Haggar Corporation History

Address:

6113 Lemmon Avenue
Dallas, Texas 75209
U.S.A.

Telephone: (214) 352-8481
Fax: (214) 956-4367

Public Company
Incorporated: 1926
Employees: 6,000
Sales: $437.9 million (1996)
Stock Exchanges: NASDAQ
SICs: 2325 Men's/Boys' Trousers & Slacks; 2311 Men's/Boys' Suits & Coats; 2321 Men's/Boys' Shirts; 6719 Holding Companies, Not Elsewhere Classified

Company Perspectives:

"We continue to provide quality men's apparel at affordable prices through our three sales divisions. Haggar brands are represented in major department stores. Our Horizon Group markets the Reed St. James and other products to the mass merchant retailers, and our Specialty Labels division provides men's wear under department store and other private labels. We continue to expand our market presence through our new Haggar retail outlet stores; through international agreements; and through licensing arrangements to extend the Haggar and Reed St. James brands across product and geographic boundaries. We diligently look for ways to become more productive, to reduce costs, and to better serve our customers. Each decade in our history has brought the challenge to work smarter, faster, and better without sacrificing the quality for which we have become known. And each decade we have met that challenge to thrive, to grow, and to remain a market leader in our business. This is what we believe Haggar has in store."

Company History:

When it comes to casually dressy clothing for men, few companies are in the same league as Haggar Corporation. Haggar is the leading maker of dress pants, sport coats, and custom-fit suits (suits consisting of separately sized slacks and matching jackets), and the second-place producer of men's casual pants. Although the company's industry ranking is important, its historic role is even more significant. "Slacks" did not exist until Haggar introduced them in the 1940s. Since that time, Haggar has expanded its line to include shorts, wrinkle-free cotton shirts, and pants, including occasional forays into women's clothing. The company's goods were sold through about 7,000 stores nationwide, and the Haggar brand accounted for 80 percent of its sales in the 1990s. The items were sold through major department stores as well as in the approximately 35 Haggar outlet stores. Haggar also sold a lower priced line called Reed St. James through mass market retailers, and manufactured private label clothing for department stores and others. Haggar has managed to maintain a dominant position in the menswear industry through several generational shifts in stylistic tastes, material preferences, and technology.

J. M. Haggar, a 34-year-old Lebanese immigrant, started Haggar in 1926. Born in 1892, Haggar sailed from his homeland to Mexico at the age of 13. He moved to the United States a few years later, settling first in Texas, moving on to New Orleans, and finally reaching St. Louis, Missouri. His first jobs were menial ones, such as dishwasher and window washer, but over the years his skill with people landed him inevitably in sales. After stints in the oil and cotton businesses, where his prowess as a salesman became legendary, by 1921 Haggar found himself selling overalls in Texas, Louisiana, and New Mexico for a company based in Missouri. While working at that job, Haggar concluded that selling many items at a single, stable price would bring more profit than selling a lot of different grades of merchandise each of which yielded a different and constantly shifting profit margin.

No Depression at Haggar

By 1926, Haggar had saved enough money to launch his own enterprise. He set up shop in Dallas, and began to make and sell high-quality, low-cost pants for working men. Within three years, his Dallas Pant Manufacturing Company had 250 employees and occupied 6,000 square feet of space on two floors of the Santa Fe Building in Dallas. The company managed not only to survive, but to thrive during the Great Depression. In 1933 Haggar staged a "Prosperity Picnic/Parade" in downtown Dallas to demonstrate that his company was still hiring, and that good times were bound to return. By 1936 the company had opened a facility in Greenville, Texas, its first outside of Dallas.

Haggar's son, E.R. (Ed) Haggar, joined the company in the 1930s. Until the late 1930s, Haggar products were sold to chain stores and other accounts with no brand name attached to them. Under E.R. Haggar's direction, the company introduced brand names. In 1938, Haggar began its first national advertising campaign and began the creation of a national sales organization in order to raise customer awareness of the Haggar name, as well as its trademark Mustang brand.

Haggar's second son, J.M. (Joe Jr.) Haggar, Jr., began to play a major role in company operations in the 1940s. During that decade, Haggar, with the assistance of the Tracey Locke Advertising Agency--a forerunner of advertising giant DDB Needham--coined the term "slacks." The idea behind slacks was that they were to be worn during the slack time away from work. Slacks quickly became an accepted part of the American male wardrobe vocabulary.

Around the same time, the Haggar name was becoming increasingly familiar across America through relentless advertising. The company became the first pants manufacturer to advertise in the trade journals, beginning with Daily News Record and Men's Wear Daily. With the success of those early ads, the company gradually expanded its advertising budget. Its ads soon appeared in such big-name magazines as Life, Collier's, and Esquire. Haggar's Life ad featured a gimmick called the "Haggar Harmony Chart." The chart showed men how to "mix and match" in order to triple their wardrobe with the purchase of a few pairs of Haggar slacks. The charts were also made available through retailers and by mail-order from the company. The chart eventually disappeared, but by that time the idea of mixing and matching had sunk into the heads of previously fashion-shy American men. Several other now-common merchandising tactics can be credited to Haggar during this period, including two-pairs-at-a-reduced-price offers and prepackaged, precuffed, ready-to-wear slacks.

Haggar regularly placed ads in at least a dozen major magazines by 1950, and its distribution system grew accordingly. By 1954 there were 32 Haggar sales representatives roaming the country, more than double the number during World War II. As the "slacks" concept continued to gain momentum, Haggar latched onto the idea of well-known sports figures as the ideal pitchmen for their products. Advertising heavily in such publications as Sport and Sports Illustrated, the company began to associate its name with dashing sports heroes like Mickey Mantle, Bobby Lane, and Arnold Palmer.

