Steamboat Pilot & Today

SmartWool executives are experiencing warm, fuzzy feelings, and it isn't because of the wool their wearing.

The company posted a 25 percent increase in sales in 2004 and recently signed a $30 million contract its executives say is a first in the wool industry.

Steamboat springs-based SmartWool announced this month it had signed a deal with the New Zealand merino company that approaches $30 million during seven years.

Under the contract, Smart--Wool will purchase about 400 metric tons of merino wool annually. Much of it will be used to make its well-know performance outdoor socks.

The new contract supercedes previous multiyear contracts between the parties. Company spokesman Gardner Flanagan said the contract provides SmartWool with assurances that it will have a steady supply of the premium wool it needs for its products, but also ensure minimum prices that will help wool producers plan their flocks and keep their land in traditional uses.

"We're taking a leadership position in wool production worldwide," Flanagan said. "Nobody has done this before. Almost all wool is treated as a commodity. This is an example of the manufacturer supporting sustainability. The sustainability is really important for us, and through this contract, it keeps New Zealand sheep stations in a natural state."

SmartWool manufactures a variety of wool outdoor wear, but its socks remain its biggest seller, Flanagan said.

"Our dominant market share in the on-snow and outdoor industries helped us realize growth roughly in excess of 25 percent in 2004," Flanagan said. "The growth is in our core categories (socks) right now."

SmartWool is working to expand into weekend casual socks, Flanagan said. The company sees potential in developing a line of socks that people would wear to a coffee shop on weekends, for example.

SmartWool added 18 new jobs in Steamboat in 2004, bringing the total number of employees here to just fewer than 50. As recently as 2000, the company had about a dozen employees here.

To accommodate the growing number of employees, the company built a mezzanine level in its headquarters in the Steamboat Springs Airport terminal, Flanagan said.

RAF Industries, a Philadel--phia-based holding company, which acquires and nurtures a variety of small to medium-sized manufacturing companies, acquired a controlling interest in SmartWool in January 2003. RAF had been an investor in the company and finally acquired the minority interest of SmartWool founders Peter and Patty Duke of Steamboat Springs.

Flanagan said RAF has been infusing SmartWool with new talent -- people with valuable experience from companies such as Nike, Levi Strauss and the accounting firm Deloitte and Touche.