, making a new commitment to get back in touch with its customers as it did so. During 1995 the firm was also able to begin significantly reducing both its inventory and its relatively high debt load. For the year, sales rose only 2.7 percent, while the company fell into the red for the first time, posting a net loss of $11.6 million. This net loss figure was affected both by a $16 million pretax restructuring charge and a $12.1 million pretax gain. The latter resulted from the sale of subsidiaries in Australia and New Zealand to U.K.-based trading firm Inchcape pic, which became the exclusive distributor of Timberland products in the Asia-Pacific region.

As Timberland got its inventory and distribution systems under control, revenue growth returned during the late 1990s, with sales growing smartly from $690 million in 1996 to $917.2 million by decades end. More importantly, Timberland significantly increased its profit margins during the same period. The companys net income as a percent of sales stood at just 3 percent in 1996 but vaulted to 8.2 percent by 1999 when net income was a record $75.2 million. From 1997 to 1999 the companys 19 U.S. retail stores were remodeled with a nature-oriented theme. In June 1998 Jeffrey Swartz was named president and CEO of Timberland, with his father remaining chairman. That same month, the company expanded its community service activities by holding the first Serv-A-Palooza. Timberland essentially closed its doors for a day, with more than 1,000 Timberland employees performing 8,000 hours of community service in 13 towns in New Hampshire and Massachusetts. Serv-A-Palooza became an annual event and eventually involved Timberland operations in other countries. During 1999 Timberland expanded its product line with the introduction of two subbrands: Mountain Athletics and Timberland PRO. The Mountain Athletics line included performance footwear specifically designed for outdoor sports, including trail running, boul-dering, and scrambling; it was also aimed at a younger group of consumers than the Timberland brand. Timberland PRO was a line of work boots designed for professional tradesmen, with the individual models containing some or all of these features: waterproofing, insulation, steel toe, slip resistence, and protection from electrical hazards.

Navigating the Uncertain Waters of the Early 2000s

Timberlands latest period of breathtaking growth peaked in 2000, when sales surged past the $1 billion mark, hitting $1.09 billion, and net income leaped 68 percent, to $126.2 million. The profit margin now stood at a very healthy 11.6 percent. A good deal of the growth was attributed to rapidly expanding sales of apparel and accessories. Revenues for that category grew 29 percent in 2000, amounting to $243 million, or 22 percent of overall sales. During 2000, the company began selling childrens footwear, and sales of the successful Timberland PRO line were extended into Europe. Timberland also ended its distribution deal with Inchcape, reacquiring the Asian distribution rights and beginning to operate directly in Japan.

During 2001 the company began to feel the effects of the downturn in the U.S. economy, and revenues for the year increased only 8 percent while profits fell. Higher leather costs and unfavorable foreign exchange rates exacerbated the situation as did warm weather during the winter of 2001-02. Once again, the companys stock took a hard hit, falling nearly 50 percent from January 2001 to March 2002. Timberland had a number of plans in the works for 2002 as it waited for the economy to recover, including: launching a line of childrens apparel as well as a line of Timberland PRO apparel; rolling its Mountain Athletics brand into the Timberland brand; curtailing the opening of new retail outlets in the United States while developing a new and smaller store prototype; and seeking more overseas growth in both Europe and Asia. Despite this latest downturn in the companys fortunes, Timberland remained the leader of the U.S. brown shoe (nonathletic footwear) sector. The company had successfully evolved from a producer of sturdy, unglamorous work boots to become a titan of the rugged outdoor footwear market.

Principal Subsidiaries

The Outdoor Footwear Company; The Timberland Finance Company; The Timberland World Trading Company; Timberland Europe, Inc.; Timberland International Sales Corporation (U.S. Virgin Islands); Timberland Direct Sales, Inc.; Timberland Retail, Inc.; Timberland Manufacturing Company; Timberland Aviation, Inc.; Timberland Netherlands, Inc.; Timberland International, Inc.; Timberland SAS (France); Timberland World Trading GmbH (Germany); Timberland (UK) Limited; Timberland GmbH (Austria); Timberland Espana, S.A. (Spain); The Recreational Footwear Company (Dominicana), S.A. (Dominican Republic); Component Footwear Dominicana, S.A. (Dominican Republic); Timberland Footwear & Clothing Company Inc. (Canada); Les Vêtements & Chaussures Timberland Inc.; Timberland Netherlands Holdings B.V.; Timberland Asia LLC; Timberland Taiwan LLC; Timberland Hong Kong Ltd.; Timberland Japan, Inc.; Timberland Lifestyle Brand Malaysia Sdn Bhd; Timberland Lifestyle Brand Singapore Pte. Ltd.; Timberland Korea Yuhan Hoesa.

Principal Competitors

NIKE, Inc.; Reebok International Ltd.; Wolverine World Wide, Inc.; R. Griggs Limited; Columbia Sportswear Company; L.L. Bean, Inc.; The North Face, Inc.; Rocky Shoes & Boots, Inc.; Lost Arrow Corporation.

