The Timberland Company History

Company Perspectives:

Here at Timberland, things are different from other companies. At our corporate headquarters, employees work hard to make some of the world's most innovative products, then use paid time-off to make a difference in the community. Children play in our in-house day care center. The committed young people of City Year New Hampshire, a national youth corps that recently set up shop within Timberland's walls, are hard at work. And throughout the entire company, it's evident that doing well and doing good are inextricably linked.

Key Dates:

1933:

Abington Shoe Company of Abington, Massachusetts, is incorporated.

1952:

Shoe stitcher Nathan Swartz buys half-interest in Abington.

1955:

Swartz buys the remaining interest in the company; his sons Sidney and Herman soon join the firm.

1968:

Nathan Swartz retires, leaving the company in the hands of his sons.

1973:

Abington's first truly waterproof boot is introduced under the name "Timberland."

1978:

Abington Shoe Company is renamed The Timberland Company and is incorporated; company expands into casual shoes.

Early 1980s:An Italian craze for Timberland boots turns Timberland into a fashion brand and ignites an explosion in sales.

1986:

Herman Swartz sells his share of the company and retires; Sidney Swartz becomes chairman, president, and CEO; Sidney's son Jeffrey joins the company as head of international sales.

1987:

Timberland goes public.

1988:

Men's and women's clothing and accessories are added to the product mix; first Timberland specialty stores are opened.

1995:

Timberland closes its U.S. factories, shifting much of the production to outsourcers; the company posts its first loss.

1997:

Company holds the first annual "Serv-A-Palooza," a one-day, companywide community service event.

1998:

Jeffrey Swartz is named president and CEO, with his father remaining chairman.

1999:

The Timberland PRO line of work boots is introduced.

2000:

Sales surpass the $1 billion mark for the first time.

Company History:

The Timberland Company's ascension in the rugged footwear industry was sometimes rocky, but savvy marketing, excellent products, and extraordinary luck eventually turned an obscure bootmaker into a worldwide symbol of rustic chic. The first hint of widespread interest came in the early 1980s, when Italian trendsetters made Timberland hiking boots the ultimate in style and sophistication. The resulting European buying frenzy sent U.S. retailers scrambling for Timberland footwear, sparking the first of many fashion booms. Although Timberland became a household name through a fluke of fashion, the company's outdoor footwear and accessories also became synonymous with quality, dependability, and a return to nature. Along the way, the company also became well-known for its commitment to community service.

Early History: From Abington Shoe to Timberland Company

In 1952 Nathan Swartz, a shoe stitcher by trade, bought half-interest in the Abington Shoe Company of Abington, Massachusetts, a firm that had been incorporated in 1933. Within three years, Nathan acquired the remaining interest in the company for $20,000 and brought his youngest son, 19-year-old Sidney, aboard. Within the year, Nathan's elder son, Herman, returned from a stint in the navy and joined the business too. For the next decade, father and sons produced and sold handmade footwear to discount outlets and stores that put house labels on them. In 1965, after researching alternatives to the expensive art of hand-stitching soles and uppers together, the Swartzes purchased an injection-molding machine--a new binding process that chemically molded and attached soles to uppers. Injection molding not only produced footwear for 50 cents less per pair, but it also allowed Abington to charge about 20 cents more because the new footwear had some water resistance. Now selling boots for $5.75 a pair wholesale, Abington was able to generate a small profit rather than just break even.

In 1968 Nathan retired, leaving Abington in his sons' capable hands. Two years later, the brothers moved the company to New Hampshire and set their sights on producing tough, thoroughly waterproof boots capable of standing up to the worst weather and the ravages of time. Surprisingly, they found a prototype right under their noses--Abington's maintenance man wore rugged work boots year-round that were comfortable, durable, and water-resistant. The boots, made in Canada and distributed in the United States by the Vermont-based Dunham company, inspired fierce loyalty in their owner. The Swartzes bought a pair, dissected them, and were determined to make their own, even better version.

