The Boyds Collection, Ltd.

350 South Street
McSherrystown, Pennsylvania 17344
U.S.A.
(717) 633-9898
Fax: (717) 633-5511

Public Company
Founded: 1979
Employees: 203
Sales: $197 million (1998)
Stock Exchanges: New York
Ticker Symbol: FOB
NAIC: 42299
Other Miscellaneous Nondurable Goods Wholesalers

The Boyds Collection, Ltd. is a leading American designer, importer, and distributor of handcrafted collectibles. While Boyds is perhaps best known for its lines of plush bears and resin figurines, the company also offers such gift items as glass ornaments and doll accessories. Boyds products are generally recognized for their quality craftsmanship, low prices, and designs characterized as “Folksy with Attitude.” The company offers 430 different plush animals, which range in price from $4 to $95 each. Most Boyds animals are fully jointed with movable arms, legs, and heads, and their outer coverings are fashioned from a variety of fabrics, ranging from acrylic plush to custom-dyed chenille wool. The company’s founder and CEO, Gary Lowenthal, designs each of the plush animals along with a team of artists. Once Lowenthal creates a pattern and prototype, the animals are taken to a seamstress in China, who produces a working model. Each animal is stuffed and embroidered by hand.

Boyds’ three major resin products are marketed under the names Bearstones, Folkstones, and Dollstones, figurine lines that include small resin bears—similar in look to the plush animals—resin angels, faeries, and snowpeople, and resin dolls, frogs, and penguins. Each resin piece, retailing anywhere from $9 to $60 apiece, is inscribed with a hidden bear paw—a symbol of authenticity—while the bottom of each piece is stamped with the name, edition, and piece number. Boyds’ success is attributed in part to its niche distribution; Boyds sells its products through a network of 23,000 independent gift and collectible retailers, premier department stores, selected catalogue retailers, and televised QVC showcases. Moreover, Boyds selectively licenses its images; for example, its popular Bearstones® images are licensed to Sunrise Stationery, a division of Hallmark Cards, for use on paper products. Kohlberg Kravis Roberts (KKR) owns 56 percent of Boyds.

Modest Beginnings in 1979

Boyds Collection, Ltd. originated in 1979 when Blooming-dale managers Gary (G.M.) and Justina (Tina) Lowenthal left their jobs and moved to Boyds, Maryland, to open a small antique shop out of their “semi-restored” Victorian home. However, the Lowenthals found the antique business expensive and confining. They later moved on to other ventures, such as the making of decorative dried wreaths and split oak tables, neither of which proved profitable. The couple next started buying and selling antique reproductions, which were much more affordable than antiques.

By 1982, the Lowenthals began to wholesale some of their own reproductions, including their very successful duck decoys. The decoys were hand-painted and available in many different sizes and styles, including a nine-inch teal and a giant three-foot whistling swan. Word of the beautiful ducks spread quickly, and the Lowenthals began filling orders for three dozen ducks a day. Gary, who designed the ducks, later estimated that they painted about 40,000 ducks altogether.

In 1984, the Lowenthals produced their first resin sculptures of minutely detailed miniature houses. These “Gnomes Homes” were a combination of American architecture and Gary Lowenthal’s imagination. Around the same time, the Lowenthals’ created their first plush teddy bear, which they named Matthew after their newborn son. The merlino-wool teddy bear was a hit, and Boyds was on its way to becoming a leader in the collectibles industry.

The company quickly outgrew its space in the Lowenthal home, and the couple moved operations to an old Sunday school on the same street. When the “Boyds Bears” proved extremely popular, the need for greater space again arose. In 1987, the Boyds company was relocated from Maryland to McSherrystown, Pennsylvania, near Gettysburg, to take advantage of much-needed space and favorable labor markets. The young company also expanded its product line to include hares, moose, and cats in addition to bears.

The 1980s: Carving Out a Niche and Building a Name

Boyds decided against selling its products to major discount stores and toys chains, preferring to distribute them instead to upscale department stores and retailers. This decision helped Boyds develop close relationships with its retailers, as well as to occupy a strong market niche and establish a distinct brand identity. Gary Lowenthal, who referred to himself as “The Head Bean,” believed the company’s close relationship with its retailers helped it identify market trends, predict customer demand, and shorten the lead time for new products.

