The Corporation: STRATEGIES
DON'T STEP ON MY BLUE SUEDE HUSH PUPPIES
The trendy Pleasure Swell boutique in Los Angeles is in a frenzy, thanks to the latest fashion fetish gripping Hollywood's famous feet--Hush Puppies. If Sharon Stone comes to pick up another pair, she'll have to take a number. "I can't get my waiting list under 100 people," moans 28-year-old owner Joel Fitzpatrick. "Kitsch Americana is in."
Hush Puppies? Those fuzzy, fuddy-duddy suede shoes last in vogue during the Eisenhower Administration? Yep, they're back--this time around, tarted up in shades of green, purple, and pink. And that has made Hush Puppies' conservative parent, Wolverine World Wide Inc., a hot ticket on fashion runways and on Wall Street. With analysts predicting net income will leap 25% this year, to a record $21 million, on sales of $415 million, the stock is trading at nearly double its 52-week low of 131/2 in December. "It's like an angel came down from heaven and blessed this company," says analyst David Jarrett of Gerard Klauer Mattison & Co.
A combination of spruced-up shoe styles, stringent restructuring--and just plain luck--has clearly put Wolverine on cloud nine. The retro craze has finally given Hush Puppies some cachet. This fall, for the first time ever, fashionable department stores such as Macy's and Bloomingdale's will begin stocking the $70 shoes. And Wolverine is adding a third shift at its Rockford, Mich., factory to try to catch up with demand. Even Wolverine Chief Executive Geoffrey B. Bloom's 12-year-old daughter, Jessica, is on a waiting list for a pair of pink puppies. "I promised I'd get her a pair for back to school," Bloom said.
Hush Puppies' sudden fame comes after years of fruitless efforts to reach younger buyers. The company developed generic leather pumps and wing tips, with advertising aimed at baby boomers, while pushing Grandpa's old suede lace-up "Dukes" and slip-on "Earls" to the back of the closet. "We spent $10 million in advertising to try to convince people that we no longer made those old Hush Puppies," Bloom says.
Then Tom Hanks brushed up those old Hush Puppies by wearing a pair in the final, tearjerking scene in Forrest Gump. Next, New York designer John Bartlett featured wildly colored Hush Puppies in his spring runway shows. "You can be good," says Bloom, "but it helps to be lucky."
The change of fortune has left Bloom feeling lucky right down to his size-13 narrows. Bloom and his marketing executives quickly canceled a series of prosaic Hush Puppies ads that were set for the fall. Instead, their advertising agency created hipper ads in a Fourth of July-weekend frenzy. The new ads showcase the colorized Duke--now renamed the "Wayne"--and the Earl on the feet of Gen X models who seem to have wandered in from Calvin Klein ads.
Some of the ads will appear in unusual places for Hush Puppies, such as Sassy, a teen-age-girls' magazine, and Out, a gay magazine. But they're really aimed at department store apparel buyers: Now that the Wayne has its suede toe in the door, Bloom wants the rest of his Hush Puppies shoes--which range from children's sandals to women's moccasins--to follow. Bloom notes that the Classics line, which includes the newly gaudy versions of the old clunkers, accounts for only about 20% of Hush Puppies sales. "The secret is to take this wonderful opportunity to command real estate we've just never been able to get," Bloom says.
BIGGER TREND. Of course, holding that ground won't be easy. The hot shoe this year, Hush Puppies risks being next year's fashion victim. "The world can very easily get bored with them again," warns stock analyst Sheldon Grodsky of Grodsky Associates Inc. Still, the Classics line's success is already spreading: At the Las Vegas shoe show in August, for example, Nordstrom bought Hush Puppies' new sport collection featuring techno-colored suede sneakers.
And even when day-glo Hush Puppies grow cold, Bloom is counting on the bigger trend to casual attire in the workplace to fuel more long-term sales. He has spent years restructuring Wolverine to take better advantage of that trend. When he landed the top job in 1992--he had been COO since 1987--Bloom knew something about reviving desperately unhip fashions. As CEO of Jaymar-Ruby Inc. in the early 1980s, he's credited with putting some snap back into Sansabelt slacks for men. So Bloom quickly began refashioning the shoemaker, which had stumbled through the 1980s as Nike and Reebok sneakers became the leisure footwear of choice. "Dullness permeated the company and they just missed the entire 1980s," says Grodsky.
Bloom focused on three core lines: Hush Puppies, which account for 45% of Wolverine's sales; Wolverine work boots, which bring another 40%; and its Tru-Stitch slippers unit. "We were bleeding to death," he recalls. "I told the board we should get rid of everything that is not comfort, work, or slippers."
Bloom's first move was to sell Brooks athletic shoes, which was losing $5.4 million a year. Next he shed other unprofitable operations; Hush Puppies retail shoe outlets have gone from 176 to 60 since 1990, for example. He also slashed costs by condensing the company's 25 divisions to four. Annual revenues per employee increased by 24% in two years, to $73,000 by 1994.
Bloom also knew Hush Puppies needed help on the fashion front, so he convinced a hot women's designer--Maggie Mercado of R.H. Macy & Co. in New York--to move to bucolic Rockford. Bloom also hired fashion consultant Jeffrey Miller, former men's fashion editor at The New York Times and British GQ. Mercado's fresh styles began catching the eye of influential Nordstrom buyers in 1993, while Miller's connections helped put puppies on the feet of New York's fashion elite in 1994.
The moves paid off handsomely: From less than $5 million in 1992, Wolverine's earnings swelled to $18 million last year. So when John Bartlett came to town in late 1994, Hush Puppies executives were ready to embrace the fashion industry that had once scorned them. The trendy designer convinced them to dye their dogs to match his fall 1995 men's clothing line. The crew in Rockford liked the look so much, they launched a whole line of Hush Puppies in decorator colors. "They're hot with the fashion customer now," says Bartlett. "But they've got a huge country to cover."
That's where Hush Puppies first-ever appearance in fashionable department stores comes in. Analysts expect big earnings gains as Middle America begins finding Hush Puppies at the likes of Dayton Hudson Corp. To keep momentum up, Hush Puppies is also launching a line of casual suede work shoes next fall. "We have not seen the full benefit of the fashion hype," says analyst Alice Ruth of Montgomery Securities.
The hype is still in full stride at L.A.'s Pleasure Swell. Fitzpatrick is designing lime-green corduroy trousers and "biker wallets," chain optional, to go with the shoes he sells. "Hush Puppies are going to be the flavor for at least the next year and a half," he says. Apparently, every dog does have his day.By Keith Naughton in Rockford, Mich.