After persuading Goodyear to design a synthetic rubber sole capable of withstanding the harshest elements, the Swartzes used injection molding to bond the polyurethane soles to genuine blond leather uppers. To test for water resistance, the brothers tried everything from weighting boots with metal and submerging them in a bucket to filling the boot itself with dyed water and waiting for leaks. The result was Abington's first truly waterproof boots, which the company began marketing under the brand name "Timberland" in 1973 and guaranteed as water-resistant. Targeted at blue-collar workers and sold in army-navy stores, Timberland boots were a serendipitous hit on college campuses.

Never big on advertising, Abington hired the Boston firm of Marvin & Leonard to help market Timberland boots. Len Kanzer, the agency's president, convinced the Swartzes to appeal to upscale buyers via ads in the New Yorker. As a result, Timberland boots sold remarkably well at highbrow retailers such as Bergdorf Goodman, Lord & Taylor, and Saks Fifth Avenue, and the company produced 5,000 pairs in 1974. By 1975, production jumped to 25,000 and sales neared the million-dollar mark. By the late 1970s, the company was producing 400,000 pairs of Timberlands annually, which prompted the Swartz brothers to consider expanding their product line. Abington Shoe Company's principal output was now Timberland boots, with no-name boots amounting to only about 20 percent of 1978's production. Now on the map with its own brand, Abington discontinued manufacturing for others and concentrated on Timberland boots.

While diversifying was indeed a gamble, Herman and Sidney decided to risk it. First, taking full advantage of their rugged footwear's brand recognition, they renamed the Abington Shoe Company as The Timberland Company and incorporated in 1978. The newly christened company then introduced its first casual shoes for men with handsewn uppers, solid brass eyelets, and water-resistant full-grain leather. Next came 1979's boating or "deck" shoe, which went toe-to-toe with the industry leader--Sperry's perennially popular Top-Sider brand. Timberland aggressively marketed its product, polling dozens of sailors and eventually winning endorsements from hardcore yachters William F. Buckley, Jr., and Ted Kennedy.

Becoming an International Fashion Brand

Also in 1979, an Italian goods distributor named Giuseppe Veronesi visited Timberland's New Hampshire factory and ordered 3,000 pairs of boots. Veronesi, the president of Ritz Firma, a subsidiary of FinRitz SpA (which was responsible for the Louis Vuitton brand and Ralph Lauren's Polo line for women), figured Timberland boots would be a perfect fashion accessory for well-heeled Italians. After testing the market in haute couture shops in Milan and Rome, Veronesi soon began selling Timberland boots in boutiques throughout Italy. Though Timberland products were still selling well in pricey U.S. department stores, the Italian craze caused even more U.S. retailers to jump on the Timberland bandwagon. Boot production rose to 1.8 million pairs in 1983, with a price tag between $70 and $80 per pair in the United States, and nearly double that in Europe.

In 1984, Timberland was flush with success and poised for more. As a company on the move, moreover, it had caught the interest of several acquisitive conglomerates. The VF Corporation, which had holdings including Lee Jeans, was the first to approach the Swartzes with a buyout offer of $60 million. Herman, nearing 60 years of age, wanted to accept the package and retire. Sidney, however, was not interested in selling and wanted Timberland to raise its own funds for a major expansion. Before the brothers could reach a compromise, the offer was withdrawn. Despite what may have been a lost opportunity, it was business as usual at Timberland. The company planned a further expansion into international markets, hoping to capitalize on its continued boom in Italy, where 490,000 Timberland boots were exported in 1984. Soon Timberland began shipping products to France, Germany, Hong Kong, Switzerland, and Turkey. Not only did Italian sales continue to climb, reaching 540,000 in 1985, but worldwide sales soon hit $68 million.

In the early months of 1986, Timberland was again faced with the possibility of acquisition. This time a former partner of Morgan Stanley & Company proffered a bid of about $60 million. Again, the brothers were at odds: Herman for the buyout, and Sidney steadfastly against it. In order to reach an agreement, Sidney sought financing and came up with $34.5 million from Merrill Lynch to purchase Herman's share of Timberland for roughly $30 million. Herman left Timberland and retired, while Sidney became chairman, president, and CEO of the company.

