Case Study Update: Downhill From Here
The Problem Brian Cousins and Stephen Sullivan, who met while working at a Jackson ski shop, founded Cloudveil in 1997. By 2004, they had 20 employees, 130 products, a call center in Denver, and some $5 million in sales. But a long manufacturing and distribution cycle meant that Cloudveil was starved for cash. Selling to a larger apparel business with a global distribution system and deep pockets seemed like a good solution, but the partners worried about losing credibility with their key market of hard-core skiers. Nevertheless, in January 2005, they sold Cloudveil to Sports Brand International, a New York City-based apparel giant that owns the Fila and Ciesse lines. Under the terms of the deal, Cloudveil would continue to sell its own products and would also create a new line of ski apparel called Fila Mountain.
What the Experts Said Robert Bruner, a professor at the University of Virginia and author of Deals From Hell, predicted that SBI would leave Cloudveil alone as long as sales continued to grow at a healthy pace. Mark Martin, division president at Marmot, an apparel company in Breckenridge, Colorado, said that Cloudveil had to expand globally to compete. But he worried about expanding the company while creating a new Fila line.
What's Happened Since "So far, it's working great," Cousins says. Cloudveil's apparel is now sold in 350 U.S. stores, compared with 300 a year ago. Sales in 2005 jumped 45 percent, to about $9 million. Meanwhile, the Fila Mountain line, which is available in Europe, is slated to debut in the U.S. in 2007. On the downside, Cloudveil shut down its Denver call center and laid off four employees. Besides that, things haven't changed much, Cousins says. "We still take the staff skiing some afternoons," he says.
What's Next Cousins expects Cloudveil's sales to double this year, thanks to ramped-up production and overseas expansion. He and Sullivan hope to open a Cloudveil specialty store in late 2007. An expanded product line, including bags and footwear, is also a possibility.