Further Reading

Angrist, Stanley W., Betting the Company, Forbes, April 25, 1983, pp. 109-10.

Benoit, Ellen, When the Shoe Fits, Forbes, September 16, 1985, p. 194.

Conklin, Michele, How Three Shoe Manufacturers Found Their Pots of Gold, Madison Avenue, October 1985, pp. 49-50.

Cook, William J., Four Better Mousetraps, U.S. News and World Report, August 24, 1992, pp. 52-55.

Greenwald, John, Timberland Hits Its Stride, Time, November 29, 1993, p. 63.

Hill, Julie Skur, Japan Is Next for Timberland, Advertising Age, October 27, 1986, p. 62.

Hill, Suzette, Timberland Heeds Consumers: Go Forth and Be an Apparel Brand, Too, Apparel Industry Magazine, December 2000, pp. 27 + .

Koshner, Karen, Sole Man, Boston Magazine, March 1995, pp. 54 + .

Leand, Judy, Jeffrey Swartz: The SGB Interview, Sporting Goods Business, August 4, 2000, pp. 34-36. Lenetz, Dana, All in the Family, Footwear News, December 31, 2001, p. 6.

Lippert, Barbara, Blues Power, ADWEEK, November 15, 1993, p. 42.

Maremont, Mark, Timberland Comes Out of the Woods, Business Week, September 13, 1993, p. 78.

McCord, Michael, Timberland, at 25, Puts Its Best Foot Forward with World Sales of $690 Million, New Hampshire Business Review, January 30, 1998, p. 17.

Meeks, Fleming, Sidney Swartz Dolce Vita, Forbes, July 10, 1989, pp. 56-57.

Rosato, Donna, and Judith Schroer, Timberland Steps into Fashion, USA Today, December 14, 1993, p. BI.

Serwer, Andrew E., Will Timberland Grow Up?, Fortune, May 29, 1995, p. 24.

Sloan, Pat, Timberland Tries on Clothes, Advertising Age, August 22, 1988, p. 51.

Tedeschi, Mark, Timberland Restructures As Net Lags, Footwear News, May 1, 1995, pp. 1 +.

Timberland Launches Anti-Racism Ads, Sporting Goods Business, February 1993.

Timberland: Walking Tall, Economist, August 4, 1990, pp. 56-57. Timberland: You Could Pick Out Our People, Chief Executive, September 1998, pp. S10-S11.

Williams, Christopher, Dig These Boots, Barrons, March 11, 2002, pp. 20-21.

Taryn Benbow-Pfalzgraf

update: David E. Salamie

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The Timberland Company

The Timberland Company

200 Domain Drive
Stratham, New Hampshire 03885
U.S.A.
(603) 772-9500
Fax: (603) 773-1640

Public Company
Incorporated: 1978
Employees: 7,000
Sales: $637.5 million

Stock Exchanges: New York Pacific Chicago
SICs: 3143 Mens Footwear, Except Athletic; 3144 Mens Boots, Casual or Dress; 2386 Womens Footwear, Except Athletic; 2329 Womens Leather or Canvas Boots

The Timberland Companys ascension in the rugged footwear industry was sometimes rocky, but savvy marketing, excellent products, and extraordinary luck eventually turned an obscure bootmaker into a worldwide symbol of rustic chic. The first hint of widespread interest came in the early 1980s, when Italian trendsetters made Timberland hiking boots the ultimate in style and sophistication. The resultant European buying frenzy sent American retailers scrambling for Timberland footwear, sparking the first of many fashion booms. Although Timberland became a household name through a fluke of fashion, the companys outdoor footwear and accessories also became synonymous with quality, dependability, and a return to nature. In 1993, Timberland became the leading producer of rugged footwear in Italy and the United States with net sales of $418.9 million. Continuing its spectacular climb in 1994, Timberland reached $637.5 million in net sales by years end, an astonishing 52 percent leap from 1993.

In 1952 Nathan Swartz, a shoe stitcher by trade, bought half-interest in the Abington Shoe Company of Abington, Massachusetts. Within three years, Nathan acquired the remaining interest in the company for $20,000 and brought his youngest son, 19-year-old Sidney, aboard. Within the year, Nathans elder son, Herman, returned from a stint in the navy and joined the business too. For the next decade, father and sons produced and sold handmade footwear to discount outlets and stores that put house labels on them. In 1965, after researching alternatives to the expensive art of hand-stitching soles and uppers together, the Swartzes purchased an injection-molding machinea new binding process that chemically molded and attached soles to uppers. Injection molding not only produced footwear for 50 cents less per pair, but it also allowed Abington to charge about 20 cents more because the new footwear had some water resistance. Now selling boots for $5.75 a pair wholesale, Abington was able to generate a small profit rather than just breaking even.

