Maples Industries, Inc

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Maples Industries, Inc.

2210 Moody Road
Scottsboro, Alabama 35768-4114
U.S.A.
Telephone: (256) 259-1327
Fax: (256) 259-2072

Private Company
Founded: 1966
Employees: 1,500
Sales: $190.2 million (2005 est.)
NAIC: 314110 Carpet and Rug Mills

Maples Industries, Inc., is a Scottsboro, Alabama-based rug manufacturer, specializing in tufted accent, area, and bath rugs. The company is the third largest maker of bath rugs with $190 million in sales in 2005. Maples products are sold under private in-store labels for major department stores and specialty retailers, as well as the Maples name itself. The company is known for the high quality of its products, breadth of selection, and strong relationships with customers. In addition to the Alabama production plant, Maples maintains a New York City showroom on Fifth Avenue. Maples is family owned, headed by cofounder Wade Maples.

LAUNCH OF ORIGINAL FAMILY
BUSINESS: 1928

Maples Industries was founded in 1966 by Wade Maples and his father, John Maples. The elder Maples had originally established a company in 1928 in Scottsboro called Maples Company. In the beginning it manufactured tufted chenille bedspreads, robes, and pot holders. With the invention of nylon the company expanded into the production of bath rugs and mats. In 1950 the company offered its first mail-order bath rug. Maples sold the business in 1963 to J.P. Stevens, a venerable mill that wanted to become involved in the rub business but then sold the business to Fieldcrest. Three years after selling out, John Maples wanted back in and along with his son established Maples Industries and opened a 30,000-square-foot factory.

At first the new Maples company served primarily as a private label supplier of bath rugs for the Sears and J.C. Penney department store chains. As the business prospered, Maples kept pace by doubling the size of the production facility in 1969. The extra capacity would be taken up by other private label customers, as Maples became less dependent on Sears and J.C. Penney, although J.C. Penney would remain its largest private-label customer. One important factor in the company's success was its focus on tufted rugs and the refusal to drift too far afield. As a result, Maples was able to create a wider selection, and offer higher quality products and better service. Moreover, the private company did not worry about producing profits as did public competitors burdened by the pressure of shareholders. Instead it reinvested profits to improve facilities and grow the business. The top ranks of management were also actively involved in product development, resulting in the addition of new wares within the company's focus. In 1975, for example, Maples unveiled its first three-color cross-dyed rugs. Five years later Maples introduced the first BCF nylon bath rugs, making use of a bulked continuous filament that was extremely durable and also highly dyeable. Then, in 1985, Maples made the jump to computerized dyeing, followed two years later by the introduction of computerized tufting. In 1988 the company lead the way in producing washable accent rugs made out of Olefin, which were not only durable but also resistant to stains and fading because the synthetic fibers were characterized by their relative imperviousness to moisture, and even chemicals.

BRANDING EFFORT: 1988

Maples reached a turning point in 1988 when Wade Maples decided the time had come for the company to "spread its wings," as he told HFN in 1995. In truth, the company either had to grow or face a slow death. It was one of a number of midsized rug manufacturers, boasting annual sales in the $30 million range. Long in the background as a private-label supplier, Maples now had to promote its name to remain competitive in the accent rug market with innovative Burlington Rugs the reigning category leader. A host of other large companies were also involved in the bath rugs category, including Aladdin Mills and C.S. Brooks vying for the top spot, followed closely behind by Spring Industries. Complicating the situation was a retail buying base that was growing smaller. Moreover, Maples' strong suit was in fashion, or multicolored rugs, and for the company to grow it would have to attack the solid-color market, which accounted for 80 percent of sales in bath rugs. Yet it was a mature market that was overproduced, meaning that the only way to make strides in the solid-color category was taking away sales from competitors. Yarn innovation was deemed the best way to get an edge, and Maples' play to the market was a solid-color rug called Ambience, relying on a proprietary fiber that was soft yet good at absorbing colors. To accommodate the production of the new line, Maples installed computer-aided design (CAD) equipment, which was also capable of incorporating artwork into the weaving process, in this way allowing Maples to develop custom rug programs for private label customers. The company also added about 50,000 square feet to its manufacturing operation and expanded the warehouse to three stories and modernized the operation so that it could ship from inventory and accommodate large orders while still maintaining a high number of SKUs (about 4,000 different bath and accent rugs, comparable to what much larger competitors had to offer). The company also benefited from improved efficiencies that resulted in greater productivity than expected.

The competitive landscape of the late 1980s also forced the company and Wade Maples to assume a higher profile. In 1988 Maples opened a New York showroom at 295 Fifth Avenue to help make buyers aware of what the company had to offer. More than that, the company had to act as something of a liaison between the mill and the customer. For Wade Maples, who had preferred to focus on the manufacturing side of the business in Alabama, it meant an increased amount of travel to provide customers with a much needed manufacturing point of view. Another way to improve the connection between the mill and the customer was to eliminate the use of an independent New York-based sales representation firm, beef up the company's in-house sales force, and urge them to be more assertive in giving sales advice. Maples also looked to use the sales force to promote its own efforts at branding. A new logo was developed and an advertising and promotional campaign crafted.

KEY DATES

1928:: Maples family establishes Maples Company.
1950:: Company branches into bath rub manufacturing.
1963:: Company is sold to J.P. Stevens.
1966:: Maples family launches Maples Industries.
1988:: Company focuses on branding.
1994:: Yarn mill opens.
1999:: First Chromojet rug is produced.
2004:: Plant expansion is launched.

