Tuesday, February 4, 2003
Steamboat Springs The founders of one of Steamboat's biggest success stories have sold their interest in their company, but a top executive said Tuesday SmartWool isn't going anywhere.
Philadelphia-based RAF Industries, which purchased a majority interest in the outdoor wear maker, acquired the remaining minority interest of Peter and Patty Duke in late January.
The deal wasn't announced until this week because SmartWool executives were attending trade shows in Las Vegas and Salt Lake City.
"Peter and Patty have ridden the wave of the American Dream," SmartWool Executive Vice President John "Chip" Coe said. "They were able to start a company and watch it prosper and grow into something significant."
The Dukes were skiing in Utah this week and unavailable for comment. When SmartWool received a Navigator Award as Steamboat's business of the year in October 2002, Patty Duke accepted on behalf of the company.
Asked if the transaction was the result of diverging philosophies among the Dukes and principals at RAF, Coe said sale negotiations were made at the shareholder level and he wasn't privy to them. Coe sits on the board of directors of SmartWool with key players at RAF.
SmartWool is best known for hiking, skiing and running socks made in the United States from Merino wool imported from New Zealand.
However, the company has aggressively expanded its line during the past two years.
The 2003 catalog for dealers includes wool turtlenecks, sweaters, vests, jackets, gloves and more.
RAF acquired a majority interest in the company in 1995, Coe said. The privately held RAF operates as a holding company, which invests in existing companies and lends management expertise.
Its portfolio includes a range of companies, with an emphasis on gift items and industrial products. Some of the companies are in the Philadelphia area, but their locations range from Texas to Minnesota. RAF has no designs on moving SmartWool, Coe said.
"We came here for a reason," Coe said. "People live here for a lifestyle. It's one of the reasons we can attract the people we do."
During the past three years, SmartWool has grown from 12 to 32 employees in Steamboat Springs.
The Dukes have continued to provide vision and strategic input into the company, but SmartWool has been run on a day-to-day basis by the existing management team for a period of years, Coe said.
SmartWool has been able to record annual growth in revenue during the past seven years without additional infusions of capital, and Coe said he plans to be able to continue growing the company on that basis.
"No money came to the company" as a result of the transaction and, "we do not need additional capital to grow," Coe said. "We run our operation really efficiently."
Coe said the company enjoyed "very healthy growth" in the midst of last year's down economy but declined to provide details on the percentage growth rate experienced by the company or its gross revenues.
"We're one of the strongest players in the outdoor industries and we (claim) the dominant market share among socks for the outdoor industry," Coe said. "Each quarter we strengthen our hold. We're well positioned for future growth."
SmartWool is in the first year of a five-year renewable lease with the city of Steamboat Springs for its headquarters in the former commercial airport terminal at Steamboat Springs Airport. The company invested "hundreds of thousands of dollars" in the tenant finish on its new headquarters and won't recover those costs until the seventh year of the lease, Coe said. The lease includes options that could extend it to 14 years.