After 30 years, Herman was no longer at his brother's side as Sidney moved forward with both domestic and international expansion. In 1986, Timberland hoped to claim $20 million worth of the lucrative Japanese consumer goods market. Sidney's 29-year-old son Jeffrey joined the company as head of the international sales division to help steer the company's growing Asian and European presence. Less than a year after Herman sold his stake in Timberland and retired, Merrill Lynch sold 3.35 million Timberland shares, roughly 30 percent of their holdings, at $14 each in an initial public offering. When Sidney and Jeffrey made a public offering on the American Stock Exchange in mid-1987, they kept the "B" shares, with ten votes each, in the family, and dispersed only "A" shares, which held one vote apiece.

Late 1980s: A Too Rapid Expansion

Meanwhile, Timberland's expansion continued unabated, and the Swartzes started to lose control of their vast empire. By rapidly introducing 160 new models, bringing Timberland's total product line to about 500, the company caught its factories unprepared. Inventory control and customer service suffered, frustrating retailers and consumers. Despite the fact that revenues climbed by 24 percent and total sales reached $85 million by the end of 1986, profits fell 14 percent to $4.8 million. In an effort to stem manufacturing and customer service problems, Timberland created a worldwide customer relations department in 1987 to make good on its commitment to quality products and service.

Also in 1987, Marvin & Leonard Advertising made Timberland the first boot producer to advertise its products on television. One memorable commercial featured rural bootleggers extolling the virtues of Timberland boots for hiding from Treasury agents in swamps. The wry ads gained plenty of attention, propelled sales, and solidified Timberland's reputation as a producer of fashionable footwear.

In 1988 the company entered the men's and women's clothing and accessories market. "Versus Ralph Lauren, we have a degree of authenticity," Jens Bang, Timberland's executive vice-president, explained to Advertising Age. The clothing lines, like Timberland footwear, were designed to "perform under extreme conditions" yet remain stylish. Though sales sputtered initially, apparel and accessories eventually claimed about 20 percent of Timberland's net sales. Later that year, the company began opening specialty stores: the first on Newbury Street in Boston; a second on Madison Avenue in New York City; and a third on New Bond Street in London.

Finishing the year with profits of $8 million on revenues of $133 million, Timberland also posted record exports of $39 million. The majority of exports were still shipped to Italy--528,000 pairs of footwear worth $21 million wholesale. Despite runaway sales, however, Timberland's profit margin continued to erode; from 1987 to 1989, profits fell from $9.4 million to $6.4 million. The company had too many products, too little focus, and even less corporate restraint. "I nearly drove this company under the ground," Sidney Swartz admitted to Forbes in 1989. Though his ideas and intentions were good, the reality of Timberland's rapid expansion had proved burdensome for a company still adjusting to its previous growth. "My optimism sometimes gets the better of me," Sidney said as he envisioned Timberland backpacks, canoes, and sleeping bags. "And we're not ruling out mountain bikes."

Luckily for Sidney, his son was a capable business manager. The two set out to regain control of their product line and eliminate costly manufacturing snafus. The company also stopped trying to capture two disparate markets--the fashion elite who wore Timberland boots simply for effect and the outdoor crowd who wore them to get fit and explore the natural world. Eschewing trends, the company stepped up advertising to the outdoorsy men and women its rugged footwear was originally designed for. Integrating its marketing efforts, Timberland also began to stress corporate responsibility and a growing community awareness. The company reemphasized its commitment to consumers interested in hiking, climbing, camping, adventure travel, and environmental protection by backing local and national service organizations such as the Wilderness Society, the Boston-based City Year, and Alaska's legendary Iditarod dogsled race.

Timberland's growing relationship with City Year was not just public relations posturing; what began as a request for 50 pairs of boots had turned into a $1 million investment by 1992, enabling the company to expand into four states. "As a company," Jeffrey noted, "we have a responsibility and an interest in engaging the world around us. By doing so, we deliver value to our four constituencies: consumers, shareholders, employees, and the community." The company furthered this commitment by granting all employees between 16 and 32 hours of paid time off each year for community service. The Swartzes also broadened their sensitivity to environmental issues by joining the EPA's Green Lights Program, Businesses for Social Responsibility (BSR), and the Coalition for Environmentally Responsible Economies (CERES) in 1992 and 1993.