The strategy was so successful that Maples enjoyed strong growth into the 1990s, outperforming the industry as a whole. In 1991, for example, Maples increased sales by 35 percent while industry sales grew by just 1 percent. To keep up the pace, the New York showroom was doubled in size in 1991 and late in the year a $1.5 million expansion program was launched to grow the high end of the market as a complement to the company's sizeable volume retail business. The company's key product in the mid-market was Dura-Back, a step up from the latex-backed rugs sold by mass merchants, and Kaleidoscope, a top-end product individually tuft by an operator at a tabletop machine (similar to a sewing machine). In addition to buying new computerized tufting machines and tabletop machines, Maples added another 60,000 square feet to its facilities, which comprised 300,000 square feet. A year later Maples invested another $2.5 million to expand its dye house, adding new computerized dyeing equipment and dryers. As a result, in 1993 Maples was able to bring dyeing in-house. Then, in 1994, Maples opened its own yarn mill. All of these changes made Maples a completely vertical operation and helped increase its business with department and specialty store customers, which in addition to J.C. Penney included Macy's and Bed, Bath & Beyond.

Aside from capital investments to build sales in the department and specialty store channels, Maples invested in people as well. In 1995 the company recruited Arnie Stevens, president of the bath division at Home Innovations, to serve as vice-president of sales and marketing, charged with growing sales to department and specialty stores. The addition of Stevens also represented a change in selling strategy, as Wade Maples explained to HFN: "Instead of having totally separated territories, we're trying to have a team effort. The missing link in the team was Arnie's experience and knowledge in department and specialty stores, which is a growth area for us." For Stevens it was a chance to return to the rug business. He would remain based in New York at 295 Fifth Avenue, which in addition to the Maples showroom housed Home Innovations. Stevens simply moved from the 14th floor to the second.

Several months after Stevens joined Maples, he helped in the launch of a new upscale brand of accent and bath rugs called Roomers, intended to help increase penetration into the department and specialty store channels. Its name a reference to accent rugs, Roomers was a collection of eight synthetic and eight all-cotton accent rugs as well as seven cotton and three synthetic bath rugs. They featured the skid-resistant Dura-Luxe backing that offered a handcrafted appearance, as well as high-low loops, dull-luster yarns, wide bindings, fringes, and overtufting.

PRINT GALLERY LINE: 1999

Sales stood around $60 million in the mid-1990s, an amount that would triple over the course of the next decade, as Maples continued to plow profits into growing the business and remained in the vanguard of industry innovation. In the late 1990s Maples invested in the latest dye-inject printing equipment, Chromojet, to get involved in the printed rug category that had long been dominated by Milliken and its proprietary equipment. Maples was able to acquire new dye-injecting equipment that forced dyes deep into the pile. Unlike screen printing it was able to switch from one color to another and offered excellent control that resulted in a very sharp image. In 1999 Maples launched its Print Gallery line of area and accent rugs relying on the Chromojet, and it quickly became a major growth category. The company was so pleased with the line that in 2000 it was expanded to include kitchen and theme rugs. With business thriving, Maples again expanded its manufacturing operations to 500,000 square feet.

Maples had to contend with price increases in the early 2000s, due in large measure to higher energy costs. In addition to shipping surcharges, the company had to contend with higher production costs and the higher price of raw materials. However, it was a situation faced by all rug makers and did not affect Maples' standing in the industry. The company strengthened its position in 2002 when it signed a licensing agreement with West-Point Stevens Inc., whose processor acquired the first Maples family company four decades earlier. The new deal called for Maples to produce bath and accent rugs that coordinated with other WestPoint Stevens bed and bath products. In this way, WestPoint Stevens was able to offer complete bath presentations, a former shortcoming, and Maples gained a new growth channel.

Starting in the early 1990s Maples experienced a growth rate of approximately 17.5 percent, the result of reinvesting 90 percent of profits in upgrading facilities and purchasing new equipment. The bath rug segment led the way, enjoying a growth rate of 20 percent in 2001 and 2002, or nearly $60 million in sales. Accent and area rugs during these two years increased at a more modest 7 percent, but at $141 million still contributed the lion's share of total revenues in 2002. Industry conditions also favored Maples for continued growth. In the summer of 2003 a major competitor, Pillowtex, exited the bath business and began liquidating its rugs and towels. Pillowtex did close to $50 million in business in bath rugs, and Maples looked to pick up shelf space and capture some of those sales once the Pillowtex inventory worked its way out of the stores. In the fall of 2004 Maples was able to take direct advantage of the Pillowtex situation by securing the rug license for Royal Velvet, a former Pillowtex brand with strong name recognition.

To support its steady growth, Maples launched yet another expansion program in 2004. The company earmarked $6 million to increase the size of its factory to more than one million square feet. Although business conditions were poor in 2005—raw materials surged in price, retailers offered increasingly stiff competition with their own brands, and Hurricane Katrina inflicted damage on the oil and gas industry that resulted in higher energy costs—Maples was able to find a way to overcome the rough patch. It was able to raise some prices and further compensated by introducing new styles. Still a family owned company, Maples remained free of the pressure of shareholder profit expectations, and the owners made it clear that the company intended to continue to invest in the business and remain privately held.