In 1968 Nathan retired, leaving Abington in his sons capable hands. Two years later, the brothers moved the company to New Hampshire and set their sights on producing tough, thoroughly waterproof boots capable of standing up to the worst weather and the ravages of time. Surprisingly, they found a prototype right under their nosesAbingtons maintenance man wore rugged workboots year-round that were comfortable, durable, water-resistant. The boots, made in Canada and distributed in the United States by the Vermont-based Dunham company, inspired fierce loyalty in their owner. The Swartzes bought a pair, dissected them, and were determined to make their own, even better version.

After persuading Goodyear to design a synthetic rubber sole capable of withstanding the harshest elements, the Swartzes used injection molding to bond the polyurethane soles to genuine blond leather uppers. To test for water resistance, the brothers tried everything from weighting boots with metal and submerging them in a bucket to filling the boot itself with dyed water and waiting for leaks. The result was Abingtons first truly waterproof boots, which the company began marketing under the brand name Timberland in 1973 and guaranteed as water-resistant. Targeted at blue-collar workers and sold in Army-Navy stores, Timberland boots were a serendipitous hit on college campuses.

Never big on advertising, Abington hired the Boston firm of Marvin & Leonard to help market Timberland boots. Len Kanzer, the agencys president, convinced the Swartzes to appeal to upscale buyers via ads in the New Yorker. As a result, Timberland boots sold remarkably well at high-brow retailers like Bergdorf Goodman, Lord & Taylor, and Saks Fifth Avenue, and the company produced 5,000 pairs in 1974. By 1975, production jumped to 25,000 and sales neared the million-dollar mark. By the late 1970s, the company was producing 400,000 pairs of Timberlands annually, which prompted the Swartz brothers to consider expanding their product line. Abington Shoe Companys principal output was now Timberland boots, with no-name boots amounting to only about 20 percent of 1978s production. Now on the map with its own brand, Abington discontinued manufacturing for others and concentrated on Timberland boots.

While diversifying was indeed a gamble, Herman and Sidney decided to risk it. First, taking full advantage of their rugged footwears brand recognition, they renamed the Abington Shoe Company as The Timberland Company and incorporated in 1978. The newly christened company then introduced its first casual shoes for men with handsewn uppers, solid brass eyelets, and water-resistant full-grain leather. Next came 1979s boating or deck shoe, which went toe-to-toe with the industry leaderSperrys perennially popular Top-Sider brand. Timberland aggressively marketed its product, polling dozens of sailors and eventually winning endorsements from hardcore yachters William F. Buckley Jr. and Ted Kennedy.

Also in 1979, an Italian goods distributor named Giuseppe Veronesi visited Timberlands New Hampshire factory and ordered 3,000 pairs of boots. Veronesi, the president of Ritz Firma, a subsidiary of FinRitz SpA (which was responsible for the Louis Vuitton brand and Ralph Laurens Polo line for women), figured Timberland boots would be a perfect fashion accessory for well-heeled Italians. After testing the market in haute couture shops in Milan and Rome, Veronesi soon began selling Timberland boots in boutiques throughout Italy. Though Timberland products were still selling well in Americas pricey department stores, the Italian craze caused even more U.S. retailers to jump on the Timberland bandwagon. Now grossing in the neighborhood of $14 million, Timberland was becoming known worldwide. Boot production rose to 1.8 million pairs in 1983, with a price tag between $70 and $80 per pair in the United States, and nearly double that in Europe.

In 1984, Timberland was flushed with success and poised for more. As a company on the move, moreover, it had caught the interest of several acquisitive conglomerates. The VF Corp., which had holdings including Lee Jeans, was the first to approach the Swartzes with a buyout offer of $60 million. Herman, nearing 60 years of age, wanted to accept the package and retire. Sidney, however, was not interested in selling and wanted Timberland to raise its own funds for a major expansion. Before the brothers could reach a compromise, the offer was withdrawn. Despite what may have been a lost opportunity, it was business as usual at Timberland. The company planned a further expansion into international markets, hoping to capitalize on its continued boom in Italy, where 490,000 Timberland boots were exported in 1984. Soon Timberland began shipping products to France, Germany, Hong Kong, Switzerland, and Turkey. Not only did Italian sales continue to climb, reaching 540,000 in 1985, but worldwide sales soon hit $68 million.

In the early months of 1986, Timberland was again faced with the possibility of acquisition. This time a former partner of Morgan Stanley & Company proffered a bid of about $60 million. Again, the brothers were at odds: Herman for the buyout, and Sidney steadfastly against it. In order to reach an agreement, Sidney sought financing and came up with $34.5 million from Merrill Lynch to purchase Hermans share of Timberland for roughly $30 million. Herman left Timberland and retired, while Sidney became president and CEO of the company.

