The next year sales stayed at the same level but the company earned $6
million in profits. The previous year's disaster had ruptured feelings with
retailers and Mow was more interested in trying to maintain relations than in
pushing sales. He also learned the wisdom of a year of consolidation after a
spurt of rapid growth.
In fiscal 1987 sales shot up to $189 million with strong profits. Sales grew
another 40% the following year. In fiscal 1989 Mow deliberately held down
growth to give the company time to consolidate. Also, he felt it would be
unwise to increase sales on the heels of the stock market crash.
Having caught its breath, Bugle Boy exploded again in fiscal 1990, growing by
70% to $480 million with healthy profits, the precise amount of which Mow
refuses to disclose. He is keeping the current year's growth at a more modest
20% to build up demand.
"That's where we differ from public companies," Mow says. "I don't have to
show big growth every year just to please shareholders." Mow believes this freedom spares BBI the boom-bust cycles that regularly debilitate many
large public corporations, usually leading to management overhauls every
few years. Mow doesn't yet see a limit to BBI's growth, but neither does he
see any more years of 70% growth. In the future, he expects steady growth
at 20-30% per year.
Bugle Boy's nemesis and Mow's current obsession is Levi-Strauss which
enjoys worldwide sales of $3.6 billion. Bugle Boy's preeminence in the young
men's (50% to Levi's 5%) and boy's (45%) segments of the U.S. market doesn't
offset the commanding 65% to 3% leading Levis still enjoys in the
all-important men's segment (which is four times larger than the young
men's). Internationally, Mow admits that Levis is still king. Bugle Boy
doesn't yet have even licensees in Europe. In Japan it maintains a small
office in Tokyo's Shibuya district and has licensed Itohman, a giant grading
company and BBI's prime creditor, to sell Bugle Boy jeans in 500 stores
within two years. Levis has a big wholesale operation in Japan but no stores
of its own.
The lopsided contest exhilarates BBI's chairman. Time, Mow believes, is on
his side. He recites the reasons. Superior overseas sourcing lets BBI provide
better value than Levis at every price point. BBI's paperless inventory and
sales reporting system lets it operate more efficiently and quickly in an
industry that now moves on a weekly cycle. A lag in getting advance
information can doom an entire line. The current recession is a source of
comfort for Mow. The industry shakeout he expects will let BBI emerge with
a bigger market share. "It's going to separate the men from the boys," he
says, barely containing his glee. He fels no qualms about driving competitors
out of business. You suspect Mow dreams of increasing market share until
Levis withers away into oblivion.
A long-term ace in the hole, according to Mow, is the expectation that males
who now buy Bugle Boy boy's and young men's lines will grow into its men's
lines, giving it a built-in growth base. "We'll be doing $2 billion by 2000," he
says nonchalantly. If he meets his $900 million forecast for fiscal 92, $2
billion would seem a surprisingly conservative prediction in light of BBI's
record during the past decade.
Mow's patience is seemingly limitless. He is literally cultivating his future
customers with his boy's and young men's lines. The crop will take a decade
or two or three to mature. He admires the Japanese ability to wait 25 or 50
years for a franchise to turn profitable. Of the $500 million paid by the
Watanabe family for prestigious Riviera Country Club of which Mow is a
member, he says, "Who know? After the current members die off they may
charge a million dollars for a membership and have 3,000 members like they
do in the clubs in Japan. That's three billion dollars!"
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