Garan, Inc. - A Wider Mix of Products in the 1970s

A Wider Mix of Products in the 1970s

By 1972, Garan was back in stride, having topped $2 million in net income the previous year. Heightened productivity, tighter cost controls, fewer markdowns, and a wider mix of products were credited for the company's turnaround. Of its eleven factories, seven were located in Mississippi and one each was located in California, Kentucky, Louisiana, and Tennessee. The company started making men's pants in 1969, jeans for girls in 1971, and children's apparel in 1972. It also introduced a "Jugs" line of pants and knit shirts for girls 15 years and older. Shirts now represented only 46 percent of Garan's varied production. Roughly three-quarters of its merchandise bore the labels of its customers, and the balance was being sold under the Garan label.

By the mid-1970s, Garan was a broad-based producer of knitted and woven apparel for girls, infants, and men as well as boys. Branded children's apparel was introduced in 1972 under the Garanimals label, a system of coordinating tops and bottoms with color-keyed mix-and-match animal tags and hangers. Two years later, the company opened a new plant devoted exclusively to turning out knitted tops and woven bottoms for infants and toddlers. Garan also restored men's knit sport shirts as a meaningful part of its apparel mix. A licensing division established in 1975 began distributing sweatshirts, sweaters, knit shirts, and T-shirts bearing designs of professional sports leagues and teams.

There were 23 Garan plants at the end of 1977, a year in which net sales reached $122.8 million and net income rose to $7.7 million, both records. The Garanimals label accounted for 30 percent of sales volume. Sears and JC Penney remained the largest of Garan's more than 2,000 accounts. Long-term debt was only $1.9 million. About 44 percent of the company's shares of common stock was closely held.

Garan averaged an excellent annual return on equity of more than 17 percent between 1979 and 1983. During this period, it added the Garan Mountain Lion brand name, which along with Garanimals accounted for more than half of company sales in 1983 and also enjoyed higher profit margins than the firm's private labels. Licensed sweatshirts and T-shirts continued to be marketed through mass merchandisers, department stores, and other customers. Sales of children's clothing represented about 70 percent of the 1983 sales total. Branded and licensed apparel accounted for about two-thirds of sales, and private label and licensed business to Sears and JC Penney accounted for the rest.

Garan Advantage, a line of discounted men's sportswear with the same tagging system as Garanimals, was introduced in 1982. Garan Man, a sportswear line of knit and woven shirts, casual slacks, and pullover and cardigan sweaters, was unveiled the following year. Also in 1983, the company introduced Garan By Marita for women. Garan net sales reached a record $176.9 million in 1984, and net income rose to a record $22.8 million. At the end of 1985, there were 20 company plants distributed throughout seven states: Alabama, Arkansas, Kentucky, Louisiana, Mississippi, Oklahoma, and Tennessee. A manufacturing facility was established in Costa Rica in 1984, and two facilities were opened in El Salvador during fiscal 1985. Long-term debt that year came to $9.9 million. By the mid-1980s, Seymour Lichtenstein had succeeded Dorsky, who remained a director, as chairman and chief executive officer, and Jerald Kamiel had succeeded Lichtenstein as president and chief operating officer.

Fiscal 1985 began a tailspin for Garan: sales fell to $105 million in 1986 and earnings dropped to a low of $2.2 million the following year. A number of factors were blamed, including cheap imports, the demise of the preppy look, and the miniskirt disasters. The company cut back on branded products, which accounted for only 47 percent of sales in 1988, compared with 75 percent in 1986. It introduced Bobbie Brooks, an in-house label for Wal-Mart Stores' women's clothing, and began a licensed menswear line featuring the insignia of professional sports teams. Company plants were retooled for lower costs and greater efficiency. Sales and profits improved, reaching $145.3 million and nearly $10 million, respectively, in 1990.

Company Perspectives:

Garan continues to make clothes that look great and make kids feel great. We are the brand that kids and parents can count on for quality, value, and fashion.