Utilitarian Man

Bill Combs, CEO of Bogs Footwear, talks about the recent acquisition by Weyco Group, makers of Florsheim, and why even if the rain boot craze were to dry up tomorrow, the brand’s future remains lush.

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CEO of Bogs Footwear

CEO of Bogs Footwear

Times are good at Bogs Footwear. The Eugene, OR-based maker of all-weather boots (not just rain, mind you), closed the books on 2010 with sales soaring nearly 100 percent compared to the previous year. This year, reports Founder and CEO Bill Combs, sales continue at a torrential pace— with no let up in sight. And in order to facilitate the expected growth, the company just dotted the i’s and crossed the t’s on its acquisition by Weyco Group.

Combs describes the merger process as painless and seamless, and says it will enable his family business team (wife Sue manages design and development and sons Dustin and Riley head sales) to remain intact and focused on what they do best while Weyco provides the necessary backroom logistics and financial support. In fact, Combs says that after the initial in-person meeting with Weyco’s Tom and John Florsheim, both parties sensed it would be a perfect match. “We could just feel there were great common goals, and they saw our upside for growth and we saw what they could bring us,” he says. “Their people are terrific and the way management treats them is fantastic.” Combs adds, “You can tell when you walk into an office whether the employees are happy or not. I was amazed by Weyco’s environment and their capabilities.”

Call the merger a win-win: Weyco diversifies its brand portfolio by expanding further into the casual and performance markets (Bogs also makes the outdoor sandal brand, Rafters), and Bogs obtains the support needed to take the company to the next level. The way Combs describes it, Bogs, now in its ninth year, has only just begun. “We own very little share of any market we play in, so our upside for growth is terrific,” he says. Those markets currently span the New York fireman to the Alaskan fisherman to the Wisconsin dairy farmer to the Wyoming rancher, as well as outdoor enthusiasts and urbanites in between seeking protection from the elements. The broad appeal, Combs notes, is based on the brand’s unique waterproof, breathable and insulated bootie construction found throughout the line. It consists of scuba-like four-way stretch neoprene material, wicking lining that keeps feet warm and dry and a shock-absorbing nylon pad—all built on comfortable contoured lasts. It’s why Combs believes Bogs is much more than just another rubber rain boot brand. “That’s probably our biggest point of differentiation: Our boots are waterproof, but they are not ‘rain boots,'” Combs explains. For example, he says a person wearing Hunter wellies on a 40-degree day or lower will get cold feet but they will be nice and warm in a pair of Bogs. “Our insulation works from temperate conditions down to -40 degrees,” he says. “We think of ourselves more as making comfort shoes that just happen to be worn in cruddy conditions.” Combs admits that the current rain boot craze has led to some spillover sales for Bogs—especially since the company began introducing pattern uppers in ’06—but rain fashion is not the only reason Bogs is growing rapidly. The growth, Combs ascertains, is more utilitarian at its roots and also why boots, in general, have been popular the past few years amid a difficult economy. “Boots solve a problem. They are often waterproof, warm and keep you out of the mud,” he says. “And they are long-lasting and, therefore, of great value. When the economy gets difficult, people tend to buy what’s needed, what works well and what will hold up for a while.”

Combs foresees little abatement in the current utilitarian fashion wave; you might even call it the new normal with respect to shopping preferences of American consumers. “We see a trend in people simplifying their lifestyle and buying less but buying better—and buying what works,” he says. “There is great opportunity for anyone, like us, that builds product that solves a problem and lasts for a long time. And if you can twist a bit of fashion into the equation, then it helps even more. I think the future is pretty bright.”

Combs has plenty of firsthand knowledge of current consumer sentiment, as his family owns the legendary Burch’s, a 10,000-square- foot sit-and-fit store in Eugene, OR. “It’s a huge advantage, because we are right in front of the customer and we learn about last, girth and fit as well as all those particular wants and needs,” he says. “We often take new samples into the store for a weekend and get tremendous feedback.”

Hence the reason this fall Bogs will begin introducing more shoe-like styles featuring hybrid constructions of rubber bottoms paired with fabric and neoprene upper materials. It’s what the people want, basically. “You will see more of that for Spring ’12,” Combs says. “So far, the reaction has been good, and this will represent the next step for Bogs.”

In the meantime, Bogs is getting set to move into new Portland, OR, offices that will house design, sales and marketing. There are currently 40 employees in Oregon and Combs says workforce expansion is likely in order to keep pace with the expected growth. Also in the works: developing a new ecommerce site and getting the word out on the brand’s new Industrial collection. “We are targeting cold storage workers that are probably now wearing leather boots that crack,” he says, adding the market segment has huge potential. Overall, Combs says the company has only scratched the tip of the iceberg with respect to Bogs’ long-term growth prospects. “We have very talented people—my sons, in particular— and Tom and John Florsheim are very talented,” he says. “We are certainly raring and ready to take it to the next level. The growth is out there to be had. We just need to go for it.”