After 30 years, Herman was no longer at his brothers side as Sidney moved forward with both domestic and international expansion. In 1986, Timberland hoped to claim $20 million worth of the lucrative Japanese consumer goods market. Sidneys 29-year-old son Jeffrey joined the company as head of the international sales division to help steer the companys growing Asian and European presence. Less than a year after Herman sold his stake in Timberland and retired, Merrill Lynch sold 3.35 million Timberland shares, roughly 30 percent of their holdings, at $14 each in an initial public offering. When Sidney and Jeffrey made a public offering on the American Stock Exchange in mid-1987, they kept the B shares, with 10 votes each, in the family, and dispersed only A shares, which held one vote apiece.

Meanwhile, Timberlands expansion continued unabated, and the Swartzes started to lose control of their vast empire. By rapidly introducing 160 new models, bringing Timberlands total product line to about 500, the company caught its factories unprepared. Inventory control and customer service suffered, frustrating retailers and consumers. Despite the fact that revenues climbed by 24 percent and total sales reached $85 million by the end of 1986, profits fell 14 percent to $4.8 million. In an effort to stem manufacturing and customer service problems, Timberland created a worldwide customer relations department in 1987 to make good on its commitment to quality products and service.

Also in 1987, Marvin & Leonard Advertising made Timberland the first boot producer to advertise its products on television. One memorable commercial featured rural bootleggers extolling the virtues of Timberland boots for hiding from Treasury agents in swamps. The wry ads gained plenty of attention, propelled sales, and solidified Timberlands reputation as a producer of fashionable footwear.

In 1988, the company entered the mens and womens clothing and accessories market. Versus Ralph Lauren, we have a degree of authenticity, Jens Bang, Timberlands executive vice-president, explained to Advertising Age. The clothing, like Timberland footwear, would perform under extreme conditions and are good-looking, too. Though sales sputtered initially, apparel and accessories eventually claimed about 20 percent of Timberlands net sales. Later that year, the company began opening specialty stores: the first on Newbury Street in Boston; a second on Madison Avenue in New York City; and a third on New Bond Street in London.

Finishing the year with profits of $8 million on revenues of $133 million, Timberland also posted record exports of $39 million. The majority of exports were still shipped to Italy 528,000 pairs of footwear worth $21 million wholesale. Despite runaway sales, however, Timberlands profit margin continued to erode; from 1987 to 1989, profits fell from $9.4 to $6.4 million. The company had too many products, too little focus, and even less corporate restraint. I nearly drove this company under the ground, Sidney Swartz admitted to Forbes in 1989. Though his ideas and intentions were good, the reality of Timberlands rapid expansion had proved burdensome for a company still adjusting to its previous growth. My optimism sometimes gets the better of me, Sidney said as he envisioned Timberland backpacks, canoes, and sleeping bags. And were not ruling out mountain bikes.

Luckily for Sidney, his son was a capable business manager. The two set out to regain control of their product line and eliminate costly manufacturing snafus. The company also stopped trying to capture two disparate marketsthe fashion elite who wore Timberland boots simply for effect and the outdoor crowd who wore them to get fit and explore the natural world. Eschewing trends, the company stepped up advertising to the outdoorsy men and women its rugged footwear was originally designed for. Integrating its marketing efforts, Timberland also began to stress corporate responsibility and a growing community awareness. The company reemphasized its commitment to consumers interested in hiking, climbing, camping, adventure travel, and environmental protection by backing local and national service organizations like the Wilderness Society, the Boston-based City Year, and Alaskas legendary Iditarod dogsled race.

Timberlands growing relationship with City Year was not just public relations posturing; what began as a request for 50 pairs of boots had turned into a $1 million investment by 1992, enabling the company to expand into four states. As a company, Jeffrey noted, we have a responsibility and an interest in engaging the world around us. By doing so, we deliver value to our four constituencies: consumers, shareholders, employees, and the community. The company furthered this commitment by granting all employees between 16 and 32 hours of paid time off each year for community service. The Swartzes also broadened their sensitivity to environmental issues by joining the EPAs Green Lights Program, Businesses for Social Responsibility (BSR), and the Coalition for Environmentally Responsible Economies (CERES) in 1992 and 1993.

In 1989 sales topped $156 million, of which exports represented 30 percentdespite Timberlands withdrawal from China after the Tiananmen Square massacre. In 1991, 31-year-old Jeffrey Swartz was named Timberlands chief operating officer. Overseeing daily operations, Jeffrey implemented several corrective measures to restructure the company, cut waste, boost profits, and maintain shipping schedules. The biggest of these adjustments was the switch from assembly-line manufacturing to teamwork, which cut production time by as much as two-thirds. This year also featured two other milestones: the companys commencement of trading on the New York Stock Exchange, and the fall debut of Elements: The Journal of Outdoor Experience, Timberlands slick, 32-page biannual magazine. Translated into four languages and distributed in nine countries, the magazines content was written by celebrated outdoor enthusiasts and edited by mountaineer John Harlin III.