Resurgent Growth in the Early 1990s

In 1989 sales topped $156 million, of which exports represented 30 percent--despite Timberland's withdrawal from China after the Tiananmen Square massacre. In 1991, 31-year-old Jeffrey Swartz was named Timberland's chief operating officer. Overseeing daily operations, Jeffrey implemented several corrective measures to restructure the company, cut waste, boost profits, and maintain shipping schedules. The biggest of these adjustments was the switch from assembly-line manufacturing to teamwork, which cut production time by as much as two-thirds. This year also featured two other milestones: the company's commencement of trading on the New York Stock Exchange, and the fall debut of Elements: The Journal of Outdoor Experience, Timberland's slick, 32-page biannual magazine. Translated into four languages and distributed in nine countries, the magazine's content was written by celebrated outdoor enthusiasts and edited by mountaineer John Harlin III.

By 1992, Timberland's print and media gambits carried the company logo and a social message, such as the "Give Racism the Boot" campaign it ran in the United States and Europe. Complete with billboards in New York City, as well as T-shirts, posters, and pins (proceeds from the sale of which went to City Year), the campaign fueled company growth of 22 percent in the first half of the year. To keep its lead in the footwear and apparel industry, Timberland started retooling factories with the latest technology and applied a few tricks of the trade learned from Japanese manufacturers. "Companies that don't adapt won't be around," Sidney told U.S. News and World Report. "It's Darwinism at its best. We will adapt and we will survive." By the end of 1992, Timberland's sales topped $291 million, and its products were sold in 50 countries, 12 retail stores, and over 225 department store "concept" shops worldwide.

As the 1990s progressed, the popularity of Timberland's footwear spawned many imitators. Adidas, Nike, and Reebok all came out with rugged footwear in an attempt to compensate for sluggish athletic shoe sales. According to market analyst Scott Davis in USA Today, however, "Timberland is No. 1 in this market. Everyone else is playing catch-up." As proof, Timberland stock rose 280 percent in 1993 and was named one of the New York Stock Exchange's "best stocks" by Business Week. Near the end of the year, Timberland's creative advertising campaigns once again struck a chord with television viewers when Mullen Advertising introduced its inspired Muddy Waters campaign. Rife with shots of Mother Nature's mood swings, the quirky, pun-filled commercials drew cheers from fellow agencies and consumers alike.

Timberland's 1994 revenues were even more incredible--surging 52 percent, to $637.5 million--partly because of a sizeable increase in its advertising budget, which approached $25 million worldwide. Timberland's increasingly aggressive media blitzes paid off handsomely. The Swartzes strengthened Timberland's market share even more by slashing prices as much as 25 percent on Waterbuck casuals, with plans for more "value pricing." Domestic production climbed from three to five million pairs annually; combined with improved inventory control and faster delivery, this production helped Timberland secure more business in the U.S. Midwest and South, the company's fastest-growing regions for the third quarter of 1993.

While several prominent athletic shoe manufacturers continued to expand their rugged footwear lines, even Harley Davidson and Caterpillar announced their intentions to join the fray. Yet Jeffrey Swartz was not overly concerned: "We transcend language and geography," he told USA Today at the end of 1993. "We represent something that's more than a product; it's also a point of view. Whether it's the '60s or '70s, whether it's grunge or hip-hop or be-bop, it still snows and it still rains and you're going to get dressed for the snow and the rain." Timberland's revenues bore this out, and the company maintained its quest to make even better products. One advance was Timberland's introduction, in January 1995, of its exclusive Active Comfort Technology (ACT), which was soon to become part of its high-performance hunting and hiking boots.

Community service, too, became a bigger part of Timberland's corporate life. The company made a $5 million pledge to City Year in 1994 and participated in several area events, including the Seacoast Hospice clean-up, a City Year-sponsored "Serv-A-Thon" at the Thurgood Marshall School in Atlanta, and work at the YMCA's Camp Gundalow in both 1993 and 1994. In the latter effort, Jeffrey Swartz and his three young sons (ages six, four, and one) were among over 175 Timberland employees who pitched in to help prepare Camp Gundalow for the upcoming summer season. "As an employee, you don't draw strength from some corporate guy making a speech," Jeffrey told a local newspaper covering the event.

