Tilley Endurables, Inc.

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Tilley Endurables, Inc.

900 Don Mills Road
Toronto, Ontario M3C 1V6
Canada
Telephone: (414) 441-6141
Toll Free: (800) 363-8737
Fax: (414) 444-3860
Web site: http://www.tilley.com

Private Company Incorporated: 1984
Employees: 215
Sales: $25 million (2004 est.)
NAIC: 315991 Hat, Cap, and Millinery Manufacturing; 315299 All Other Cut and Sew Apparel Manufacturing; 448190 Other Clothing Stores

Tilley Endurables, Inc. specializes in clothing for the adventurer. The company has five retail stores in Canada, including three in Toronto and one each in Montreal and Vancouver. All clothing items, with the exception of their "unholey" socks, are manufactured in Toronto. Tilley hats and classic shorts and some other items come with a lifetime warranty. Hats bear the washing instructions: "Give 'em hell." Tilley products are sold by more than 2,000 associated retailers in 17 countries, including Australia, Belgium, Canada, Chile, Ireland, Finland, Japan, The Netherlands, New Zealand, Singapore, St. Martin, Sweden, Turkey, and the United Kingdom, and by 1,500 retailers in the United States. Tilley products also can be purchased via mail order and online.

1980–87: Quest for the Perfect Hat

In 1980, on a whim, Alexander Tilley, an amateur yachtsman and art dealer who liked to sail Lake Ontario in all weather, decided to make himself the perfect hat. Alex Tilley wanted his sailor's hat to float, tie under the chin, stand up to the harshest weather, launder, look classic, and wear comfortably. Tilley located a milliner through the yellow pages who agreed to sew a hat for him, but then ran into problems. "The canvas I wanted to use was so tough that needles couldn't go through it and it shrank when it got wet," he recalled in a 1989 Boston Globe article.

After experimenting, Tilley discovered that he could pre-shrink the canvas by boiling and steaming it and eventually completed his hat. A sailing trip to Belize with his two daughters yielded the final design; the hat had an adjustable, tuck-away, back-of-the-head wind cord. In 1986, Tilley added a layer of foam in the sweatband and closed-cell foam in the crown for flotation and sun protection.

Tilley was notable for his vibrant personality and relaxed approach to business, although by his own and others' estimation, he had neither the background nor the talent for running a successful company. It had taken him six years to earn a three-year undergraduate degree at the University of British Columbia, and he later flunked out of York University's M.B.A. program. His checkered career included working in a bank until informed that he was "too full of piss and vinegar to survive in banking," according to a 1990 Record article, and being fired "for sheer incompetence" from his sales job at Bell Canada. He later set up a tutoring business which went broke after 22 months, after which he spent a year selling printing presses. In the late 1970s, he opened Fine Art Consultants of Canada Ltd., which operated two "artmobiles" that sold and rented Canadian art.

But Tilley's prototype hats were admired by other sailors, and Tilley turned out to have a genius for marketing. He began to sell his hats from home for slightly above cost. His fledgling business got a boost in September 1980 when Yachting, a leading U.S. sailing magazine, wrote an editorial on the hat. Strong sales at the Toronto International Boat Show further helped the new business. In January 1984, Tilley founded Tilley Endurables and began to sell his hats via mail order from the basement of his Toronto home. "I had the perfect hat, conceived in frustration and created out of necessity, but it was so expensive to make that the only way I could sell it was by mail order," according to Tilley in the Boston Globe. Soon he had sold 20,000 hats, often trading hats as payment for magazine advertisements.

Shortly thereafter, Tilley abandoned his art rental business and added a line of yachting shorts. The garment had strong and capacious pockets that could carry a six pack, as Tilley liked to boast. But it was "so well designed, [it was] a failure," according to Tilley in the Record article because of the cost of making the garment. The company donated its unsold stock of shorts to Canada's America's Cup team, leading, ironically, to fresh demand for the shorts.