The company also steered away from mass producing its plush animals, deciding instead to continue making each product by hand. Lowenthal went to great lengths to ensure that the company’s products were meticulously handcrafted, modifying some of his designs 30 times before completion. Each pattern was either cut by hand or machine, depending on its design, and then hand-stuffed. The plush animals’ noses, eyebrows, paw-pads and other features were also embroidered by hand. Before being shipped to retailers, each plush animal was hand-brushed and inspected three times.

Ironically, while collectors were delighted with the high quality of Boyds products, they were dismayed with the low price. Most collectors equated higher prices with enhanced value. However, Lowenthal disagreed, believing that an item’s cost did not necessarily reflect its worth. He refused to inflate the price of an item to make it more collectible. Lowenthal claimed that it was more important to put Boyds bears in the hands of kids than to make them more desirable to collectors. He did manage to sustain collectors’ interest by retiring about 40 percent of the company’s products each year in addition to introducing new lines. New lines had a similar “look” that made them easily recognizable as Boyds.

New Product Lines in the 1990s

In 1992, the immensely popular TJ’s Best Dressed line made its debut. The line featured fully jointed bears, cats, moose, and other animals dressed in handmade stylish clothing, including homespun rompers and hats trimmed with silk flowers. T.J.’s Best Dressed quickly became Boyds most desired collection, with each piece retailing for between $11 and $52.

However, it was The Bearstone Collection®, unveiled in 1993, that made Boyds a major contender in the collectibles market. The Bearstone Collection, a line of small resin teddy bear figurines, became so sought-after that some retailers claimed the line earned twice its projected sales in its first year.

In 1994, Boyds unveiled The Folkstone Collection, a line of nontraditional whimsical figurines with folk art themes. The Folkstones Collection was later divided into three lines: The Folkstones and Wee Folkstones, two lines of “pencil-style” santas, snowpeople, faeries, angels, and animals; Ribbit and Company, a line of distinguished-looking frogs; and The Tuxedo Gang, a line of sophisticated penguins.

Yesterday’s Child... the Dollstone Collection, a series of little girl figurines from different eras with companion dolls or teddy bears, was introduced in 1996. Like the Bearstones and Folkstones, the Dollstones were handmade, handpainted, and handboxed. The limited-edition dolls were 16 inches tall and came with a six-inch plush companion and special accessories.

During the same year, the Loyal Order of Friends of Boyds (LOFB) was formed to further enhance product identity. The club grew quickly and had over 100,000 members in 1996. Members paid an annual fee of $32.50 and received a special product kit that contained a resin figurine, a plush animal, and a resin pin. The items found in the kit were limited editions, not sold in stores. Members also had the opportunity to purchase additional limited editions offered only to members.

In the fall of 1997, Boyds expanded the Dollstone Collection and introduced its first two porcelain dolls. Dissatisfied with the look of the hands and feet on most porcelain dolls, Lowenthal developed a new sculpting technique that allowed for more intricate details. The resultant Boyds porcelain dolls had finely crafted hands, which could hold watering cans and cookie trays, and wear textured socks and shoes with real shoelaces. The dolls were poseable and finely dressed. A series of 12-inch dolls was made available in unlimited editions that sold for $33 to $34.

Boyds also produced a line of accessories for its plush animals and dolls called The Bear Necessities. The line included upholstered chairs and sofas, wooden cabinets, and garden furniture. In 1998, one of Boyds’ porcelain dolls was a runner-up in the NALED (National Association of Limited Edition Dealers) Achievement Awards. Boyds’ dolls later received a DOTY (Doll of the Year) award.

Company Perspectives:

The Boyds Collection Ltd. has received many Awards and a whole lotta Recognition from the Gift Industry and Collectors alike, for which we are not-too-Humbly Grateful! Our wonderful Whimsical and “Slightly Off-Centered” designs speak to the Heart and Soul... a bit of OV Fashioned Appeal in a slick and fast-moving world.