Mid- to Late 1990s: Overcoming Another Rough Patch

Timberland hit another rough patch in the mid-1990s. Profits began falling in 1994, even as sales surged, because the price cuts that had been instituted resulted in a margin squeeze. Sales slumped in the winter of 1995-96 because of mild weather and a sluggish retail environment. Inventory surged to more than $200 million as the company's distribution and tracking systems were unable to keep up with the higher volumes of merchandise the company was now handling after the rapid sales gains of the early 1990s. In response to these travails, Timberland's stock price plummeted from a peak of $85 in November 1993 to $22 in May 1995.

To turn the company around, a wide-ranging restructuring was launched in early 1995. To cut costs, Timberland closed its two domestic manufacturing plants in North Carolina and Tennessee, resulting in the elimination of 500 jobs, and cut back on its workforce at its factory in the Dominican Republic. Like other footwear makers, Timberland would now outsource much of its production. The company also overhauled its product lines, making a new commitment to get back in touch with its customers as it did so. During 1995 the firm was also able to begin significantly reducing both its inventory and its relatively high debt load. For the year, sales rose only 2.7 percent, while the company fell into the red for the first time, posting a net loss of $11.6 million. This net loss figure was affected both by a $16 million pretax restructuring charge and a $12.1 million pretax gain. The latter resulted from the sale of subsidiaries in Australia and New Zealand to U.K.-based trading firm Inchcape plc, which became the exclusive distributor of Timberland products in the Asia-Pacific region.

As Timberland got its inventory and distribution systems under control, revenue growth returned during the late 1990s, with sales growing smartly from $690 million in 1996 to $917.2 million by decade's end. More importantly, Timberland significantly increased its profit margins during the same period. The company's net income as a percent of sales stood at just 3 percent in 1996 but vaulted to 8.2 percent by 1999 when net income was a record $75.2 million. From 1997 to 1999 the company's 19 U.S. retail stores were remodeled with a nature-oriented theme. In June 1998 Jeffrey Swartz was named president and CEO of Timberland, with his father remaining chairman. That same month, the company expanded its community service activities by holding the first "Serv-A-Palooza." Timberland essentially closed its doors for a day, with more than 1,000 Timberland employees performing 8,000 hours of community service in 13 towns in New Hampshire and Massachusetts. Serv-A-Palooza became an annual event and eventually involved Timberland operations in other countries. During 1999 Timberland expanded its product line with the introduction of two subbrands: Mountain Athletics and Timberland PRO. The Mountain Athletics line included performance footwear specifically designed for outdoor sports, including trail running, bouldering, and scrambling; it was also aimed at a younger group of consumers than the Timberland brand. Timberland PRO was a line of work boots designed for professional tradesmen, with the individual models containing some or all of these features: waterproofing, insulation, steel toe, slip resistence, and protection from electrical hazards.

Navigating the Uncertain Waters of the Early 2000s

Timberland's latest period of breathtaking growth peaked in 2000, when sales surged past the $1 billion mark, hitting $1.09 billion, and net income leaped 68 percent, to $126.2 million. The profit margin now stood at a very healthy 11.6 percent. A good deal of the growth was attributed to rapidly expanding sales of apparel and accessories. Revenues for that category grew 29 percent in 2000, amounting to $243 million, or 22 percent of overall sales. During 2000, the company began selling children's footwear, and sales of the successful Timberland PRO line were extended into Europe. Timberland also ended its distribution deal with Inchcape, reacquiring the Asian distribution rights and beginning to operate directly in Japan.

During 2001 the company began to feel the effects of the downturn in the U.S. economy, and revenues for the year increased only 8 percent while profits fell. Higher leather costs and unfavorable foreign exchange rates exacerbated the situation as did warm weather during the winter of 2001-02. Once again, the company's stock took a hard hit, falling nearly 50 percent from January 2001 to March 2002. Timberland had a number of plans in the works for 2002 as it waited for the economy to recover, including: launching a line of children's apparel as well as a line of Timberland PRO apparel; rolling its Mountain Athletics brand into the Timberland brand; curtailing the opening of new retail outlets in the United States while developing a new and smaller store prototype; and seeking more overseas growth in both Europe and Asia. Despite this latest downturn in the company's fortunes, Timberland remained the leader of the U.S. "brown shoe" (nonathletic footwear) sector. The company had successfully evolved from a producer of sturdy, unglamorous work boots to become a titan of the rugged outdoor footwear market.

