Helly Hansen ASA

Solgaard Skog 139
N-1539 Moss
Norway
(47) 69 249000
Fax: (47) 69 249290
Web site: http://www.helly-hansen.com

Private Company
Incorporated: 1877
Employees: 476
Sales: NOK 941 million (US $146 million) (1996)
SICs: 2300 Apparel & Other Textile Products; 2381 Fabric Dress & Work Gloves; 2311 Mens/Boys’ Suits & Coats; 2339 Womens/Misses’ Outerwear, Not Elsewhere Classified; 2824 Organic Fibers—Noncellulosic; 2329 Mens/Boys’ Clothing, Not Elsewhere Classified

Helly Hansen ASA is a world-leading designer, manufacturer, and distributor of a branded line of clothing and accessories to marine, outdoor, and other high-performance apparel markets, as well as a range of more fashion-oriented, less technically demanding garments to a growing consumer base. The Helly Hansen hallmark has long been rainwear and other extreme weather gear for the fishing, boating, and other marine industries, a category the company is said to have invented in the late 1800s; since the 1980s, however, the company has expanded its product line to include other industrial and professional markets, as well as the outdoor, ski, and in the late 1990s, snowboarding markets. The company’s mid-1990s move into the consumer sportswear apparel market has been inspired in part by the adoption of the Helly Hansen brand by members of the international rap music scene. In the late 1990s, however, the company has indicated that it will be restoring its focus to its core activewear and nautical markets.

While phasing out its manufacturing activities in the late 1990s—instead outsourcing its production requirements to third party manufacturers, chiefly in the Asia Pacific region—Helly Hansen has been developing a chain of flagship retail stores. Located in the U.S. and Canadian markets, which represent more than a third of the company’s sales, the Helly Hansen stores are being developed primarily on a licensed basis. The company expects to develop a network of some 50 licensed stores, in addition to the company-owned flagship retail store in Seattle, Washington. In addition to the retail chain, Helly Hansen continues to distribute its products through a network of some 10,000 third party retailers worldwide, as well as operating Helly Hansen “shop-in-shop” sales areas in department stores and other retail stores.

The company’s headquarters remain in its original Moss, Norway location, where Helly Hansen maintains the research and development activities into new textile technology that have enabled the company to become one of the world’s leading suppliers of nautical and other extreme weather gear. Since the 1980s, Helly Hansen has promoted its three-layer Weather-System, designed to provide maximum waterproofing and breathability, consisting of a LIFA (polypropylene) base layer, a Propile (fleece-like) thermal layer, and an outer layer using the company’s patented Helly Tech fabric. Helly Hansen products long have been mainstays of the nautical world and have outfitted adventurers from North Pole expeditions to Mount Everest climbs. Continuing the Helly Hansen tradition of innovative technology is the 1998 introduction of illumiNITE, a reflective fabric destined to provide greater safety to mountaineers.

Since April 1997, Helly Hansen has been 70 percent owned by Investcorp, a Bahrain-based investment group that also holds a stake in Saks Fifth Avenue, among others, and previously held positions in such other brand names as Tiffany and Gucci. Longtime principal shareholder, Orkla, of Norway, maintains a 30 percent share in the company. In February 1998, Investcorp named Erik Stensrud, formerly with Adidas, as Helly Hansen’s CEO.

The World’s First Rainwear Company in the 1870s

When Helly Juell Hansen of Moss, Norway set out to sea in the 1850s, joining the crew of a merchant ship at the age of 15, sailors long had been exposed to the often harsh elements of ocean travel. Hansen, who started his career swabbing the decks, soon would have his fill of the cold and wet conditions found especially in the rough seas of the Northern Hemisphere. Then Hansen hit upon the idea of adding the water-repellant properties of oil to clothing. Hansen fashioned the first “oilskin” using canvas coated with linseed oil (which itself long had been used in paints and other materials, because, unlike other oils, linseed oil dries). The oilskin would become quickly popular among seamen—although stiff and sticky, the oilskin nevertheless helped to protect the sailors from the wet and cold, while also protecting their clothing.

