| BUSINESSWEEK ONLINE : MAY 31, 1999 ISSUE | ||||||||
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| SPECIAL REPORT
Salton Inc.: Putting a Gizmo in Every Kitchen Salton Inc. SFP has mastered the art of making and marketing the kitchen gadgets you never knew you needed. Big sellers include Juiceman, Toastmaster brand, and George Foreman's Lean Mean Fat Reducing Grilling Machine. But don't chuckle: Sales, which have grown an average of 61% a year since 1996, topped $305 million last year. Profits jumped an astounding 178% per year over the same period, to $20 million last year. That puts Salton, which makes a living off products that star in late-night infomercials, at No. 3 on the BUSINESS WEEK Hot Growth list. Mount Prospect-Ill.-based Salton found a devoted following early in its corporate life. Founder Lewis L. Salton, a Polish immigrant, invented the Salton Hotray, an electric tray with feet that quickly became a must-have item in the suburban household of the pre-microwave 1950s and '60s. But even after microwave culture smoked out its star product, Salton marched on. Leon Dreimann, 50, once the head of the company's Australian operation, became CEO in 1987 and has since combined savvy marketing with smart acquisitions and cost-control. ''Dreimann gives me confidence that the company isn't a one-hit wonder,'' says Linda Greenblatt, managing partner at Saddlerock Partners, a New York-based hedge fund, which owns 150,000 shares. ''He's not only hit every number, he's exceeded them.'' He has achieved that, in part, by keeping the company pipeline filled with new gadgetry. Key acquisitions have helped. Over the past six years, Salton has acquired the makers of Breadman, Juiceman, and Toastmaster products. Most new product ideas now come from Salton's manufacturing partners, but a sizable number still springs from the minds of basement inventors. Salton reviews about 50 ideas for new products a week--and chooses an average of two of them for further development. ''We won't say no to anybody,'' Dreimann says. COST-CUTTING. To keep his army of unusual appliances in the black, Dreimann has been especially aggressive in inking low-cost manufacturing deals. His first task as CEO was to ditch the company's European suppliers in favor of Hong Kong and Taiwanese producers. Dreimann credits the cheap, reliable manufacturing for helping to rev up Salton's profit growth. No mere penny-pincher, Dreimann is adept at turning his oddball appliances into hot products. He has a knack, observers say, for matching the right celebrity with an appliance. Boxer George Foreman, whose agent Dreimann met at a trade show, has turned a grill into a $140 million business. Football player Jay Korditch, who swore ''juicing'' fruits and vegetables helped him beat cancer, was the force behind Juiceman, a $50 million staple in the Salton line. Dreimann also oversaw Salton's move into infomercials in 1993. Although only a small portion of its products are sold directly via the half-hour shows, retailers say they help push the products in stores. The more unusual Salton's inventions, the more they need lengthy explanations--something retailers don't have time for, Dreimann says. Still, new products and celeb endorsements are not guarantees of future success. Salton's three-year record of runaway growth is at least partly the gift of poorly run competitors. ''Al Dunlap was one the best things that ever happened to us,'' says Dreimann, referring to the flamboyant executive who was booted from Sunbeam Corp. last year. While Sunbeam, along with competitors such as Windmere-Durable Holdings Inc. and Hamilton Beach/Procter Silex Inc., has struggled with its own problems, Salton soaked up the goodwill of retailers looking for reliable suppliers for both branded and private-label merchandise. Salton did both. ''When everyone else was focused internally, Salton shot out ahead,'' says Mark Grand, head of home fashions at Sears Roebuck & Co. But as rivals fix their businesses, Salton could face stiffer competition. Plus, as the saga of the Salton Hotray shows, the life of a great gadget isn't everlasting. Up next: an electric bagel slicer, the brainchild of a doctor tired of stitching up Sunday-morning hand injuries. Stay tuned for the infomercial. By Andrew Osterland in Chicago _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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Hot Growth Companies TABLE: Hottest of the Hot Friede Goldman Intl.: A Gusher in a Drought bebe stores inc.: This Is No Fashion Victim Mastech Corp.: The Nabobs of Networking Action Performance Cos.: Hot-Rodding His Way to the Top Salton Inc.: Putting a Gizmo in Every Kitchen Maximus Inc.: Welfare Privatizer Where Are They Now? TABLE: The 1997 Winners...And the Losers TABLE: 1999's 100 Top Hot Growth Companies (.pdf) INTERACT E-Mail to Business Week Online | |||