How did the Weyco deal come about?

Like any fast-growing, family-owned company, we were out looking for capital to fund our growth. Weyco resulted from that search, and it turned out to be a very good deal for both sides.

How did you go from seeking funding to an actual acquisition?

About six months ago we could see that not only were we going to need capital, but we were facing some operational constraints—like the size of our warehouse and its location, inventory control systems, back office capabilities, etc. And given the financial situation today at many banks coupled with our decision to enter the industrial market—what we call “Tuesday morning accounts” that size up their inventories on Monday, order on Tuesday and want it in stock by Thursday—we needed to have a lot of inventory in stock. Well, that just doesn’t fit with your typical trade bank ratios. So we had some rather large decisions to make, and Weyco already had all of those aspects in place. Lastly, Tom and John Florsheim are shoe people and just really great guys. They wanted to carry on this vision we had.

Did you get other offers?

Yes. We talked to a lot of great, smart people. We learned a lot. And Weyco turned out to be the very best fit.

How has life changed at Bogs since the acquisition—and what can retailers expect going forward?

It’s really pretty much business as usual. We will be moving our warehouse to Wisconsin and we will move development, design, branding and marketing to Portland, OR. Going forward, the changes retailers can expect will be better delivery, more inventory and much less freight cost for our retailers located in the eastern part of the country, which are numerous. In addition, it frees my wife and I to concentrate on product development. Overall, I don’t think there are any disadvantages because we have always operated like a publicly traded company with a small board that watched our financials.

Did you envision this kind of popularity five years ago for Bogs— one that would lead to an acquisition like this?

Honestly, no. We started out in the farm and agricultural business selling basic black boots. But people like me, who were not farmers or ranchers,
started buying our boots to wear to their cabin in the mountain or to a football game, and their wives were wearing Bogs to their kids’ soccer game on a cold Saturday morning. I realized that there was a real upside and that’s where we saw growth potential.

Is that what Weyco saw in Bogs as well?

Well, I think our brand doesn’t really complement their existing portfolio, but it gets them into a market where they see great potential. You know as well as anyone how difficult it is to go outside of a category and succeed. It’s really difficult—almost impossible. But they can surely help Bogs succeed. They have a state- of-the-art distribution center located in the middle of the country (Glendale, WI) that can ship a pair of shoes from order to out-the- door in an hour. When dealing with Internet retailers, in particular, that’s going to be a tremendous asset. They also have a great back office to support our direct-to-consumer online sales, which is growing rapidly. Their customer service team is of a size capable to support our projected growth. They have good factory relationships in China as well as in other countries. Those strong relationships also help with our current factory base. And the biggest aspect is that they are a family shoe company and understand the importance of customer service like we do, which has been the backbone of our family-owned retail business. At Burch’s, we sit every customer down, measure both feet and polish the shoes that they walked in wearing. We also offer a forever return policy, no questions asked. It’s old-fashioned service that seeks 100 percent customer satisfaction. We have applied that same philosophy to Bogs and it has helped us tremendously.

Some examples?

If a farm and agricultural store in Oklahoma calls us saying one of its customers got one of their Bog boots torn up in his tractor, we will send that customer a new pair. If a commercial fisherman in Alaska loses one of his boots overboard, we will send him a new pair as well. No questions asked. We believe our customers, and I think that’s important.

Is there a typical Bogs customer?

It’s a broad customer base. It spans a soccer mom shopping in Brass Plum to a guy like me who shops REI and is coming out of stiff hiking boots but doesn’t want to wear a pair of sneakers. It’s also the guy working on the dairy farm; he doesn’t earn a high income but needs a durable boot that performs. It’s the same scenario for the Alaska deep- sea fisherman or the rancher in Oklahoma. We cover a wide range of income, so we have to keep the value in our product.

It all sounds a lot more involved than finding a rubber boot factory and then slapping on some funky prints.

We go out into the market to find out exactly what our customer needs. We travel to Alaska and work with the fishing boat captains. We see what they are currently wearing and ask them what would make the product perform better and be more comfortable. We continually test our products with the end user; I think that’s the secret. Unlike a lot of wellie companies, we make functional footwear and everything we do has to work. That’s why the dairy farmer who is milking cows 365 days a year is great to talk to because he can tell you things about comfort, warmth and moisture management that make the person who buys a pair of Bogs at REI and may wear them 20 times a year just that much more comfortable.

Didn’t Bogs product appear on the TV show, Deadliest Catch?

