California Apparel News

In the wake of America’s corporate ethics meltdown, one outdoor apparel company tucked away in the coastal town of Ventura, Calif., could serve as the model for the new business enterprise.

Known for its bowel-deep corporate culture, 30-year-old Patagonia Inc. marches to the beat of another drummer, and what it hears is nature calling, not stockholders. Over the years, the privately held company has committed itself to fostering a better environment—even donating 1 percent of its sales revenues to earth-friendly causes— and that steadfast goal won’t budge, based on the philosophy of founder Yvon Chouinard. However, it can’t completely ignore the goliaths of the outdoor world. Like others in the industry, Patagonia has faced a tough couple of years due to warm winter months and general consumer malaise. Sales for the company’s wholesale, retail, catalog and Internet divisions are tracking flat compared to last year’s $200 million.

“We’ve had 10 years of growth in the industry and it’s flattened off—the gravy isn’t there,” said Rich Hill, Patagonia’s vice president of production development.

While some things won’t change at Patagonia, which sells mountaineering, skiing, trail-running, surfing and fishing apparel as well as sportswear for men, women and children along with luggage packs, the company does plan to embrace a few forward- thinking initiatives.

Top of mind for the company, which employs 1,000 people worldwide, including 300 people in Ventura and 150 at a warehouse in Reno, Nev., is creating better fabrics for its products, such as more resourceful synthetics. The company has linked up with environmental visionary Bill McDonough—who’s working with industry leaders Ford, Nike and DuPont—to pioneer new ways to manufacture and retail its products. McDonough has already made an impact. The company is developing clothing with antimony- free polyester, which doesn’t contain the toxic heavy metal known to cause cancer.

Another part of its crusade involves building more environmentally friendly retail structures. Currently, Patagonia’s 32 stores worldwide result from transforming neglected buildings in redeveloping urban neighborhoods, such as the 3,500-square-foot store in Pasadena, Calif., slated to open later this fall and a store in Chicago planned to open by early 2003. Now that gentrification has swept the nation, those locales are harder to find, prompting the company to build from the ground up. Patagonia is exploring the use of alternative materials proposed by McDonough—including strawbale and adobe for better insulation— for its new facades and is working with cities to pass muster with codes that haven’t been written for such “green” construction.

Patagonia also tries to practice what it preaches in its manufacturing, which takes place both domestically and overseas in 52 factories spread over 17 countries. The company took a hard look at itself in the early 1990s and devised ways that its high-performance gear would prove less taxing to the earth.

In 1993, it introduced fleece shirts made of recycled plastic bottles and three years later, the company made a bold statement by using only organic cotton. Its prices—already higher than the industry average—went up 20 to 30 percent, but the company hasn’t had to look back.

Still, the question of durability is first and its pledge to organic products is second in the company’s goal for quality clothing. That’s why fabrics must endure the rigors of testing for color fastness, water resistance, strength and porosity.

“Is it going to last 20 years or two years—that’s the question of whether we go organic or not on a product,” Hill said.

Even with competition growing daily—from discounters to North Face Inc. and Columbia Sportswear to such designers as Ralph Lauren, whose Polo Sport RLX caters to the sporty chic crowd— Patagonia doesn’t plan to produce a lower-cost product. Hill is betting on the loyalty of his customers to see him through good times and bad.

“[The competition doesn’t] have the relationship with the customer like we do and customers can smell a poseur,” he said.

Industry watchers agree that Patagonia has forged a strong brand identity that isn’t easily vanquished.

“They recognize who the boss is—culture—and that’s why they’re surviving the assault of the other brands, because the real territory isn’t being challenged,” said retail consultant Carrie Williams. “A few customers may flake off, but as long as Patagonia stays focused on its culture, the true user will stick to Patagonia.”

That culture remains firmly entrenched at Patagonia.

At corporate headquarters, employees enjoy gourmet health food from the subsidized cafeteria. There’s also a row of buildings devoted to the subsidized childcare used by about 110 families. (The waiting list is 22 children long.)

And, the stereotype is true—workers do wear flip-flops and shorts, they do take extended lunches on the nearby bike trail, and they do leave their surfboards reclining in the stairwell.

“We also have yoga and dance classes—I know, it’s sick,” Hill said.

It’s a lifestyle promulgated by Chouinard, who began his retail enterprise in 1958 forging new and improved pitons for his rock-climbing ventures and launched his first catalog in 1972. But, now that he’s reached 62 years of age, succession planning has become a top-of-mind issue. Michael Crooke, the company’s chief executive officer for the past three years, is writing a dissertation on the subject of succession in family companies for his Ph.D. So far, Chouinard has resisted the temptation of going public or even selling out to rumored companies such as Nike, but “never say never,” according to Hill.

Growth is hopefully a natural byproduct of the business, but it isn’t the ultimate goal. Officials don’t want to make the same mistake they did more than 10 years ago when Patagonia grew too fast and branched out into clothing for the nonsports enthusiast. In 1991, the company had to cut its work force by 20 percent and reduce its line by 30 percent, and return to its core mission.

“We have tons of MBAs who come through here and want to change things, and their ideas may be good, but they don’t mesh with the values of the company,” Hill said.