By 1992, Timberlands print and media gambits carried the company logo and a social message, like the Give Racism the Boot campaign it ran in the United States and Europe. Complete with billboards in New York City, as well as t-shirts, posters, and pins (proceeds from the sale of which went to City Year), the campaign fueled company growth of 22 percent in the first half of the year. To keep its lead in the footwear and apparel industry, Timberland started retooling factories with the latest technology and applied a few tricks of the trade learned from Japanese manufacturers. Companies that dont adapt wont be around, Sidney told U.S. News and World Report. Its Darwinism at its best. We will adapt and we will survive. By the end of 1992, Timberlands sales topped $291 million, and its products were sold in 50 countries, 12 retail stores, and over 225 department store concept shops worldwide.

As the 1990s progressed, the popularity of Timberlands footwear spawned many imitators. Adidas, Nike, and Reebok all came out with rugged footwear in an attempt to compensate for sluggish athletic shoe sales. According to market analyst Scott Davis in USA Today, however, Timberland is No. 1 in this market. Everyone else is playing catch-up. As proof, Timberland stock rose 280 percent in 1993 and was named one of the NYSEs best stocks by Business Week. Near the end of the year, Timberlands creative advertising campaigns once again struck a chord with television viewers when Mullen Advertising introduced its inspired Muddy Waters campaign. Rife with shots of Mother Natures mood swings, the quirky, pun-filled commercials drew cheers from fellow agencies and consumers alike.

Timberlands 1994 revenues were even more incredible, partly due to a sizeable increase in its advertising budget, which reached between $18 and $25 million worldwide. Timberlands increasingly aggressive media blitzes paid off handsomely. The Swartzes strengthened Timberlands market share even more by slashing prices, by as much as 25 percent, on Weatherbuck casuals, with plans for more value pricing. Domestic production climbed from 3 to 5 million pairs annually; combined with improved inventory control and faster delivery, this production helped Timberland secure more business in the American Midwest and South, the companys fasted-growing regions for the third quarter of 1993.

While several prominent athletic shoe manufacturers continued to expand their rugged footwear lines, even Harley Davidson and Caterpillar announced their intentions to join the fray. Yet Jeffrey Swartz was not overly concerned: We transcend language and geography, he told USA Today at the end of 1993. We represent something thats more than a product; its also a point of view. Whether its the 60s or 70s, whether its grunge or hip-hop or be-bop, it still snows and it still rains and youre going to get dressed for the snow and the rain. Timberlands revenues bore this out, and the company maintained its quest to make even better products. One advance was Timberlands introduction, in January 1995, of its exclusive Active Comfort Technology (ACT), which was soon to become part of its high-performance hunting and hiking boots.

Community service, too, became a bigger part of Timberlands corporate life. The company made a $5 million pledge to City Year in 1994 and participated in several area events, including the Seacoast Hospice clean-up, a City Year-sponsored Serv-A-Thon at the Thurgood Marshall School in Atlanta, and work at the YMCAs Camp Gundalow in both 1993 and 1994. In the latter effort, Jeffrey Swartz and his three young sons (ages six, four, and one) were among over 175 Timberland employees who pitched in to help prepare Camp Gundalow for the upcoming summer season. As an employee, you dont draw strength from some corporate guy making a speech, Jeffrey told a local newspaper covering the event.

Entering the mid-1990s, the Swartz family had evolved from producers of sturdy, unglamorous work boots to become the titans of the rugged outdoor footwear market. The company experienced rough times during the late 1980s, as Sidney explained to USA Today: Frankly, we didnt have a disciplined approach or business sense about us, he admitted. We were very driven, but didnt know where we were going. Timberland overcame this difficult period, however, and appeared firmly focused on the future.

Principal Subsidiaries

Timberland Aviation Inc.; Timberland Direct Sales Inc.; Timberland Europe Inc.; Timberland International Inc.; Timberland Manufacturing Co.; Timberland Overseas Co.; Timberland Scandinavia Inc.; Timberland World Trading Co.

Further Reading

Angrist, Stanley W., Betting the Company, Forbes, April 25, 1983, pp. 109-110.

Benoit, Ellen, When the Shoe Fits, Forbes, September 16, 1985, p. 194.

Conklin, Michele, How Three Shoe Manufacturers Found their Pots of Gold, Madison Avenue, October 1985, p. 49-50.

Cook, William J., Four Better Mousetraps, U.S. News & World Report, Aust 24, 1992, pp. 52-55.

Greenwald, John, Timberland Hits Its Stride, Time, November 29, 1993, p. 63.

Hill, Julie Skur, Japan is Next for Timberland, Advertising Age, October 27, 1986, p. 62.

Lippert, Barbara, Blues Power, ADWEEK, November 15, 1993, p. 42.

Maremont, Mark, Timberland Comes Out of the Woods, Business Week, September 13, 1993, p. 78.

Meeks, Fleming, Sidney Swartz Dolce Vita, Forbes, July 10, 1989, pp. 56-57.

