Royal Robbins has gone from a company losing money, losing shelf space, and losing retail significance to a profitable corporation boasting a whopping 70-percent increase in gross sales in the last two years. More bragging rights come from a double-digit turnaround in pre-tax profits -- from -7 percent between June 1 and October 1 last year to +7 percent for the same period this year.
Dan Costa, company CEO and owner of Royal Robbins since May of 2000, told SNEWS® today the biggest reasons for the turnaround has been in the ways the company sources product, enabling Royal to now offer vastly improved prices and values.
"Sourcing garments today is a global program where you have to place the production of the right garments in the right country to achieve the best quality along with the best price," says Costa. "Every country has a slightly different twist due to varying tariffs, quotas and duties. Royal pretty much sourced out of one area in the past and while the rest of the world was moving into better areas for price, the company stayed put."
Learning the garment trade was a crash course in textiles, weaves and duties for Costa to be sure. When he acquired the initial 51 percent stake in the company two years ago, he told SNEWS® he didn't know the difference between a knit and a woven. But, coming from a strong background in the food industry where grocery stores won't give you the time of day unless you bring to market a good price and a good product, Costa knew what he wanted to do. An intended one-week educational stay in Asia morphed into six weeks, and when he returned to the United States, Costa knew dramatic changes were essential.
"We couldn’t expect retailers to subsidize our lack of knowledge regarding sourcing, no matter how good our product was," says Costa. "The biggest blow came when, in a meeting with Galyan's shortly after I purchased Royal, their buyers told us they could no longer carry our product -- it was simply too expensive."
Fortunately for Costa, the buyers at Galyan's were sufficiently interested in Royal to offer advice about what they needed to do in order for Galyan's to begin making shelf space available again. Costa listened.
A perfect example of the change in price and value is the Royal icon, the Billy Goat short. At $36 retail, buyers stopped carrying it because consumers stopped buying it. With different sourcing, but no changes to the material or way in which the short is made, it comes in at $29 MSRP, and retail buyers have taken note. Sales have vaulted from 12,000 units two years ago to more than 60,000 units sold for Spring 2001.
"The change we made was not in materials, but in simply moving production of the short from one country that levied a $3 quota on bottoms to another that only levies a 50 cent quota," Costa said.
In addition to the sourcing, Costa has adjusted his company's production schedules so Royal now has samples to show retailers during prime buying season, as opposed to two or three months after the competitors’ products have already been seen. In addition, product delivery is now 98 percent on time compared to just 84 percent last year.
Costa told SNEWS® that EMS used to carry Royal in only 10 to 15 stores, but now the retailer stocks Royal products in every store. While REI remains the No. 1 seller of Royal product, he said, both EMS and Galyan's are not far behind.
"We have our fundamentals in place. Our focus is on product now," adds Costa. "Look for us to open eyes with new product in Spring 2003."
SNEWS® , of course, will bring you a sneak peek in an upcoming Product Focus.