Bugle Boy Industries Inc.

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Bugle Boy Industries Inc.

founded: 1977

Contact Information:

headquarters: 2900 madera rd.
simi valley, ca 93065 phone: (805)582-1010 fax: (805)582-5236 email: [email protected] url: http://www.bugleboy.com

OVERVIEW

Founded in 1977, Bugle Boy Industries Inc. enjoys annual sales of nearly $500 million. The company produces sportswear, jeans, and assorted products in no-wrinkle, 100 percent cotton fabrics. The company sells its lines to more than 7,000 leading American department stores and retailers including J.C. Penney, Kohl's, and Sears. Bugle Boy apparel can also be found at various family stores and at Bugle Boy Factory Outlets.

COMPANY FINANCES

Bugle Boy's 1997 sales were $470 million, with an estimated net income of $11 million. The company ranked number 466 on Forbes' 1997 list of The Top 500 Private Companies.

ANALYSTS' OPINIONS

Many analysts had a favorable view of Bugle Boy Industries Inc.'s financial picture during the 1990s. CEO William Mow had a revenue goal of $1 billion by the year 2001, which was seen as fairly conservative. Potential growth and profits for the company remained favorable over the decade, on an international scale as well as within the United States. Among the company's competitive advantages was its inventory system, which is accessible to sales and management personnel from laptop computers. The company also claims to have a price advantage over chief competitor Levi-Strauss in international markets.

Among analyst concerns was the celebration of Bugle Boy's success in the young men's division. Some say this notoriety could cause serious marketing difficulties for the company's conservative men's division, arguing that men entering their mid-20s tend to prefer jeans to trendy clothes. This, they say, was at the root of Levi's solid 65 percent market share on men's clothing. Due to Levi's market standing, it has widespread admittance to a variety of department stores, whereas Bugle Boy has been bound to stores like Sears and May Company. Therefore, many analysts say an improved image is needed for Bugle Boy's men's division to sustain its growth.

HISTORY

Dr. William Mow (born Mow Chao Wei), CEO of Bugle Boy Industries Inc., founded the company in 1977. Launched as Buckaroo International, Mow and partner Stanley Buchthal were convinced they could sell men's pants. Mow's computer and technological background, however, provided him with few advantages and little knowledge of the industry. The first four years of the business proved difficult. In 1981, Bugle Boy moved to cut its products down to include casual men's slacks. Having realized success with its "parachute pant" line in 1983, the company began to produce a boys clothing line the following year.

The 1980s proved to be a changing decade for Bugle Boy. The company signed its first U.S. licensee agreement in 1986, one that allowed Bugle Boy to expand its product lines. By 1988, the company had established Jeans and Missy divisions and signed its first foreign licensee agreement with Canada. By 1989 Japan and Eastern Asia were added to the list of regions with which the company had licensee agreements.

By 1990 Bugle Boy's sales passed the $500 million mark, allowing the company to better serve buyers by implementing Electronic Data Interchange (EDI) services, laptop computer systems that provide up-to-date inventory and pricing information for Bugle Boy salesmen and management. With increased success, the company introduced numerous clothing lines in the 1990s, such as wrinkle-free products (1994), the Black Label and Gold Crest line (1995), and the Classics line (1996).

STRATEGY

Bugle Boy Industries Inc. has held on to a simple fundamental principle: to offer genuine value and quality while increasing company profits. In other words, by offering fashionable, comfortable clothing at an affordable price, the company believed itself capable of competing with big names like Levi-Strauss. To best assist its buyers, Bugle Boy has heavily relied on its high-tech laptop inventory system.

Targeting the average American family, Bugle Boy Industries Inc. has consistently sought to increase its name recognition. One example was expansion of its product line to include newborns, infants, toddlers, and sized 4-16 boys and girls clothing. Also in an effort to make its name more recognized globally, the company pursued license agreements with choice merchandisers as a strategic means of expansion. As of the late 1990s, Bugle Boy Industries Inc. enjoyed 98 percent brand awareness and had firmly established itself as a family brand for "middle America." The company continued its national advertisements in 1998 focusing on "Americana." The theme uses red, white, and blue colors and depicts an "All-American Bugle Boy(r) family" in everyday life.

FAST FACTS: About Bugle Boy Industries Inc.

Ownership: Bugle Boy Industries Inc. is a privately owned company.

Officers: Dr. William C.W. Mow, CEO, 62; Rosa Mow, Pres. & COO; Michael Seyhun, Sr. VP & CFO; Ken Sekella, Human Resources Mgr.

Employees: 2,200

Chief Competitors: Bugle Boy is a manufacturer and marketer of jeans, sportswear, and other casual apparel. As such, its primary competitors include: Calvin Klein; Farah; Fruit of the Loom; Guess?; Haggar; J. Crew; Jordache Enterprises; Levi-Strauss; Liz Claiborne; Osh Kosh B'Gosh; Oxfor Industries; Polo; The Gap; Tommy Hilfiger; and VF Corp.

Bugle Boy held market share of 50 percent in the young men's division and 45 percent of the boy's division in the U.S. market. Bugle Boy's biggest concern was competitor Levi-Strauss, which held 65 percent of U.S. market share in the men's division and boasted global sales of more than $3.6 billion. Bugle Boy has not yet obtained licensees in Europe, a major international playing field. The company has an office in Tokyo's Shibuya district in Japan and has a licensing agreement with the giant grading company Itohman to sell Bugle Boy jeans in 500 stores given a two-year time frame.

