NXTI was in the press over the weekend. Godd write up from a newspaper.
For Wabash clothing firm, there are no strings attached
By Jenni Glenn
The Journal Gazette
A clothing company with local roots is sizing up opportunities for continued growth in the apparel industry.
Next Inc., which embellishes clothes with college and automobile logos at its Wabash plant, is expanding its range of products to capture more business from major retailers, including Kohl’s, J.C. Penney and Sears. The company acquired a children’s clothing line in 2003 that allows Next to offer stores a broader range of sizes. And Next continues to add to its roster of about 200 licenses so it can expand its product offerings. The company received a license in March to manufacture Notre Dame clothing.
Next strives for diversity in its clothing designs, the stores it supplies and the way its apparel reaches the customers, said William B. Hensley III, chief executive officer and president of the company. Spreading its business over many niches in the apparel industry allows Next to take advantage of trends and weather any industry downturns, he said.
The strategy is paying off, Hensley said. The company had $21.5 million in sales last year, up from $12.4 million two years earlier.
After the growth in sales, Next bought a warehouse in Wabash this year and is refurbishing it as part of a $500,000 project, Hensley said. The bulk of the company’s workforce – 120 to 150 employees, depending on the season – work at the Wabash plant and distribution center, said Hensley, who also works from that location. Next employs five at its Chattanooga, Tenn., headquarters.
Employees at the Wabash plant screen print and embroider plain garments shipped in from manufacturers in Asia and the Caribbean, Hensley said. The designs include college, wildlife, motor sports logos and entertainment themes such as the Three Stooges or James Dean.
The variety allows Next to offer a range of products to retail stores, Hensley said. The company produces apparel in all sizes from 12 months for infants to XXXL for adults. Next can offer a store such as Kohl’s the same shade of red in clothing from infant to adult sizes, Hensley said.
“We go into a retailer, and we become a total-solution provider with the retail opportunities, from the infants’ department to the men’s department and all the departments I mentioned in between,” he said.
Children’s clothing is a new field for Next, which manufactured onlyadult clothing until 2003. The company acquired Noblesville-based Lil’ Fan Inc., a children’s clothing company, for $100,000 and 180,000 Next shares in August 2003 so it could expand into the growing youth clothing market, said Jason Assad, Next’s director of investor relations. The acquisition allowed Next to sell clothing to multiple departments at stores such as Kohl’s and Sears.
Youth and women’s apparel are among the fastest growing segments of the $2.8 billion college apparel and merchandise industry, said Tammy Purves, director of corporate communications for the Collegiate Licensing Co. in Atlanta. These areas are growing because most apparel companies did not focus on them in the past, she said.
The Collegiate Licensing Co. helps colleges negotiate apparel licensing deals with clothing companies, including Next. The company ranked 18th in sales between July 1, 2004, and March 31, 2005, according to the Collegiate Licensing Co.’s ranking of apparel companies. The position shows Next is a major player in the industry, Purves said.
“To be on our top 25 list, they are a pretty substantial manufacturer,” she said. Nike USA Inc. has topped the list since 1999.
College apparel is the core of Next’s business. Even though colleges are becoming more selective about which companies they allow to produce their apparel, Next is receiving new licenses, such as the Notre Dame one.
Notre Dame has licensed about 250 companies to produce university merchandise, said Michael S. Low, the university’s director of licensing. The university added Next to the list even though it plans to reduce the number of licensed companies in the next two years.
“Because we have so many licensees in those (apparel) categories, a company has to work quite a bit harder to show us that they have something unique to offer us,” Low said.
Licensing Next was an appealing idea because the company sells its merchandise to a wide range of retail stores, from Kmart to Cracker Barrel, Low said. Notre Dame wants university clothing to be widely available to alumni and fans, and Next’s distribution network fit in with that goal, he said.
“They had excellent distribution, in many cases distribution we felt we were underrepresented in,” Low said.
Next’s network is wider than traditional retail stores. The company sells its automobile apparel in car dealerships and markets its college apparel at campus bookstores, Hensley said. Consumers are shifting away from traditional stores and are spending money on event merchandise, he said.
“You have to look at every channel you can to develop and take advantage of the consumer dollars being spent, and that’s just not traditional retail today,” he said.
Next also has a way to capture a share of online spending. The company sells its merchandise directly to consumers through Web sites such as www.campustraditionsusa.com and www.americanbiker.net. Employees in Wabash start embellishing the clothing when the consumer places an online order, Hensley said.
In the past six months, Next added more novelty licenses to its stable, including this year’s 50th anniversary of James Dean’s death and the Three Stooges. The company looks for licenses that have long-term appeal to multiple generations of consumers, Hensley said.
“We don’t take a lot of risk with our license portfolio,” he said. “We try to work with things that have long product lifecycles, that aren’t trendy. They tend to go with long-term product cycles that don’t have a lot of risk involved.”
College apparel is a growing field because it also has stable, cross-generation appeal, Hensley said.
College sports continue to generate publicity that boosts the industry, he said.
College merchandise sales totaled $2.8 billion last year, a 10 percent increase from 2003, said Purves of the Collegiate Licensing Co. Non-apparel segments of the market are growing fastest, but sales also are increasing on the apparel side, she said. Companies can capitalize on the strong fan base colleges and universities have, she said.
“We do see there is some opportunity for growth out there,” she said.
Next still has opportunities to sell more products to existing and new customers, Hensley said. Retail stores buy apparel separately for children’s, men’s and women’s departments, so Next is working to make sure its current customers buy clothing for all of their departments from Next, he said.
“We think until we sell every department within every account and take advantage, our job is not done,” he said.