Rosato, Donna, and Judith Schroer, Timberland Steps Into Fashion, USA Today, December 14, 1993, p. Bl.

Sloan, Pat, Timberland Tries on Clothes, Advertising Age, Augst 22, 1988, p. 51.

Timberland Launches Anti-Racism Ads, Sporting Goods Business, February 1993.

Timberland: Walking Tall, The Economist, Augst 4, 1990, pp. 56-57.

Taryn Benbow-Pfalzgraf

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The Timberland Company

The Timberland Company

founded: 1955 as the abington shoe company; becamethe timberland company in 1978



Contact Information:

headquarters: 200 domain dr.
stratham, nh 03885 phone: (603)772-9500 fax: (603)773-1640 toll free: (800)445-5545 email: [email protected] url: http://www.timberland.com

OVERVIEW

The Timberland Company designs, engineers, markets, and distributes high-quality footwear apparel and accessories in more than 90 countries worldwide through independent retailers and better grade department and athletic stores, in addition to its own retail locations. In addition to its strong company goals of producing high-quality products delivered at exceptional value, Timberland focuses much of its effort and concern on social issues that affect both its target markets and the overall community.

The Timberland motto: "boots, brands and belief" permeates the company at all levels. Under the leadership of Sidney and Jeffrey Swartz, Timberland has juggled these two concerns and built an organization that employs over 6,000 persons worldwide, makes the finest in waterproof boots and footwear, and inspires community service in not only their employees but, wherever their presence is felt.




COMPANY FINANCES

Timberland's products are sold to a diverse customer base—urban, suburban, and rural communities with an 18 to 30 age demographic. Timberland's goal is to provide tough, durable, and comfortable outdoor wear. Because Timberland took precautions and was able to reduce prices, thereby driving up sales during the outdoor craze of the early 1990s, it has ensured its survival through any changes that occur in the supply and demand of its products in the future.

Over the past five years the outdoor apparel craze has created a steady market, and Timberland's sales have risen. Revenue derived from footwear totaled $593.0 million in 1997; revenue attributable to apparel and accessories reached $193.8 million. Since 1989 Timberland's revenues have increased 80 percent to reach $796.5 million in 1997, 73 percent of which was generated in the United States. From 1996 alone, the company experienced a 15.4 percent growth in revenue. Timberland stock ranged from a low of $37.75 to a high of $82.78 in the 52-week period in 1997. The annual dividend was $4.20 per share. Financial goals for Timberland are pursuing profitable revenue growth, with an emphasis on growing earnings at a faster rate than revenue; generating positive cash flow; improving gross margins; and controlling operating and capital expenditures.




ANALYSTS' OPINIONS

According to Boston Magazine, analysts who follow Timberland think that the company "has sacrificed profit for the sake of growth." They fear that in its rush to reach the billion-a-year sales category, reduced prices on Timberland's best selling items will only weaken the company. The attitude is that the shoes are good, but the stock is a risk.




HISTORY

In 1955 Nathan Swartz completed his purchase of the Abington Shoe Company in Abington, Massachusetts, and brought his sons, Herman and Sidney, into the new family concern. Over the next 10 years, the Swartz family developed a revolutionary new type of boot that fused soles to upper leathers without stitching, thereby producing the first truly waterproof boot and shoe. This type of footwear was ideal for workers who spent their time in the outdoors and needed footwear that kept their feet dry and comfortable. In 1973 they began branding these boots with the "Timberland" name as a reflection of the rugged, long-lasting, outdoor quality these boots and shoes portrayed.

In 1978 the Abington Shoe Company name was officially changed to "The Timberland Company." This same year Timberland developed the first casual shoe with the same sole-infused technology that made their boots so successful. By the following year Timberland made its first boat shoe, thereby opening up the fishing and sailing markets.

Sidney Swartz bought out his older brother Herman in 1986 and became the sole proprietor of the business in 1986. Within two years Timberland introduced a line of men's clothing and the remarkable Hydro-Tech self-draining boat shoe. These activities began to broaden Timberland's appeal, and by 1990 women's apparel was introduced to the line.

Meanwhile, Timberland was also cultivating the international market, beginning with Italy in 1979. Timberland's product sales were so extensive that by 1986 the company had won the President's "E" Award for Export Excellence, securing Timberland's position as a dynamo among U.S. and international businesses.

Throughout the 1980s and 1990s Timberland continued to grow and expand their product lines and services. The early 1990s saw the creation of the professional Mukluk boot that was worn by the 1990 Iditarod Trail sled dog racers. This controversial race, wherein animal activists protested the harsh and often inhumane treatment of the sled dogs, was a problem for Timberland. On the one hand the boots worked exceptionally well, but on the other, the mistreatment of the animals was contrary to Timberland's philosophy and civic concern. In subsequent years, Timberland was able to improve race conditions and ensure the well being of the sled animals, but the controversy did lead to the company's quietly dropping sponsorship within a few years. Timberland is no longer associated with the Iditarod Race.

