Apparel Company Tests Waters. Will It Sail?
BY Mike Hofman
An overview of a company that hopes to build a brand of outdoor apparel made from a special fabric.
COMPANY: The AtlanticRancher Co.
HEADQUARTERS: Marblehead, Mass.
TYPE OF BUSINESS: Outdoor-apparel company
FOUNDER: Engle Saez
CAPITAL: $1 million, entirely from angels
KEY COMPETITION: Willis & Geiger catalog from Lands' End
COMPETITIVE STRATEGIES: Market proprietary DryHandle fabric; build a brand
In the 1960s, Engle Saez tended faithfully to the rickety small boat he rowed in the waters near Beach Haven, N.J., where his family lived every summer. The boat, a Barnegat Bay Sneak Box, had a protective tarp made from DryHandle--a fabric that was incredibly durable, water-resistant, and difficult to stain. Thirty-odd years later Saez founded the AtlanticRancher Co., determined to build a high-end brand of apparel from that same fabric.
DryHandle had been developed during World War I to prevent the British army's tents from rotting. In 1984, while Saez was director of field marketing at Timberland, he persuaded the top brass there to try out DryHandle, but the product was dropped after one season.
"DryHandle is a tough fabric to work with," Saez, 42, admits. "It had a propensity to have variations in color within the same roll. But I'm fascinated by it, and I've continued to use the product at every company I've been with since Timberland."
Convinced that there was great growth potential in a high-end line of clothing made chiefly of DryHandle and sold primarily through catalogs, Saez opened AtlanticRancher's offices in March 1996 in Marblehead, Mass., a seaside village located 17 miles north of Boston. He used his 10-year relationship with British Millerain, the British manufacturer of DryHandle, to acquire exclusive worldwide rights to produce clothing made from it.
AtlanticRancher's first 24-page catalog, mailed in November 1996, featured 56 items. The size of the average order exceeded projections by 50%, says Saez. Sales have been brisk across the entire line, with 80% of the orders spread over 60% of the merchandise. More than half of the apparel line features DryHandle, including best-sellers such as a $298 parka, a $340 trench coat, and a $128 sweater. One surprise: many of the small sizes sold out, owing to unexpected demand from women. AtlanticRancher's 1997 catalogs (ranging in length from 36 to 48 pages) feature twice as many products and also include women's apparel. "It's one of the more exciting new catalogs I've seen," says industry veteran Bruce Willard, founder of the Territory Ahead, a $40-million catalog company based in California.
One challenge for AtlanticRancher, whose 1996 sales hit $325,000, will be reducing its advertising ratio (the cost of making the catalog divided by net sales) quickly, according to Craig Battle, managing director at Tucker Capital Corp., a boutique investment bank that specializes in catalogs. "I'm attracted to the fact that they've stumbled onto a niche that's high-end," says Battle. "You have more of a margin to play with."
The company's first catalog cost $250,000, putting its advertising ratio well above 50%. A level near 27% is more desirable. With projected 1997 revenues of $1.8 million and plans to spend $625,000 on catalogs, AtlanticRancher still has a way to go. It will help if sales per catalog jump as expected from $1.55 per book to $2.20 per book, which is above the industry standard for apparel.
Saez hopes to build AtlanticRancher into a formidable brand of high-end apparel and to tap into the $46 billion that Americans spend annually on items sold by direct mail. "We plan to establish a very strong brand DNA," says Saez.