A Buyout in 1998

By 1998, Boyds’ distribution network included over 19,350 independent gift and collectible retailers, which represented over 23,500 individual stores. A specially selected network of resin dealers—about 6,050 accounts—generated most of the sales. Because of the high sales volume of Boyds products, resin dealers were carefully selected. In order to be granted dealership status, resin dealers had to meet an annual performance criteria. In 1998, Boyds had a waiting list of about 5,500 resin dealers, most of whom were already plush dealers who had expressed an interest in selling Boyds resin figurines. Boyds divided its resin dealers into Gold, Silver, and Bronze Paw distinctions, based on the amount of merchandise the dealers ordered annually from the company. Dealers maintaining the highest Paw distinctions enjoyed benefits such as priority delivery of products and special consideration when ordering limited editions.

With Boyds having grown from a small home business to a major competitor in the collectibles market, Gary and Justina Lowenthal found themselves back in the rat race they had tried to escape when they left Bloomingdale’s almost 20 years earlier. Gary Lowenthal, in particular, longed to spend more time developing designs and nurturing the creative side of the business and less time with administrative affairs. In April 1998, Kohlberg Kravis Roberts (KKR), a private investment firm and one of the oldest buyout firms in New York, invested over $600 million in the company.

After the buyout, KKR owned 56 percent of Boyds. Industry experts considered the move a risky one for KKR. Even though Boyds was extremely profitable, the company was young and had few hard assets. Moreover, because its products were theme-oriented and selectively retired, its future depended upon the popularity of its upcoming designs. Boyds was also highly leveraged at the time of the buyout, with a debt equaling 100 percent of its capitalization. In fact, the KKR buyout panicked many collectors who felt Boyds’ success depended upon Gary Lowenthal’s designs. To alleviate their fears, Lowenthal issued a public statement in which he promised to stay involved with the creative aspects of the company. Lowenthal said he hoped KKR would handle much of the business and legal operations that had been taking up too much of his time.

The year after the KKR buyout was a good one. The company posted a 52 percent rise in revenue growth to $197.8 million from $129.8 million, and this growth enabled Boyds to go public. On February 26, 1999, Boyds began trading on the New York Stock Exchange under the symbol FOB—an acronym for Friends of Boyds—with an initial offering of $18 a share. The company sold approximately 9.25 million shares, and shareholders sold another 6.75 million. Boyds’ offering thus totaled 16 million shares and generated approximately $288 million. The company used the proceeds to redeem part of its outstanding notes and to reduce its bank debt.

The year 1999 also marked the introduction of some new Boyds lines. With the unveiling of its Jodibears line (named for its designer, Jody Battaglia), Boyds added puppets to its lineup. To satisfy collector demand for high-end Boyds products, the company introduced its Uptown Collection, a three-bear series limited to 12,000 pieces each. The Uptown bears retailed for about $60 and sold for as high as $120 on the secondary market.

While Boyds plush animals and resin figurines comprised 97 percent of its sales in 1998, the company licensed its images for other products as well, such as clothing, home textiles, stationery, and rubber stamps. As it moved toward a new century, the company planned to increase this licensing, as well as to unveil new products, including a line of “millennium bears” and a piece to celebrate its 20th anniversary. Moreover, the company was also planning to expand into Asia, Europe, and Canada.

Further Reading

“The Boyds Collection Announces Initial Public Offering,” Business Wire, December 23, 1998.

“The Boyds Collection Begins Trading on the NYSE,” PR Newswire, March 5, 1999.

Dochat, Tom, “McSherrystown, PA-Based Marketer of Boyds Bears Goes Public,” Knight-Ridder/Tribune Business News, March 5, 1999.

“KKR Makes Quick Profit by Bringing Boyds to IPO,” Buyouts, March 8, 1999.

“KKR to Make Equity Investment in Boyds,” PR Newswire, April 2, 1998.

“Store Promotions Bear-ly and More,” Playthings, February, 1995, p. 50.

Tuttle, Denis, “Boy, Oh, Boyds!,” Beans and Bears, June 1999, p. 61.

—Tracey Vasil Biscontini