Hansen continued his career at sea, receiving his master’s license at the age of 25 and earning a reputation as an able captain. In 1876, however, after surviving a storm (saving his crew and a French vessel as well, for which Hansen was decorated by the French government), Hansen decided to retire to shore. Up until then, Hansen had done little with his oilskin invention. In 1877, however, Hansen and his wife set up shop in Moss, Norway, producing oilskins for the local market and becoming the world’s first rainwear manufacturer. The Hansen oilskin was a quick success—in the company’s first year, more than 2,000 were sold. By the turn of the century, the Helly Hansen name had already found renown among the world’s fishing and marine industries.

Hansen, meanwhile, had continued to develop his invention, enabling the company to outpace a rising number of competitors offering their own oilskins. Among Hansen’s innovations was a method of drying the linseed oil so that the oiliness was reduced, while the fabric was made more supple and thus more comfortable to wear. This formula would remain a company secret, and Helly Hansen’s oilskins would dominate the industry over the following decades, achieving as much as 65 percent of the worldwide market.

Although Helly Juell Hansen died in 1914, the company, which remained under family control before becoming a wholly owned subsidiary of Norway’s industrial giant Orkla, would continue its founder’s knack for innovation. The company soon added its own line of garments, to be worn under the oilskin outerwear, to provide greater insulation. In 1950 Helly Hansen attacked the problem of leaking seams with the introduction of its patented Micro Weld process, a method of blending materials using microwaves to create a bonded, 100 percent waterproof fabric. In the 1960s the company became the first to introduce new “pile” materials into the outdoor garment industry, providing better insulation properties.

Helly Hansen would prove quick to adapt new materials to its line of nautical wear. The company added polyurethane coating to replace the original oilskin; in the mid-1970s Helly Hansen developed a MultiCoating technique for applying polyurethane in multiple thin layers, as opposed to the single thick layer used by other manufacturers, creating a more durable and pliable material. At the same time, Helly Hansen was quick to recognize the potential of another recently introduced material, the polypropylene-based Lifa, produced by a neighboring Scandinavian manufacturer. Lifa already had found application as a liner for the disposable diaper industry—it is this material that provides the wicking action, drawing moisture away from the skin. Helly Hansen adapted Lifa to its product line in 1975, becoming the first company in the world to manufacture Lifabased garments to the adult market. Helly Hansen’s Lifa underwear would form the primary layer beneath the company’s insulation and outerwear garments. Two years later, the company would introduce a line of performance clothing that was among the first to be waterproof and breathable. The company also developed a neoprene-based survival suit that enabled a person to stay warm and float for up to two days in frigid waters.

Expanding Markets in the 1980s and 1990s

Helly Hansen introduced a new insulating fabric, Fibrepile, in 1979. Featuring a patented double-knit construction, the new material boasted not only strong insulation performance, but also high durability, making it ideal for the company’s line of work garments. By then, the company had begun to target other markets. The company moved beyond its nautical base into creating clothing for other outdoor industrial applications, including ranching and construction. The boom in outdoor recreation during the 1970s and 1980s would propel Helly Hansen into creating clothing for sports such as skiing and hiking/ mountaineering, among others. Along the way the company also expanded its clothing designs to appeal to the growing consumer market, while maintaining its high-end, performance image.

By the beginning of the 1980s, Helly Hansen was established in its Scandinavian and European markets. Until 1981, however, the company’s presence in North America remained minimal. In that year the company opened its U.S. headquarters, in Redmond, Washington, with a staff of 15. The following year Helly Hansen also opened a Canadian subsidiary. By 1984 the company’s North American subsidiaries employed 130 and sales had topped US $10 million, while total company sales represented some US $100 million, generated by more than 1,600 employees and manufacturing facilities in Canada, Ireland, Portugal, and the United States, in addition to the company’s seven Norwegian plants.