Skirts and pants with "anti-pickpocket" security and secret pockets followed in 1985, all advertised as being the best adventure and travel clothing available and all selling a lifestyle modeled by Alex Tilley. Tilley hats were worn by the Canadian sailing team at the Los Angeles Olympics in 1984. The Ontario pavilion at Expo 86 selected the hat to be presented to the VIP of the day during the exhibition. Operation Raleigh, a program for young adventurers, presented Prince Andrew with his own Tilley when he visited Expo.

All items of Tilley clothing were made of what Tilley called "adventure cloth, a blend of cotton and polyester fibers originally developed for the uniforms of GIs fighting in Vietnam. The fabric was easy to wash and cool to wear, even in the tropics. All items were manufactured in Canada, "[a]nd will remain so," Tilley announced in Northern Ontario Business in 1988. The position was ". . . a matter of honour. Also I get to keep my eye on it. And I am a fussy bugger. One supplier called me a 'fusspot' in print and I was delighted. . . . Everything we do is an attempt to make the best in the world."

In 1987, Tilley Endurables moved into its headquarters and manufacturing plant on Don Mills Road. By the late 1980s, the broad-brimmed, brass-grommetted, sturdy canvas Tilley hat had become something of a fad and Tilley a renowned figure among enthusiastic customers. Each hat came with a four-page owner's manual and a lifetime guarantee and a two-year, all-peril, 50-percent deductible Hat Insurance Policy. Both the hat and classic shorts were guaranteed for life. The company would replace any hat either found defective or worn out. From 1980 to 1988, Tilley doubled the number of stores carrying its products each year until, by 1988, more than 50 stores carried Tilley clothing. In 1987, sales were reportedly closing in on $5 million, and by 1988 there were seven Tilley stores in Canada, of which Tilley owned two. In 1989, Tilley was selling about 100,000 hats a year. In 1990, the company reported a profit of $1 million on sales of $8 million. By 1992, Tilley products filled a 64-page catalogue.

1987–93: Financial Hard Times Followed by Reasoned Expansion

But the company continued to wade through hard times financially. In 1987, it almost went bankrupt after a failed expansion in Boston and Aspen. Tilley, whom others described as financially naive, mistakenly believed that he could use the same approach to sales in the United States—where his hat was virtually unknown—as he had in Toronto. Tilley Endurables' finances led Tilley to enter into a shareholders' agreement with Dennis Hails in 1989 after Tilley had trouble paying Hails Interiors for its work decorating the company's offices. Hails had offered to join the company under a management contract. and lent the company $200,000. Without being asked, Tilley gave Hails 50 percent of the company's shares for nothing and made him vice-president in charge of day-to-day operations. Tilley oversaw product design, marketing, and the company's catalogue.

Hails moved aggressively to eliminate costs and staff and closed the company's Boston store. However, by 1991, the relationship between the two men had soured, and they stopped talking to one another. The company—with net income of $700,000 on sales of $8.6 million—was paralyzed. Tilley filed a lawsuit against Hails, asserting that Hails had tried to prevent him from fulfilling his role in management. The dispute went to a court that applied the winding-up section of the Ontario Business Corporations Act which permitted the judge to find any solution to keep a viable company going. The court ordered Hails to sell his shares to Tilley.

The following year, Tilley brought two veteran retailers on board to handle day-to-day operations of his three retail outlets and mail-order business. Philip Davson became chief financial officer and Jim McKinney became general manager. "My 'child' has been maimed over the last four years," he was quoted in the 1992 Financial Post article. "Now we are adding fine people to make it whole again. . . ." The company began a small, low-budget retail operation in Buffalo, duplicating the way Tilley had gotten into retail in Canada.

Sales for Tilley Endurables climbed 30 percent in 1992, reaching more than $10 million with profits of close to $750,000, and by 1993, Tilley Endurables was selling about 4,000 Tilley hats each week compared to 2,500 hats weekly just one year earlier. Its classic pants and classic shorts accounted for roughly half of the business. The company had 100 employees, five company-owned stores, and sold through close to 125 other retail outlets across Canada. About $2 million in business came from its Buffalo store and warehouse annually. Sir Edmund Hillary, Pierre Trudeau, and Paul Newman were just a few of the famous heads that had donned Tilley hats.

