Garan, Inc. - Eight Years of Growing Profits: 1957–65

Eight Years of Growing Profits: 1957–65

Garan was incorporated in 1957 as a merger of seven companies, the first of which was incorporated in New York in 1941 as Myrna Knitwear, Inc. Its name originated from management coining "Guarantee" as the name for a new T-shirt but instead deciding to use the first part of the word as the corporate title. Company headquarters were located in Manhattan's garment district. Sales rose to $9.1 million in fiscal 1960 (the year ended September 30, 1960) from $3.2 million in 1957, when net income was only $47,000.

By 1961, the year the company went public, Garan was the nation's leading manufacturer of men's and boys' knitted sport shirts. It also made men's and boys' woven sports shirts, polo shirts, and boys' knitted pajamas. Knitted products were being made from cotton, acrylics, polyester and cotton blends, and textralized nylon yarn. Woven products were being made from cotton and rayon and from cotton, acetate, and polyester blends. The materials were being purchased from a number of textile manufacturers.

More than 90 percent of Garan's sales volume of $8.8 million in 1961 came from its sports shirts, which retailed for between $1.95 and $2.95. About two-thirds of its output was being sold under private labels, with the remainder selling under the Garan name. Accounts included Macy's, JC Penney, Woolworth's, and Sears, Roebuck. A new plant in Lambert, Mississippi, began manufacturing higher-priced Ban-Lon shirts from Garan's own knitted fabric in 1961, and another factory, in Clinton, Kentucky, also began operations that year.

Garan's first public offering, at $6.50 per share on the American Stock Exchange, raised $700,000 for the company and enabled it to finance its own receivables without factoring (hiring someone else to collect its bills). Almost two-thirds of the shares, the value of which rose as high as nearly $21 per share in 1961, remained in the hands of the officers and directors of the company, headed by the president and chairman of the board, Samuel Dorsky, and the executive vice-president and secretary, Seymour Lichtenstein, who soon advanced to president. The company's property in 1962 consisted of six leased factories in Kentucky, Mississippi, Pennsylvania, and Tennessee, and a warehouse in Tennessee. Net sales rose to $12 million that year, and net income increased to $464,703 from the previous fiscal year's $328,894. The company then declared a dividend for the first time.

Sales and net income for 1963 reached new levels of $15.1 million and $547,000, respectively. A 76,000-square-foot facility for the production of woven sports shirts opened in Kosciusko, Mississippi, in 1963, replacing two smaller units, and the company began selling Acrilon (as well as Ban-Lon) shirts for boys under its own Rhodes label. The following year, Garan opened another 76,000-square-foot plant for knitted garments in Starksville, Mississippi, and a 35,000-square-foot factory for woven sports shirts in Carthage, Mississippi. The Lambert facility was doubled in size. Plans were begun to devote part of the existing Adamsville, Tennessee, facility to popular-priced, man-tailored women's blouses.

In 1965, a new factory opened in Philadelphia, Mississippi, for the manufacture of boys' jeans and slacks. Garan's net sales reached nearly $23 million that year, and its net profit increased for the eighth year in a row. Long-term debt was only $1.9 million. All nine of the company's plants were situated in the South. JC Penney and Sears were taking about two-thirds of total production. The company's Rhodes label, sold through department stores, was being promoted only modestly, and its own Garan label, directed at discounters and chain stores, required minimal advertising.

The going got rougher for Garan in the next few years. Profits fell for the first time in 1966 because of inventory writeoffs in velour, high in-house costs for a computer system subsequently phased out, and the costs of decentralizing company-wide operations to a divisional basis. Net income passed the $1 million mark in 1967, and doubled in 1968, but fell to $920,000 in 1969 as the company's Ban-Lon sweaters and shirts met with increased competition. In 1970, sales fell from $45.1 million to $43.8 million, although net income rose slightly.