In 1989 Timberland was no longer merely a family concern, since it was being traded on the New York Stock Exchange. Two years later Jeffrey Swartz, son of chairman Sidney, was named chief operating officer, while Sidney was promoted to chief executive officer. With the new management team in place, the focus of Timberland shifted slightly to include a more active community service perspective. Meanwhile, the company was also developing a new line of high-tech boots, shoes, clothing, and accessories for consumer consumption. In 1993 a new line of women's leather footwear and clothing were introduced along with updated men's clothing and footwear. At age 37 Jeffrey Swartz became CEO of Timberland in 1998, while his father remained as chairman of the board. The Swartz family still owns about 55 percent of the company.




STRATEGY

Timberland's growth strategy depends on constantly improving their quality-driven products, increasing sales and outlets through their own retail stores, and licensing their products. To accomplish this, the company focuses on five key areas—product, distribution, marketing, business systems, and community. Timberland believes the success of this combination equals success for the company.

In 1998 Timberland looked to continuing improvement in the distribution of the products to retail and outlet stores. Improved inventory management will allow the company to have the products that are "hot" in stock and ready to go. The business systems segment helps the company be responsive to customers' needs and preferences around the world. Timberland's plans to improve its business systems should allow the company to deliver products in an even more cost efficient way.

Timberland's marketing reflects the company's commitment to making "boots that last forever" as Ken Freitas, director of marketing told Seacoast Times. This quality of "bootness" is the hallmark of the entire company. Every product Timberland makes must fit within the concept of long-wear, quality, and performance. Since many of the waterproof boots, one of the first products created by the company, are still in existence, this is a high standard to maintain. Advertising also reflects the outdoor, rugged quality of the Timberland product, with models chosen from regular people who actually use the products and appear comfortable in the outdoors, as opposed to models who really only look as if they belong on a runway. The advertisements of the 1970s were typical of what the company sought, a refreshing "truth in advertising" tagline: "A whole line of leather boots that cost plenty and should."

FAST FACTS: About The Timberland Company


Ownership: Timberland is a publicly owned company traded on the New York Stock Exchange.

Ticker symbol: TBL

Officers: Sidney Swartz, Chmn., 62, 1997 pay $1,721,561; Jeffrey Swartz, Pres. & CEO, 38, 1997 pay $1,141,854; Gregory W. VanWormer, Sr. VP & General Manager, Marketing, 42, 1997 pay $796,591; Geoffrey J. Hibner, Sr. VP Finance & Admin. & CFO, 48, 1997 pay $688,482

Employees: 6,000

Chief Competitors: Because of its stand in both manufacturing and retailing of its products, Timberland competes with other multinational companies who manufacture and sell boots; shoes; and men's, women's, and children's apparel. Some of Timberland's main competitors are: Birkenstock; Columbia; L.L. Bean; Rockport; Nike; and Reebok.




Timberland uses strategic marketing to show customers it cares about them and the world. The company ran an ad campaign against racism both in Germany and the United States. According to Freitas, in Germany a Timberland employee of Ethiopian background was subjected to hate crimes by local youth. Timberland used its billboards to mount a campaign with the classic Timberland workboot superimposed over headlines with the tagline "Give Racism the Boot" as a statement of protest over the actions. The campaign was so successful in Germany that it was introduced to the United States the following year.

INFLUENCES

For all its marketing savvy, like being the first boot manufacturer to advertise on national television and by its biannual magazine for outdoor enthusiasts, there are times when Timberland's executives managed to alienate much of their target audience. This occurred, according to Boston Magazine, when it was perceived that Timberland seemed to be distancing itself from African American buyers. It was noticed that "drug dealers in New York were purchasing boots at their neighborhood stores. Initially they were attracted to the boots because they needed something to keep their feet warm and dry while standing outside in harsh weather hawking dime bags. . . . The name Timberland, or Timbos, even started popping up in rap and hip-hop lyrics. . . ."

At the same time, Timberland began to cut styles and reduce stores that carried the lines; many of these stores were in urban communities. The company refused to provide free merchandise to singers for music videos. It was perceived that these moves were an attempt on the part of Timberland to lump all African Americans into the negative urban stereotype personified by alleged drug dealers. Jeffrey Swartz further stumbled when he denied these allegations and hidden motivations when he told The New York Times that Timberland would spend its advertising dollars on "honest working people," thereby implying that all African Americans were not. Even with Timberland's active stance against racism, such as the international "Give Racism the Boot" campaign and other socially responsible policies and decisions, these remarks and decisions alienated many in the African American community and even caused many of the offended to launch a boycott of the products.




CURRENT TRENDS

While the 1990s have been exemplified by the "outdoor apparel craze," Timberland has wisely not sold items outside its brand, according to Seacoast Times. It maintained an integrity to the type of product that made it a household word and because of this, even though the outdoor apparel trend has subsided, it will nevertheless maintain the same quality of product that formed its reputation in the first place.




