Angling for Profits
from
Summer 2001
by Sarah Max
For nearly 150 years, Orvis has successfully sold customers on the
joys of the outdoor life. The result: a bountiful bottom line—and
hearty perks for the directors.
The C.F. Orvis Corp., as it was then called, was founded in 1856 when 25-year-old Charles Orvis began selling his fly-fishing rods and tackle to well-to-do New Yorkers who traveled to Manchester, Vermont to breathe Green Mountain air and cast their flies into the Battenkill River. Customers returned to the city singing the praises of the out-of-the-way outfitter and began writing to him with new orders. They told their friends to do the same. More than 30 years before anyone would hear of Sears Roebuck, Charles Orvis had put his stamp on the mail-order business.
Today, New Yorkers need go only as far as Fifth Avenue to pick up their neoprene waders, snake-proof boots, and Barbour jackets. Orvis now sells its goods through 22 wholly owned stores and 700 independent dealers. It also mails 40 million catalogs a year and, of course, is on the Internet. Sales are expected to reach $300 million this year, up from 2000’s $270 million.
Although Orvis has been bought and sold twice in the past 145 years, the biggest changes have come at the hands of its current owners, accomplished outdoorsman Leigh Perkins, his wife, Romi, both septuagenarians, and Leigh’s four adult children, including the company’s current CEO, Leigh “Perk” Perkins Jr., who is in his 40s. In addition to changing the name to the Orvis Company in 1965 and expanding Orvis’s reach, the family has broadened the product line to include everything from technical fishing equipment to home furnishings—all the necessary accoutrements for living a “distinctive country” lifestyle, as the catalogs put it.
Despite their success, the family has little interest in taking the company public, though Perk has broached the subject at family meetings. “I have told them that the private aspect of the company is not sacred and that going public is an option.” But, he says, “I would not recommend it right now, since our shares are growing anyway.” Perk adds that he probably feels more pressure to perform with his siblings as major stockholders. (Perk’s younger brother, David, oversees Orvis’s retail and travel operations. Their sister Molly owns an independent Orvis dealership and a fly-fishing school in Cleveland, which makes her both a shareholder and a customer. The youngest sibling, Melissa, is not directly involved in the company’s operations.) Says Perk: “To me, the only reason to go public would be for reasons of wealth, and fortunately all of our shareholders are pretty happy with their lot in life.”
Though not all private companies have a board of directors, the elder Perkins established one to, in his words, “curb my enthusiasms.” Many of the original board members still advise the company, including Don Kendall, retired CEO of PepsiCo.; Bob Mitchell, former vice chairman of Celanese Corp. (now owned by Hoechst); Al Whitehouse, formerly CEO of Standard Oil of Ohio; and John Drinko, a successful Cleveland entrepreneur. Noteworthy newcomers to the board include Joe Williams, retired chairman of the Williams Companies, a $10 billion-a-year oil and communi-cations conglomerate, and Michael Rutgers, the executive chairman and former CEO of data-storage giant EMC. As the box on page 82 shows, Orvis directors who love the great outdoors have good reasons to remain on the board.
Illustrious as Orvis’s history has been, the company was all but wiped out by the crash of 1929 and the Great Depression that followed. When a Vermonter named Dudley “Duckie” Corkran bought Orvis in 1939, the company employed just two people. Had it not been for a contract to make bamboo ski poles for the U.S. Army to use in Alaska, Orvis might have been a casualty of World War II. As it was, Orvis not only made it through but was able to capitalize on the renaissance in outdoor recreation that occurred in the 1940s. By 1965 annual sales hit $500,000, though the company employed less than a dozen people.
That year, shortly before Corkran’s 70th birthday, Orvis changed hands a second time when Perkins Sr., then 37, bought the company. He inherited his love of the outdoors from his mother, a Georgia socialite who was more interested in shooting quail, tracking alligators, and hooking Atlantic salmon than filling her dance card. Perkins was a talented salesman, who had learned the art of the deal by enrolling in a Dale Carnegie night class and working his way up the ladder at Harris Calorific, a Cleveland manufacturer of gas welding and cutting equipment. Perkins bagged Orvis for $400,000, half of which came from the sale of Harris stock, the rest from a loan.
He worked hard to preserve the company’s culture while undoing what he describes as the it-can’t-be-done “Vermont mentality” of his early employees. After preaching that the customer is always right, Perkins gave his customer service representatives autonomy to do whatever it took to win back a dissatisfied customer—no matter what. Among other things, they replaced graphite rods that had been slammed in car doors, one that had broken while being used to kill a rattlesnake, and another that was mangled by a grizzly bear. In another nod to the customer, every year before Christmas Perkins asked his executives to join him in working the phones. Long before marketers picked up on the power of the brand, Perkins seemed to understand that he wasn’t just selling sporting goods, he was selling the entire experience. To stay in touch with customers between catalogs and phone calls, Perkins began publishing a bimonthly tabloid, Orvis News, filled with travel tales and fishing advice.
