Ready to reap the rewards of patience

The stars and planets aren't yet aligned

perfectly for Sportif USA, but they're

getting close.

Executives of the Sparks-based company

project sales increases in 2004 and

2005 that will dramatically outpace the 3-

4 percent annual growth rate in the highly

competitive outdoor apparel industry.

That's good news indeed for a company

that posted only its second operational

loss in its history last year after it struggled

with the hefty costs of shuttering a

Mexican plant and the post-Sept. 11 sales


Sales currently run just under $20 million

a year; the company expects 20 percent

growth next year.

Here's how John Kirsch, president of

Sportif USA, sees the next couple of


The outdoor apparel industry grew

like crazy in the late 1990s. Cash-flush

consumers flocked to outdoor fashions

even if their idea of outdoor activity was

nothing more than a stroll from the

house to the SUV.

Attracted by high margins, big outfits

purchased many of the smallish outfits

that supplied the boom in outdoor apparel.

The margins, the big outfits learned,

were unsustainable during a downturn

unless they cheapened their brands. They

cheapened their brands anyway moving

once-prestigious brands, for instance,

into department stores or even discount


The family owners of Sportif USA

four brothers took over the business in

1991 after founder John G. Kirsch. died

in the crash of a light plane didn't succumb

to the temptation of the high-multiple

offers they got for the company.

And now the 36-year-old Sportif is

ready to reap the fruits of its patience.

The outdoor apparel business is dominated

by about 4,000 specialty stores

nationwide, Tom Williamson, Sportif 's

sales manager explained last week.

(Keeping with the family theme,

Williamson is a brother-in-law to the

Kirsch family.)

Owners of those stores, as well as

some of the buyers for chains such as REI

who are among Sportif 's biggest customers,

tend to change slowly. But the

recent erosion of once-prestige brands

leaves them open to a pitch from

Sportif 's independent sales force.

The pitch emphasizes the unrelenting

quality of the Sportif brand. Equally

important, the company gets its foot in

the door by offering high margins to


Those high margins, Kirsch said last

week, are the result of tight cost controls

throughout the company.

The company operates its own apparel

factory in Sri Lanka John's brother Jeff

Kirsch oversees it and its 45-employee

headquarters and distribution operation

in Sparks is far less expensive than facilities

run by competitors in big-city locations.

The 41,000-square-foot facility on

Greg Street includes information technology

systems that Kirsch believes are

among the best in the apparel industry,

and the computer systems easily can be

scaled up to meet the demands of growth.

The systems manage a complex inventory.

Sportif offers some 400 styles of

clothing each year that's just styles,

not colors or sizes.While about 70 percent

of its sales go to small and mediumsized

retailers, Sportif USA also mails

some 3 million catalogs. Direct sales to

consumers amount to 30 percent of its


(A smaller but locally important

part of the business comes from a warehouse

sales operation at the Greg Street

headquarters. Prices, Kirsch said, "start at

wholesale and go down from there." Even

with minimal advertising, the warehouse

store draws a steady trickle of customers.)

A market that combines individual

consumers and small retailers requires

plenty of individualized attention, and the

Sparks headquarters includes a call center

that's particularly busy handling customer

queries during the spring and summer.

Samples of Sportif products hang in the

back of the call center, available for a customer

service worker to take a look herself

at a piece of clothing that's the subject

of a customer's call.

That sort of attention to relationships

with individual customers is an important

value for Sportif, which emphasizes both

its family ownership and the extended

family represented by a workforce that

includes some employees with tenure of

more than two decades.

"People like to do business with people

they like to do business with," Kirsch


Growing faster than its industry

means only one thing Sportif USA

will be grabbing market share but

Kirsch said the company believes it can

do so without falling into the brandcheapening

traps that befell some competitors.

A strong new fashion design team at

Sportif USA a team that walked out

of a competitor and directly into the

Sparks office is beginning to make a

mark in the industry as the group rolls

out its third season of clothing,

Williamson said.

The designs focus on Sportif 's core

market active adults, 35 to 50, who

participate in outdoor sports but aren't

extreme in their activity. About 70 percent

of them,Williamson said, are

women and a fair number of the

women also are buying men's clothing for

the man in their life.

Sportif also expects to gain market

share as it widens its retail reach. Today,

Williamson said, the company sells to

only about 15 percent of the 4,000 outdoors

specialty stores nationwide.

The company got a big boost this

autumn when Galyan's, a chain with 26

stores in 14 states, took on the Sportif

line of sportswear. Galyan's added Sportif

in about half its stores this fall and plans

to carry Sportif in all its stores by spring.

The sales growth that Sportif USA

executives expect in the next couple of

years also may push the company into

expanded facilities.

The company holds an option to nearly

double its distribution and headquarters

space in Sparks.

Beyond that, Kirsch said, the company

toys with the idea of opening an East

Coast distribution center to reduce shipping

costs to its customers.

Although more of its sales come from

the West Coast each year, the East still

accounts for about 50 percent of Sportif 's

business. In part,Williamson said, this

may reflect the company's roots as a private-

label supplier to firms such as L.L.

Bean, work that gave Sportif a good feel

for East Coast buyers.


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