Mid-1990s–2004: Advertising a New Image and New Items

Advertising for Tilley Endurables targeted upscale, white, well-educated, and well-off customers; it was done mainly in-house, featuring Tilley and real customers who offered testimonials to Tilley Products. The company catalogue, which won the 1994 Gold Award from Catalog Age, also featured Tilley and customers. In an unconventional move in 1993, a move some employees disapproved of, these ads also began to display the footnote: "We do not welcome to our company-owned stores those who make or promote tobacco products."

Company Perspectives:

To make the best hats and the finest travel and adventure clothing in the world and to endeavor to continue making it better.

Tilley defended his company's position in the press, which he did not see as contradicting his firm commitment to customer service. This commitment included the company's lifetime warranty on any item and such additional services as "personalized travel advice": detailed information on travel destinations, including entry requirements, health guidelines, local laws, and currency. At the company's flagship Don Mills store in Toronto, next door to its manufacturing plant, customers were greeted with a mug of coffee and cookies, and fact sheets for every country in the world were on display.

By 1996, Tilley had expanded to markets in Australia, Japan, Great Britain, and New Zealand, but despite its 700,000 North American customers, the company's image and items needed updating. That year a new team of designers came on board who worked to improve the fit or design of Tilley's existing 70 products, develop new styles and colors, experiment with innovative fabrics, and add new products to attract a younger following. "[T]he clothes we currently have should be more desirable. If you can wear them on a date, they work," said Tilley in a 1997 Record article. In 1997, it relaunched its web site—first introduced in 1995—with ordering capabilities.

By April 1998, Tilley had added more than a dozen new items, including polo and rugby shirts. Ironically, however, in the late 1990s, it became trendy for young people to embrace hiking, exploring, bird watching, golfing, gardening, and other activities formerly linked with older people, and the company found that its traditional products—plaid shirts, khaki, and cargo pants—fell suddenly into the younger set's favor.

With $22 million in revenues in 1999 and 195 employees in Canada, the United Kingdom, and the United States, Tilley doubled the size of its Buffalo facility, increasing warehouse space and opening a new retail showroom. Its hat, which now sold in four colors and six styles, accounted for 30 percent of business. Tilley products—including 200,000 hats a year—sold in 14 countries through a network of more than 1,300 retailers. The company's main problem was that it could not make its products as fast as it intended.

Daughter Allison Tilley joined the family firm in 1999 as vice-president of marketing and merchandising with plans to update the firm's image and introduce her own line of women's clothing. As her first order of business, she set about redesigning the catalogue. One of the elements she brought back was customer testimonials and photographs and pictures of Tilley and family, which had been excised sometime in the late 1990s. "My dad's personality is back in the book and so is mine. We have very loyal customers—400,000 of them—and they missed that in the old catalog," she said in a 2000 issue of Catalog Age. Although she continued to appear in the catalogue, by 2002, Allison had dropped out of the business to move to Hawaii to be with her housepainter paramour.

However, the company still continued to grow as branded adventure clothing increasingly attracted customers with its name and quality and associated lifestyle. In addition to true travel adventurers, many Tilley customers were people whose usual habitat was the urban jungle, and who traveled in jeeps and SUVs to drive downtown. In 2003, these people purchased 250,000 hats a year. In 2004, the company introduced its Different Drummer Legends line of jackets, vests, pants, shorts, and shirts, which were guaranteed for life, and began to manufacture items made of hemp, called by Tilley, Nature's Performance Fabric. Alex Tilley, proud and optimistic as ever about his company's products and future, said in a 2002 Style article: "People who sell our things often realize they have a product that is sought after and relatively unique. . . . Once the word gets around that they sell Tilley, they attract new customers."

Principal Competitors

Recreational Equipment, Inc.; L.L. Bean, Inc.; Patagonia.

Key Dates:

1980:: Tilley Endurables is founded by Alex Tilley.
1984:: The company begins manufacturing and retailing travel and adventure clothing.
1987:: The company moves into its headquarters in Toronto and opens a distribution center in New York State.
1989:: Alex Tilley enters into a shareholders' agreement with Dennis Hails.
1991:: Tilley buys back Hails's share of the company.
1994:: The company's catalogue wins an award from Catalog Age.
1999:: Allison Tilley joins the company.