Paddling Harder At L.L. Bean

Can the catalog outfitter catch up with the times?

Terri Wise grew up with the catalog from L.L. Bean Inc. as a staple in her house. Her parents regularly called Bean to order clothes and Christmas gifts. But these days, the only tie the 24-year-old Wise has to the Maine outfitter are some wool socks and flannel pajamas. She doesn't even bother to get the catalog. "Their stuff is just so traditional," she says. "It doesn't seem very Nineties."

That's an understatement. In everything from management to fashion, privately held Bean in Freeport, Me., is a company firmly stuck in the past. Although Bean racked up double-digit revenue growth as it rode trends such as the outdoor-sports craze of the '70s and the preppy look of the '80s, it failed to follow suit in the '90s. Today, the average customer is pushing 50. The styling of its khakis, parkas, and sweaters has changed little, and the Bean Boot, the company's very first product, is still one of its best-sellers. "Bean fell into the trap of becoming enamored with its own status while the rest of the world moved forward," says Kurt Barnard, president of Barnard's Retail Trend Report.

Indeed, even though strong international sales early in the decade helped mask the problems at home, Bean's numbers in recent years have been little to write home about. Despite having what many see as the strongest brand franchise in the catalog industry, sales are foundering. After dropping in 1996, revenues grew a scant 2.9%, to $1.07 billion, in 1997. Analysts say the company, which doesn't divulge its earnings, will see a similar sales performance in 1998.

WIDE GAP. The slowdown appears to have shaken the outfitter out of its hibernation. Bean President Leon A. Gorman, the graNdson of L.L. himself, vows he'll "dramatically change L.L. Bean as we know it." Initiatives ranging from opening stores to updating its clothing to branching into a women's fashion catalog are planned. His goal: add $300 million in sales by 2001 and triple pretax profits. Outsiders, however, wonder if Bean's efforts will be too little, too late. "It used to be that Bean was the only player on the block," says Glenda Shasho Jones, president of Shasho Jones Direct, a full-service catalog agency. Now, "they're playing catch-up to their competitors."

And it's a wide gap to close. For years, Bean, led by Gorman since 1967, has prided itself on shunning the practices of an increasingly cutthroat mail-order industry. It was the last major catalog to start charging for shipping--holding out until 1994. At headquarters, company lore revolves not around financial success or marketing coups but around tales such as the Christmas of 1996, when an incoming shipment of toboggans arrived late at the Maine warehouse. In its anything-for-the-customer tradition, Bean ordered a Federal Express Corp. 747 jet up to Freeport, filled it top-to-bottom with toboggans, and flew around the countrymaking drop-offs at FedEx hubs. "It was a fairly hefty expense," says Lou Zambello, Bean's senior vice-president, "but we wanted the kids to have the sleds for Christmas."

But while Gorman stayed true to his principles, the competition moved in. The overall number of catalogs mailed out each year in the U.S. has jumped from 7.8 billion in 1982 to 13.9 billion currently. "Where the arrival of the Bean catalog used to be a big event," sighs Gorman, it is now "just one of a dozen or so" in the mailbox. More competition came from traditional retailers such as Gap Inc. and Recreational Equipment Inc. (REI), which have copied and updated the casual outdoorsy look once owned by Bean.

Yet even as his core business eroded, Gorman hesitated in expanding the brand. For example, he debated for years with his managers the merits of moving into children's clothing, while rivals such as GapKids sewed up the market. In retail outlets, competitors such as REI grew rapidly, while Gorman held Bean's presence to its one giant store in Freeport--because he felt catalog sales were strong enough. "We discussed the growth we might achieve by opening up more stores," says one former Bean executive. Certainly, such a move would by no means have been risk-free: Mail-order companies such as J. Crew Inc. have demonstrated that the leap from catalogs to stores is not always smooth. Still, industry watchers say he goofed. "He was a fool to pass this up," says catalog consultant William Dean.

SHAKE-UP. Nowadays, Gorman is trying to make up for lost time. Plans are to add one 100,000-square-foot superstore in the mid-Atlantic region--exact location yet unnamed--plus several smaller satellite shops nearby. If those are successful, a national rollout is on the drawing boards. Freeport Studio, a new casual-clothing catalog aimed at boomer women--offering dresses, skirts, and jewelry--will be launched next year, as will a full fashion update of Bean's regular line. And he'll double marketing spending, to $26 million, next year to make sure shoppers know that changes are taking place.

Changes are also under way back at headquarters. Gorman is breaking up his hierarchical management in favor of business units responsible for such areas as sporting goods. Most important, he's telling managers that "the `P' word [profit] is not a bad word." Concedes Gorman: "Profit has not been a cultural value."

Will Gorman's fixes be enough? Despite legitimate strengths--its service and state-of-the-art warehouse continue to set the industry standard--most of Gorman's moves will simply allow Bean to catch up to rivals rather than surpass them. And skeptics warn that Bean will have a tough time coming up with fashion upgrades bold enough to distinguish itself from such competitors as J. Crew and Lands' End Inc. Wendy Liebmann, president of consultants WSL Marketing, warns that there are now "110 people offering khakis and oxford-cloth shirts." After years of hesitation, Gorman is fighting a rear-guard action to reclaim Bean's relevance. This time, he won't have decades to figure it out.