Bugle Boy Pins Hopes on a Brand-New Tune : Apparel: The once trend-setting, Simi Valley-based manufacturer develops a full line of clothing for males. The goal is to reverse an erosion in sales.
A few years ago, Bugle Boy was one of America’s hottest companies. Teen-age boys and young men were consumed with its baggy cargo pants, and the company had a top-rated television ad to boot. For the year ended April, 1990, Bugle Boy earned $44 million, on sales of over $500 million--nearly double the previous year.
But fashion trends keep changing and the cargo look began to fade that year. And so nearly did Bugle Boy.
“We could have gone out of business, we really could have,” William Mow, Bugle Boy’s secretive founder and chairman, admitted recently during an interview.
Since 1990, Bugle Boy has been quietly restructuring--from a supplier of trendy pants for young men to a full-line apparel company for males of all ages. Mow, 57, hopes the strategy will end sliding sales--he expects $440 million in fiscal 1993--and cushion the private Simi Valley company against the vicissitudes of the apparel industry.
Over the last three years, while fighting pressure from bankers and a recession that has shrunk its retail base, Bugle Boy has created a new line of more-basic shirts and pants through its network of Asian suppliers, built a T-shirt plant in Rancho Dominguez and opened 109 outlet stores around the country to help move its excess inventory.
Mow--whose name rhymes with how--has long dismissed the idea of going public. But now he is considering taking his company public to raise cash in hopes of reaching $1 billion a year in sales, and to chase his much-bigger rival, Levi’s. (Levi Strauss has annual sales of about $5.6 billion.)
Bugle Boy recently hired new accountants, lawyers and a chief financial officer to prepare for a stock offering. Yet Mow says that probably won’t happen until November, 1994.
“We don’t feel our performance today is good enough to be a public company,” said Mow, who owns 90% of Bugle Boy. Yet Mow said his company has been profitable in each of the last seven years, and expects to earn $15 million for the year ending April 30.
That’s still only one-third of the profit Mow made in his best year, in fiscal 1990, the last year of the four-year cargo pant craze. Earlier in that decade, Bugle Boy also struck gold with parachute pants--nylon trousers with a lot of zippers.
“The history of the company was they were fast-paced and geared toward trendy merchandise,” said Harry Bernard, a partner at Colton Bernard, an apparel consulting firm in San Francisco. “That’s still their strength, but in many ways it’s their vulnerability,” he said. “It is very difficult to make a transition from young men to other lines.”
Certainly, Mow is used to challenges. Mow, whose family fled communist China when he was 13, started an electronics firm in the 70s called Macrodata. The firm was later bought by a big public conglomerate, after which Mow was fired and accused of fraud. Mow was later exonerated in court.
To pay legal bills for that case, Mow needed a new business and he stumbled into the apparel trade, starting Bugle Boy in 1976. Today, Mow could sell the company and retire as a rich man. “But then what?” he said. “What I enjoy most is competition.”
Lately, there have been signs of a resurgence at Bugle Boy. Phil Turner, merchandise manager at Val Corp., which operates 15 department stores in Indiana, said he was ordering 30% more from Bugle Boy for this fall. And Kathy Blackburn, a spokeswoman for Mervyn’s department stores, one of Bugle Boy’s largest retailers, said, “Their transition has been very positive and we are increasing our business with them for that reason.”
Mow said that by 1994, “we will be at $500 million in sales again.”
But if Bugle Boy hopes to grow fast again, it will take much more than a few increased orders. The company has to change its image and sharply boost sales in the huge older men’s market, said more than 15 industry analysts and retailers, many of whom were interviewed at a men’s apparel trade show earlier this month in Las Vegas.
While Bugle Boy sees itself as a supplier of family clothes at a moderate price, many see Bugle Boy as it once was--a supplier of high-fashion, high-priced pants for young men in their lates and 20s.
“When I think of Bugle Boy, I think of strong bottoms for young men,” said Michael Black, a vice president at Union Bay, a Seattle-based rival that does about $200 million in sales.
Analysts say Bugle Boy will also have to win back customers such as Jason Burgeois, an executive with Ballin’s, a men’s store in New Orleans that hasn’t bought anything from Bugle Boy since cargo pants. “I’m looking for something conservative now, and I still picture them as having too much extras,” Burgeois said, referring to Bugle Boy’s old cargo pants that had nine or more pockets.