PRODUCTS

Active Comfort Technology (ACT) revolutionized climate controlled footwear and performance apparel for outdoor use in 1994. In 1996 and 1997 Timberland expanded its markets to include a new line of children's footwear, apparel, and accessories. Watches, legwear, gloves, and leather care products such as belts and handbags are all standard items in the Timberland inventory. Along with its well-known yellow Timberland boots, these products have set the standard for high-quality outdoor apparel.

In 1998 Timberland planned to concentrate on offering men's apparel that coordinates with the footwear line. Women's apparel is offered in a limited way in the United States and international markets. While plans do not include dramatic expansion in the women's apparel line, the company is looking to possibly license its name to outside manufacturers. The company introduced boys' clothing in 1997 and planned to expand on that line in 1998.

CHRONOLOGY: Key Dates for The Timberland Company


1952:

Nathan Swartz purchases 50 percent of Abington Shoe Company

1955:

Swartz purchases the remaining 50 percent and brings his sons into the business

1965:

The company invents its "injection molding" procedure for making waterproof boots

1973:

Markets the first Timberland boot

1978:

Abington Shoe officially becomes The Timberland Company

1980:

The company goes international with the launch of Timberland in Italy

1986:

The first Timberland store opens

1988:

Begins producing a line of men's clothing

1991:

Timberland is traded on the New York Stock Exchange

1993:

New line of women's wear and shoes introduced

1997:

Timberland records its highest revenues ever at $797 million




CORPORATE CITIZENSHIP

Timberland has made a major impact in the realm of community service. As the third part of the "boots, brand and beliefs" motto, a concentrated effort by Timberland management and employees to return to the communities that have supported them is a major company goal. Timberland signed the Coalition for Environmentally Responsible Economics (CERES), a set of 10 environmental ethics principles to prevent environmental degradation and aid corporations to set environmental policy. Timberland recycles all items from fleece remnants, leather, and materials, and the company donates these items to the homeless, museums, and other organizations that need the materials. They restore hiking trails in New Hampshire and in the Alps, and they even developed a high-tech boot that causes less damage to the environment when used by hikers.

Perhaps the most significant program in which Timberland participates is their sponsorship in the City Year initiative, a Boston-based youth "urban peace corps" and model for national youth service. The company began supporting the program in 1987 and continues to support both in the Boston area and six additional areas added over the years. Timberland is so committed to this concept that employees are given 40 hours of paid leave each year to participate in a community service project.



GLOBAL PRESENCE

Timberland products are manufactured and sold in more than 90 countries. Unlike many companies seeking cheap foreign labor for their shoe manufacturing, Timberland's international employees enjoy the same benefits as their American counterparts. Timberland has six operating divisions in England, France, Spain, Italy, Austria, and Germany with distributors in the Asian-Pacific region, South America, the Middle East, and Africa. Twenty-four retail stores scattered throughout the United States and Europe operate under the supervision of the company. Concept stores and licensed flagship specialty stores are in 12 international markets including Japan, Hong Kong, Greece, and Korea.



EMPLOYMENT

Timberland has more than 6,000 employees worldwide in both its manufacturing and retail outlets. Wholesale sales personnel are required to build two pairs of boots so they can understand the process and be able to wholeheartedly support what they are selling. The philosophy that "even though we are traded on the NY Stock Exchange, we are still a family company" according to marketing director Keith Freitas, permeates the entire organization. Although a casual dress code at Timberland is encouraged, the company also strives to achieve the paramount level in production technology and service. Additionally, in 1995 Timberland employees contributed more than 12,000 hours in community service.




SOURCES OF INFORMATION

Bibliography

alter, jonathan. "powell's new war." newsweek, 28 april 1997.

kerr, d. allen. "timberland honored for community spirit." foster's daily democrat, 10 april 1997.

klunk, suzanne. "company brightens christmas." portsmouth herald, 18 december 1996.

koshner, karen. "sole man." boston magazine, march 1995.

mccarney tim. "timberland." seacoast times magazine, 21 august 1996.

"operation blessing." the union leader, 26 november 1996.

roth, debra, and miles socha. "a full boathouse: timberland hits the runway in central park." dnr, 12 august 1996.

"the timberland company." hoover's online, june 1998. available at http://www.hoovers.com.

the timberland company home page, 23 july 1998. available at http://www.timberland.com.

"timberland—more than just a yellow boot." aci europe airport business, june/july 1997.


For an annual report:

on the internet at: http://www.timberland.comor telephone: (800)445-5545


For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. timberland's primary sics are:

2321 men/boys' shirts

2329 men/boys' clothing, nec

2331 women/misses' blouses and shirts

2389 apparel and accessories, nec

3143 men's footwear exc. athletic

3144 women's footwear exc. athletic

5661 shoe stores

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