Shortly after Perkins took the helm, he recognized two trends that were not in the company’s favor. First, fewer fathers (or mothers for that matter) were teaching their children to fly-fish and bird hunt. Second, new anglers were more likely to turn to big-reel fishing, which does not require the same kind of casting technique as fly-fishing. The solution: Perkins opened Orvis’s first fly-fishing school in 1966. Although conventional fishing is still more popular—there are 18 million reel anglers versus seven million fly anglers—Orvis persists in its mission to keep fly-fishing from becoming a lost art. Today, more than 2,500 people enroll in Orvis’s nine fishing and hunting schools each year.
One of Perkins’ most significant accomplishments since buying the company has been to more than double catalog orders, which accounted for only 30% of sales when he took over. Perkins hired a retired advertising executive to liven up the catalog copy and dream up a way to leverage the value of the mailing list. Perkins paid visits to his counterparts at L.L. Bean, Eddie Bauer, and Abercrombie & Fitch and asked if they might want to swap customer information. They laughed at the idea initially, but Perkins persisted and, within a few years, they were all trading and renting lists. When Perkins retired in 1992 (he is still an active board member), annual sales were near $100 million—70% of which were generated by the catalog.
Perkins handed the reins to Perk, who had grown up with his father’s passion for hunting and fishing. After Perk graduated from Williams College in the late 1970s, he considered going into environmental law instead of the family business. After taking time off to travel around the world, however, he returned to Vermont with a new interest in Orvis.
In 1977 Perk began his retail career as editor of the Orvis News. He moved to San Francisco to open a new Orvis store, then transferred to London to run Orvis U.K. before returning to Vermont to oversee the mail-order division and eventually succeed his father as CEO. Despite his initial reluctance to join the family business, Perk has managed to triple sales since taking over less than a decade ago.
He also saw to it that the company’s new corporate headquarters had plenty of windows to capture the sweeping Vermont views and enough meeting space to accommodate his more communicative management style. Joe Cassidy, vice president of direct marketing and an Orvis employee for 22 years, points to the differences between father and son. “Leigh is the classic entrepreneur, the idea man. Perk is much more management oriented. He has pushed a fair amount of decision making down a level or two.” Perk agrees. “There was a culture shift when I took over,” he says. “My dad preferred to discuss issues one-on-one, but the company was smaller then and the need for communi-cation was not as great. We have a lot more meetings under my management.”
Under Perk, growth has come mainly from opening new retail outlets—Orvis is adding five a year—and increasing sales through 700 independent retail dealers. “The number of dealers is growing, and we haven’t even begun to sell apparel through them,” says Perk. Though most sales are generated in the United States, Orvis is expanding its dealer relationships in Europe and South America as well.
Mail order still represents more than half of all Orvis sales, but the Internet is providing new business opportunities. According to Perk, 25% of Internet sales come from first-time Orvis buyers. The Internet also allows Orvis to educate customers and explain its products in great detail for far less than it would cost to print and mail the information in its catalogs. A fly, for example, needs a lengthy explanation, but sells for only $2. In addition to Orvis’s own content, the site encourages customers to review products and share fishing tips. Although the Orvis News is still published on paper, more than 300,000 customers subscribe to the e-mail edition.
As Orvis has grown over the years and expanded its product line, a new challenge has arisen: how to define itself to the customer. The Orvis name still carries cachet among anglers and wing shooters. But while fishing and hunting equipment account for a respectable percentage of Orvis sales, the majority of revenue now comes from sales of men’s and women’s clothing, luggage, home furnishings, and gift items, which are sold in seven separate catalogs. So even as some customers continue to associate Orvis with sporting goods, others associate the name with casual clothing and such humbler goods as dog beds and wildlife prints. “The challenge of the Orvis brand has always been in figuring out how we can thread commonality between a dry fly and women’s nightwear,” says Perk.
Perk is now taking a closer look at the Orvis brand. He recently hired Toth Brand Imaging in Concord, Massachusetts—a firm that helped shape Tommy Hilfiger and J. Crew—to better define Orvis’s core customer and, if necessary, tweak the company’s image.
Nearly every item sold by Orvis is designed by staff product developers, who get much of their inspiration by browsing through flea markets or flipping through old photographs. “Some ideas are literally based on items that come out of Leigh Perkins’ mother’s closet,” says Ryan Shadrin, director of communications. All fishing rods are designed and built in Vermont, though graphite, rather than bamboo, is now the material of choice.
“An important part of our style and the brand is that my father, my brother, and I are very in touch with all aspects of the company because we live and breathe the lifestyle we sell,” says Perk. Indeed, according to Perk, the focus of annual shareholder meetings, or rather, family picnics, is not just on profits; it is also on preserving the environment. In addition to donating 5% of pretax profits to various conservation projects, the family uses Orvis’s catalogs to educate customers about conservation issues as well as to solicit donations for such organizations as Trout Unlimited, Ducks Unlimited, the Ruffed Grouse Society, the Atlantic Salmon Federation, and the Nature Conservancy. They do this because they are nature lovers, to be sure. And hey, it’s not bad for business, either.