We outfit the crew on the Time Bandit boat featured in the series. They just got back from Opilio crab season and it was 20 below zero where they were fishing and our new commercial boot got rave reviews.

Where does Bogs come in on price?

We range from $60 to $180. Our printed boots are right under $100 and industrial product is in the $130 to $140 range. And our collection coming out this fall that pairs a vulcanized construction with waterproof leathers will be in the $180 to $190 range.

What’s your take on the footwear market’s overall health for the rest of this year?

I think it’s going to be an OK year. Inventories are clean from fall and winter, which frees up more open-to-buy. Also, since nearly everybody is coming off a couple of tough years, figures are not terribly tough to go up against.

Having grown up in a shoe retailing family, do you have any advice for your colleagues?

Just do what you do and do it really well, and don’t worry about what the competition is doing. We have a saying in our store: Once we are happy with our product mix, presentation, service and advertising, we don’t worry about anyone else. Our store managers, Terry Allen and Sarah Graves, do an amazing job in this regard. They have been with the store for more than 20 years.

Is it harder for independent retailers to succeed today?

I think five years ago if you would have asked me that question, I would have said the independent is a dinosaur and will eventually go away. But today I would say the future is as bright as it has ever been for an independent retailer. If you can sign a good lease and know who you are—whatever category you choose—and don’t go outside that, I believe you can build a nice business. There is still plenty of opportunity out there.

Many say the exact opposite—they say the sky is falling because Zappos carries everything.

Well, Zappos can’t sit down in front of the customer and explain a shoe’s features and benefits, no matter how good their website is. As good as Zappos is—and they are phenomenal—and as good as some of the big box dealers are, they still can’t replace that intimate relationship that an independent can have with a customer. That’s never going to go away.

What about those complaints that consumers will come into a store for that service and then buy it online for less.

I’m sure that happens. But for most people, when they get great service and the price is relatively close and they have the benefit of a 60-day return policy that allows them to come back for an exchange no questions asked, they will make the purchase. And that scenario just doesn’t happen with online retailers. So I believe independent retailers can compete. In fact, Burch’s had its best year yet in 2010. (The store opened during the 1930s.)

That’s a surprise considering the overall economic climate. Why?

Because we have really good people and they are very creative. Today, you have to be creative, and you have to take a certain amount of chances, but you also have the basics in stock. You have to make the retail experience so much better than it has been in the past. That means the presentation, display and product all have to wrap together with the advertising and service so that when a customer walks into your store they believe they got something way beyond their expectations. We work at that every day at Burch’s. When they walk into our store we want people to say, “Wow.” And when they leave they say, “Wow, that was a phenomenal experience.”

Might consumers be in need of that “wow” factor more than they even realize these days? Do they even know what they may be missing anymore?

It’s almost like you expect bad service nowadays. My sons are a classic example: They no longer expect service, but when they do happen to come across good service—be it a shoe store or checking into a hotel—they are blown away. I think that’s what is missing in a lot of retail today.

Is there a new normal with respect to consumers’ shopping behavior?

I’m not sure it’s a new normal, but people are surely simplifying their lifestyles by buying less and buying better as well as working on their financial health more than before. I think it’s all good, and hopefully these will be long-term habits.

Is the recession over?

Oh no. I think we have a ways to go in that regard. In Oregon, specifically, the job outlook continues to be very bleak. Having said that, business is certainly better than it had been a year or two ago. I believe the good retailers—the ones that have been able to survive—will thrive. But it varies from tier to tier. For example, the farm, agricultural and industrial retailers don’t have the big peaks and valleys like a lot of fashion-oriented stores. They sort of just rock along and have small increases. Their primary customer has no choice but to, say, milk their cows 365 days a year. If their boots wear out, then they have to go buy a new pair. The outdoor specialty guys are much the same way: They just kind of rock along because most of their customers are still going to go outdoors regardless of the economy.

Where do you see Bogs in three years?

I don’t know as far as actual numbers, but since we currently have so little market share in any of our markets, if we continue to make innovative shoes that make people feel better in uncomfortable environments, then our future is bright. We have also only just started selling our brand in Europe and that should add to our overall growth.

What do you love most about your job?

I get to make and sell shoes every day. That’s a perfect world.

And you get to work with your entire family…

Yes. It’s been a nice perk, and we all work really well together, although, we don’t see each other too often with my wife and myself spending a lot of time in China and my sons on the road selling. But you can’t sell anything sitting in Eugene, OR.

That pretty much confirms it: You are a bona fide Shoe Dog.

Yes. I think it’s a great thing to be. I enjoy sitting down with fellow Shoe Dogs. I view it as a positive connotation. —Greg Dutter

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