INFLUENCES

The first season Bugle Boy clothing was offered for sale, the company lost $250,000. Putting up his house as collateral, William Mow was able to secure more credit. His peers thought he was a business failure. Anxious to prove himself, he bought out partner Buchthal for $2,000 in 1981 and renamed the company Bugle Boy. The company's designer at that time, Vincent Nesi, agreed to head sales and marketing if Mow would reduce the company's lines to just pants. Mow agreed, and the strategy proved successful when the company sold $960,000 worth of merchandise between May and August of 1981. Sales jumped to $2.6 million by the spring of 1982, earning the company's first time profit of $200,000. The company continued to grow and remain profitable.

By 1984, sales had doubled to $43 billion. The company used parachute material to produce a new line of pants known as "parachute pants." Unfortunately, the company overestimated the sale potential and manufactured too many parachute pants, forcing the company to sell them all in 1984 for 25 cents a pair.

Desperate to produce a successful product, the company launched its cargo pant line in November of 1984. These pants were made from pigmented canvas and were the only winner in the apparel industry during Christmas of that year. The company more than bounced back from an almost total disaster to become instantly popular. Its cargo pants' success, however, did not outweigh the company's losses from the parachute pants line.

By 1986, the company rebounded, earning $6 million in profits while sales remained steady. The parachute pants catastrophe left retailers with many doubts, and the company's focus was shifted to regain their trust. Proving itself, the company's sales reached $189 million in 1987, with continued growth of more than 40 percent in 1988. The company learned its lesson and began consolidating efforts before growth got out of control.

Among the company's most successful campaigns was its denim promotion in 1988, the television commercial that introduced the phrase, "Excuse me, are those Bugle Boy jeans you're wearing?" By 1990, Bugle Boy enjoyed 70 percent growth as well as substantial profits. Since then, the company has aimed at continuing growth of 20 percent per year. William Mow has stated he expects to be doing $1 billion worth of sales by the year 2001.

CURRENT TRENDS

During the late 1990s, Bugle Boy Industries Inc. focused on expanding its product lines and launching new advertising campaigns, both as a means to increase the company's global name recognition. Among the results of Bugle Boy's efforts was its 1997 title as the Official Clothier of the Indy Racing League. In a signed agreement, Bugle Boy provided travel sportswear and uniforms for all 21 teams and maintained privileges to sell Indy 500, Indy Speedway, United States Auto Club, and Indy Racing League trademark clothing. Also, in late 1997, the company began heavy pursuit of a new market—the golf business. Bugle Boy golf apparel was introduced in the spring of 1997, and the company was working to sign contracts with some Professional Golf Association (PGA) touring professionals in late 1997. The company's line of golf apparel was available at Mervyn's and Sears in northern California and slotted for sale in southern California by 1998.

Other trends toward expansion included Bugle Boy's license agreements with merchandisers: Topsville, Inc. (a trendsetting producer in children's clothing); Chano International (an elite men's and boys' underwear manufacturer); Timestar, Inc. (an international manufacturer of stylish watches); and Vision Eyewear International, Inc. (maker of elite protective sunglasses). According to the signed agreement, these merchandisers entered into joint efforts with Bugle Boy to market and sell Bugle Boy merchandise. Apparel and accessories added to Bugle Boy's line of merchandise included bikinis, boxers, classic briefs, flannel wear, watches, sunglasses, and children's wear and accessories.

CHRONOLOGY: Key Dates for Bugle Boy Industries Inc.

1977:: Dr. William Mow launches Buckaroo International to sell men's pants
1981:: Mow renames the company Bugle Boy
1983:: Introduces the "parachute pant" made from parachute material
1986:: The company signs its first licensing agreement
1988:: Introduces the "Excuse me, are those Bugle Boy jeans you're wearing?" ad campaign; signs its first foreign licensing agreement
1990:: Bugle Boy sales pass $500 million for the first time
1994:: Introduces wrinkle-free pants
1997:: Bugle Boy begins pursuing the golf attire market

Bugle Boy Industries Inc. also signed an agreement with Lollytogs Ltd., a clothing manufacturer based in New York. Under the terms of the agreement, Bugle Boy allowed the company to use the Bugle Boy name to manufacture and sell school uniforms. Strategically, Bugle Boy saw this as an opportunity to increase its share of the children's clothing market and not be excluded due to the increasing popularity of school uniforms.

PRODUCTS

Bugle Boy makes and markets men's, women's, and children's clothing. Most product lines focus on casual clothing such as jeans and khaki pants, T-shirts, and polo shirts. The company also sells swimwear, outerwear, and accessories such as belts, socks, underwear, and sunglasses. Bugle Boy also distributes clothing under the Vincente Nesi and Vincente labels.

A MAN WHO DOESN'T NEED TO BLOW HIS OWN HORN

Bugle Boy is the brainchild of Mow Chao Wei, a Chinese national who fled the country in 1949 before the Communist takeover. Reputedly, his family got the last Pan Am Flight out of Shanghai before the Communists shut the airport down. Arriving in the United States, Mow Chao Wei reinvented himself as William Mow, and subsequently went on to get a Ph.D. in electrical engineering from Purdue University. An early researcher in microchip technology, Dr. Mow made the unlikely jump to fashion by founding Bugle Boy in 1977. As he said, "I had invented machines with millions of wires that measured time to a billionth of a second. I thought I could make a pair of pants."

GLOBAL PRESENCE

Over the years, Bugle Boy's business has expanded to include 22 domestic and international licensees in the United States, Japan, Canada, Mexico, Central America, and the Caribbean. Manufacturing for the company takes place in 40 countries worldwide, but it is concentrated in Taiwan, Hong Kong, and China. One of the largest privately owned apparel companies in the United States, Bugle Boy Industries Inc. relies heavily on its strategy of high-quality production at an affordable price to increase its global presence. Its most recent expansion efforts have been directed toward China.