The company introduced its Helly Tech fabric coating in 1984, setting a new standard for waterproof, breathable fabric. Helly Tech also would provide the final layer for the 1986 introduction of the Helly Hansen three-layer WeatherSystem, complementing its Lifa-based undergarments, and pileinsulation garments, including the Propile polyester fabric introduced in 1986. North American demand for the company’s products, in particular its Lifa-based underwear, caused the company to increase its production, including contracting third party manufacturers.

By the mid-1990s Helly Hansen had made the transition from a sole market supplier—although its nautical products continued to dominate the sports, leisure, and marine segments, the company’s “outdoor” garments now represented half of its annual sales. As such, Helly Hansen faced an entirely new field of competitors, ranging from L.L. Bean and Timberland to Patagonia and North Face, among others. Yet the company also was struggling through the extended recession of the 1990s; despite rising revenues and operating profits, the company began posting net losses by mid-decade.

In 1995 Helly Hansen’s parent Orkla agreed to sell 50 percent of the company to Resource Group International, a Seattle, Washington-based diversified holding group, for NOK 125 million (US $18.6 million). The new partners installed a new management team and effected a dramatic restructuring of the company’s operations, including shutting nearly all of the company’s manufacturing facilities and instead opening a Hong Kong office to oversee the outsourcing of the company’s production requirements to a number of Far East-based contractors. By 1997 nearly 80 percent of the company’s clothing products were produced by contract. In this respect, Helly Hansen followed a growing trend, that of transforming itself from a clothing manufacturing company to, as then CEO Johnny Austad wrote in the company’s 1996 annual report, “a brand image.”

The company stepped up its retailing activities, including expanding its “shop in shop” concept, while also making plans to enter the retail arena with its own retail stores. In the mid-1990s the company received a boost from an unexpected source—rap star L.L. Cool Jay, who had begun sporting Helly Hansen clothes. Before long, Helly Hansen found itself propelled into a new category of street wear, as the rap community quickly adopted the Helly Hansen line. In response, the company expanded its line to include more fashion-oriented, less technologically sophisticated clothing. Helly Hansen also moved to step up its marketing activities. Plans were made as well to create a network of some 50 freestanding Helly Hansen retail stores. By 1998 Helly Hansen had opened its company-owned, flagship Seattle, Washington store, while developing an extensive list of licensed retail stores, primarily located in North America.

The company push to become an international brand name beyond its nautical base led to the agreement to sell a 70 percent stake (Resource Group International’s entire 50 percent as well as 20 percent of Orkla’s holding) to Investcorp, a Bahrain-based investment group specializing in brand name businesses, for US $112 million. The move was seen as crucial for the company, as its competition now included such international sportswear names as Tommy Hilfiger and Nautica. A further indication of the company’s direction came in February 1998 when Investcorp named a new management team; both CEO Erik Stensrud and COO Robert McCulloch had worked previously for major sportswear manufacturer Adidas. Yet despite its moves into the more fashionable sportswear scene, Helly Hansen remained committed to its 120-year tradition of technical innovation and excellence.

Principal Subsidiaries

A/S Helly Hansen (Denmark); Helly Hansen (US) Inc.; Helly Hansen Distributie B.V. (Netherlands); Helly Hansen AB (Sweden); Helly Hansen Spesialprodukter AS (Norway); Helly Hansen Verkaufs GmbH (Germany); Helly Hansen (U.K.) Ltd.; Helly Hansen GmbH (Austria); Helly Hansen Benelux B.V. (Netherlands); Helly Hansen (Suisse) SA; Helly Hansen France SARL; Helly Hansen N.V. (Belgium); FCO Maritim AS (Norway); Oban Wetsuit Ltd. (Scotland); Helly Hansen Leisure Inc. (Canada); Helly Hansen Far East Ltd. (Hong Kong); Retis Ltd. (Iceland); Eurcen Retail (U.K.) Ltd.