1950s: The Television Age

One of Haggar's product innovations of the 1950s was "forever-prest," one of the first lines of pants made from wrinkle-resistant material. Meanwhile, television was emerging as an important new way to advertise, and Haggar became one of the first clothing manufacturers to take advantage of this new medium. One of Haggar's early television spots showed a pair of Haggar "forever-prest" slacks being crumpled up and run over by a steamroller. They were then picked up, shaken out, and shown to be wrinkle-free. The ad was so successful that the Gimbels department store in New York sold out of the slacks less than 24 hours after its initial airing in that city. As with its early magazine ads, the success of Haggar's first television commercials led to a full-blown commitment to television advertising. The company became a sponsor of such shows as Sugarfoot, Bronco, Twelve O'Clock High, and Naked City.

As television expanded its coverage of sports in the 1960s, Haggar found a new male-dominated outlet for its advertising. The company became a sponsor of ABC's Wide World of Sports in 1963, and a few years later it became a major advertiser during NFL football game broadcasts. Haggar also advertised during other televised sporting events, including baseball, basketball, hockey, and tennis, as their television coverage grew.

In addition to advertising, Haggar meanwhile continued to innovate in other areas as well. New products such as the "Imperials" line of dress slacks created new market niches in the gaps between "casual" and "dress" clothing. Haggar also introduced the "Haggar hanger," a special hanger that streamlined the distribution process by allowing the company to ship pants already on hangers, ready to be put on racks by retailers. Among other innovations were Haggar's precuffed pants that didn't need to be tailored.

In the late 1960s, Haggar popularized polyester-and-wool permanent press pants. By the beginning of the 1970s, Haggar controlled the biggest chunk of the men's dress slacks market, with a 20 percent share, and the Haggar brand name was the one recognized most for dress pants among American men. So omnipresent was the Haggar label in American retail outlets that the company's unofficial slogan was "We cover the asses of the masses."

In the 1970s, Haggar introduced leisure tops to go with its slacks. By the company's 50th birthday in 1976, it increased its sales of slacks during a year in which sales for the industry had experienced substantial dropoff. As in previous decades, new styles and products were added on a regular basis. A line of slacks called 640 was introduced in 1972, and in 1976, a contemporary line of slacks and tops called The Gallery, featuring a trimmer, updated fit and made of slick 1970s fabrics, was launched. A young men's line called Body Work was also added. The 1970s also brought the addition of Haggar sport coats and vests, and by the middle of the decade a customer fond of Haggar merchandise could pretty much clothe himself entirely in Haggar goods regardless of the occasion. By the end of the 1970s, the aging J.M. Haggar, while still retaining a powerful voice in company affairs, had handed over most of the duties of operating the company to sons Ed, who served as president, and Joe Jr., executive vice president. By this time their were 16 plants manufacturing Haggar clothing, located across Texas and Oklahoma.

In 1983, Haggar launched the Reed St. James brand, a clothing line specifically conceived to be sold through discount retailers. The development of the Reed St. James brand solved the problem of how to tap into the lucrative discount store market without cannibalizing the company's department store sales. By creating a quality brand that could compete favorably with cheap imports, Haggar was able to gain a strong foothold in discount stores. The idea was so good that within a few years Haggar was licensing the Reed St. James name to several other men's wear manufacturers, including Levi Strauss and Jockey. By 1986 the line was generating sales of $50 million for Haggar. Other 1980s breakthroughs for Haggar included the first use of both bar codes and Quick Response electronic data interchange technology among apparel manufacturers.

In 1986 competitor Levi Strauss caught Haggar off-guard when it introduced its Dockers line of all-cotton pants. Dockers did what Haggar had made its reputation by doing; it found a space between casual and dressy that was not yet occupied. Since the tastes of American men had taken a turn toward the casual, Dockers took a sizable bite out of the market for Haggar's slightly dressier slacks. Haggar responded with its own line of all-cotton pants, but the company did not initially focus its marketing attention on this line. In 1990, Haggar's sales dropped six percent to $292 million, its first backslide in many years.

Cotton is King in the 1990s

In 1990 Joseph Haggar III--known inside the company as Joe Three&mdashøok over company leadership from his father Joe Jr. Under Joe Three, Haggar unveiled a new line of wrinkle-free cotton pants, and spent $20 million advertising it. In 1992, after operating as a family business for its first 65 years of existence, Haggar went public, offering its stock on the NASDAQ exchange. By 1993, Haggar's wrinkle-free line had seized the momentum from Dockers in the race for king of the all-cotton's, and the company's position as a prime mover in casual pants&mdashøugh competition from Levi Strauss notwithstanding--was once again secure. Led by this new line, Haggar's sales rebounded to $380 million.

In 1994 Haggar introduced shirts made out of its fabulously successful wrinkle-free cotton material. The company also launched a line of casual/office clothing called the City Casuals Collection. Revenue reached $491 million that year. Disaster struck in 1995, as the roof on the company's main distribution center collapsed, interfering with Haggar's ability to keep stores supplied with its merchandise. As the company recovered from this mishap and worked out the bugs at its new Customer Service Center, Haggar recorded a net loss, the third in its history, in 1996.

In 1997 Haggar invented Cotton Flex, an all-cotton fabric with advanced stretch and memory capabilities, to compete against Levi Strauss. Officials at Haggar expected the company's new line of pants using Cotton Flex--dubbed the Black Label collection&mdashø become dominant as everyday pants, taking over the wardrobe spot occupied by basic cotton twills. If they predicted accurately, Haggar may remain the leader among pants manufacturers for the time being.

Principal Subsidiaries: Haggar Clothing Co.; Haggar Direct, Inc.; Haggar UK.

Principal Divisions: Horizon Group; Specialty Labels.

Haggar Corporation History

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