Mow concedes that he lost many customers, but he attributes a lot of that to financial problems and restructuring in the retail industry. As an example, Mow said, “we used to do $13 million with Miller’s Outpost, but they changed their direction to upscale.” A spokeswoman at Miller’s Outpost, which is based in Ontario, Calif., said only that its orders are based on its consumers needs.
Bugle Boy still sells through about 8,000 stores nationwide, including most of the major department stores. And its Bugle Boy outlet stores, mostly along the Eastern Seaboard, now add about $100 million in sales annually.
Of Bugle Boy’s three new divisions--kids, boys and men--it has made the most strides in clothes for boys and shirts for men, analysts said. Last year Bugle Boy’s men’s woven shirt sales were among the top five brands with a 7% market share in that category, according to surveys by the NPD Group, a New York research firm. Three years ago, Bugle Boy had less than 1% market share in that category.
But Bugle Boy hasn’t made much of a dent in the fast-growing men’s jeans market. Levi’s dominates the $3.7-billion-a-year industry in all age groups, with more than half the market at many stores, NPD reports show.
Indeed, at most department stores Bugle Boy commands little space in men’s sections, where it also competes against higher-end lines such as Guess?--plus Wrangler and Lee brands, the two popular cheaper alternatives to Levi’s. NPD surveys show that Bugle Boy now has a 4% market share in men’s jeans, and just 2%-3% in the casual pants market for men fighting the middle-aged spread. That category is dominated by Levi’s Docker brand.
Randy Ronning, vice president of men’s sportswear merchandising at J. C. Penney, said Bugle Boy’s twill pants for young men remain “one of our highest volume producers,” and its men’s shirts have come a long way. “But we don’t carry Bugle Boy jeans for men,” he said. “The competition we have with Levi’s for men is just too strong.”
Vincent Nesi, Bugle Boy’s president and owner of 10% of the company, is Mow’s top fashion man, working out of an office that overlooks Manhattan’s garment district. Nesi, 46, claims that his standard five-pocket jeans gives consumers Levi’s quality at a much cheaper cost. And he said Bugle Boy’s newest line of stovepipe-shaped and flared jeans, aimed at post-Baby Boomers, could turn into another fad.
Bugle Boy’s jeans are cheaper than other leading brands, averaging $25 a pair retail compared with $30 for Union Bay, $37 for Levis and $58 for Guess?, recent surveys show. Still, as one New York buyer for 35 stores on the East Coast put it: “I think Levi’s is a little bit better, and with the investment I have in Levi’s, I don’t know if I want to put in something much cheaper than Levi’s.”
Analysts believe retailers’ reluctance to stock Bugle Boy pants for men, and to a lesser extent, its clothes for kids and boys, partly reflects the company’s past style. “The misconception of us as being expensive is one of our biggest problems,” conceded Suzi Scheimann, Bugle Boy’s advertising manager.
One problem for Mow is he can’t compete with Levi’s in advertising--last year Bugle Boy spent about $18 million for advertising, about one-seventh of Levi’s ad budget. So while Bugle Boy has 150 ads on bus shelters in Los Angeles, for example, Bugle Boy isn’t on network television much.
Scheimann says the company is preparing new television ads aimed at women, because they buy a large percent of men’s wardrobe. And the ad budget is likely to grow if Bugle Boy takes the company public.
Mow says Bugle Boy is sound financially, with a net worth of $65 million. And 1992 tax statements filed in Kansas, where Bugle Boy operates an outlet store, show that the company has no long-term debt.
But Mow agrees he needs more capital to react quickly to market needs. With more cash, Bugle Boy could establish more domestic manufacturing operations, freeing it from government textile quotas, which sometimes causes delays. Most of Bugle Boy’s clothes are now shipped from 18 countries from Turkey to China.
“During the cargo fashion fad,” Mow said with a laugh, “we virtually couldn’t make a mistake because the goods were selling so fast our computers couldn’t keep up. We went from that psychology to a business today of refills. And when you’re shipping basic things, the quality has got to be perfect.”