Principal Subsidiaries: The Outdoor Footwear Company; The Timberland Finance Company; The Timberland World Trading Company; Timberland Europe, Inc.; Timberland International Sales Corporation (U.S. Virgin Islands); Timberland Direct Sales, Inc.; Timberland Retail, Inc.; Timberland Manufacturing Company; Timberland Aviation, Inc.; Timberland Netherlands, Inc.; Timberland International, Inc.; Timberland SAS (France); Timberland World Trading GmbH (Germany); Timberland (UK) Limited; Timberland GmbH (Austria); Timberland Espana, S.A. (Spain); The Recreational Footwear Company (Dominicana), S.A. (Dominican Republic); Component Footwear Dominicana, S.A. (Dominican Republic); Timberland Footwear & Clothing Company Inc. (Canada); Les Vêtements & Chaussures Timberland Inc.; Timberland Netherlands Holdings B.V.; Timberland Asia LLC; Timberland Taiwan LLC; Timberland Hong Kong Ltd.; Timberland Japan, Inc.; Timberland Lifestyle Brand Malaysia Sdn Bhd; Timberland Lifestyle Brand Singapore Pte. Ltd.; Timberland Korea Yuhan Hoesa.

Principal Competitors: NIKE, Inc.; Reebok International Ltd.; Wolverine World Wide, Inc.; R. Griggs Limited; Columbia Sportswear Company; L.L. Bean, Inc.; The North Face, Inc.; Rocky Shoes & Boots, Inc.; Lost Arrow Corporation.

Further Reading:

• Angrist, Stanley W., "Betting the Company," Forbes, April 25, 1983, pp. 109-10.
• Benoit, Ellen, "When the Shoe Fits," Forbes, September 16, 1985, p. 194.
• Conklin, Michele, "How Three Shoe Manufacturers Found Their Pots of Gold," Madison Avenue, October 1985, pp. 49-50.
• Cook, William J., "Four Better Mousetraps," U.S. News and World Report, August 24, 1992, pp. 52-55.
• Greenwald, John, "Timberland Hits Its Stride," Time, November 29, 1993, p. 63.
• Hill, Julie Skur, "Japan Is Next for Timberland," Advertising Age, October 27, 1986, p. 62.
• Hill, Suzette, "Timberland Heeds Consumers: Go Forth and Be an Apparel Brand, Too," Apparel Industry Magazine, December 2000, pp. 27+.
• Koshner, Karen, "Sole Man," Boston Magazine, March 1995, pp. 54+.
• Leand, Judy, "Jeffrey Swartz: The SGB Interview," Sporting Goods Business, August 4, 2000, pp. 34-36.
• Lenetz, Dana, "All in the Family," Footwear News, December 31, 2001, p. 6.
• Lippert, Barbara, "Blues Power," ADWEEK, November 15, 1993, p. 42.
• Maremont, Mark, "Timberland Comes Out of the Woods," Business Week, September 13, 1993, p. 78.
• McCord, Michael, "Timberland, at 25, Puts Its Best Foot Forward with World Sales of $690 Million," New Hampshire Business Review, January 30, 1998, p. 17.
• Meeks, Fleming, "Sidney Swartz' Dolce Vita," Forbes, July 10, 1989, pp. 56-57.
• Rosato, Donna, and Judith Schroer, "Timberland Steps into Fashion, USA Today, December 14, 1993, p. B1.
• Serwer, Andrew E., "Will Timberland Grow Up?," Fortune, May 29, 1995, p. 24.
• Sloan, Pat, "Timberland Tries on Clothes," Advertising Age, August 22, 1988, p. 51.
• Tedeschi, Mark, "Timberland Restructures As Net Lags," Footwear News, May 1, 1995, pp. 1+.
• "Timberland Launches Anti-Racism Ads," Sporting Goods Business, February 1993.
• "Timberland: Walking Tall," Economist, August 4, 1990, pp. 56-57.
• "Timberland: 'You Could Pick Out Our People,'" Chief Executive, September 1998, pp. S10-S11.
• Williams, Christopher, "Dig These Boots," Barron's, March 11, 2002, pp. 20-21.

Source: International Directory of Company Histories, Vol. 54. St. James Press, 2003.

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