 Taps for an apparel company legend
By Ron Chepesiuk
Two decades ago, the Simi Valley, Calif.-based Bugle Boy was one of the first casual wear manufacturers to target the twenty-something market. The Asian American-led company grew and became one of the most famous names in the apparel retail industry. Just three years ago, the company’s revenues topped $500 million, while employing 5,500 and owning more than 258 retail stores.
But all that’s history. Last March, Dr. William Mow, the Chinese American founder of Bugle Boy could only watch as his business was dismantled and sold off.
Riding on Parachute Pants
Jim Dion, president of Dionco Inc., a Chicago-based retail consulting firm, said he wasn’t surprised that Bugle Boy went bankrupt.
“In today’s retail industry, a company is either growing [hot] or stagnant, and Bugle Boy was still relying on the legacy of its parachute pants, a concept it started more than 10 years ago,” Dion said. “The company was simply not able to move beyond the parachute concept and develop a new sustainable look.”
Jim Okamura, a senior partner in J.C. Williams Group, a Chicago-based retail consulting firm, pointed out that the Bugle Boy saga reveals the difficulties of surviving the apparel industry’s brutal competition.
“We have seen several clothing companies go through some tough times lately,” Okamura said. “It shows how crucial it is today for businesses in the apparel industry to make the right buying and marketing decisions.”
Bugle Boy became a high profile brand in the mid-1980s with the launch of its ad campaign, in which a sexy model sits in a car, asking, in a sultry tone, “Excuse me. Are those Bugle Boy jeans you’re wearing?”
The Man Behind the Pants
Bugle Boy’s kick-off was part of the remarkable comeback of William Mow (born Mow Chao Wei), who less than a decade earlier had experienced his first bankruptcy and knew zero about retailing or the apparel industry.
In 1949 at age 13, Mow had arrived in the United States on the last plane to leave Shanghai before the city fell to the Communists. His family settled in Great Neck, New York, where they opened a restaurant. Mow earned his B.A. from Rennselaer Polytechnic Institute in 1963 and a doctorate in electrical engineering from Purdue University in 1967.
Two years later, Mow invented a method to test large-scale integrated semi-conductor chips — and founded Macrodata. The company secured $1.75 million in venture capital funding, and Mow’ invention became the prototype for a generation of testing equipment.
Macrodata took off. The company went public in 1973 and Mow made his first fortune. But by 1976, problems had begun to surface. In a profile of Mow, the Rennselaer Polytechnic Institute alumni magazine simply states: “Dr. Mow’s fortune in electronics changed, and he began looking for another venture.”
The truth, though, was that Mow was caught up in a scandal. The entrepreneur’s partner bought him out, accusing him of falsifying the value of the company’s inventory. The U.S. Securities and Exchange Commission began investigating. Mow cleared his name, but his former partner had him sign a three-year, non-competition clause that kept him out of the electronics industry.
In a 1992 interview with Singapore’s Business Times, Mow described his ordeal as a bitter blessing. “In retrospect, they probably did me a favor, but at the time it was devastating,” he recalled.
Mow never doubted that, given the right opportunity, he could bounce back from the brink. Then, he stumbled into the apparel industry and founded Dragon International, an import company.
Why didn’t he stay with what he knew best — technology?
In 1999, he told CNN reporters: “There’s an old saying I remember from my parents that says, ‘good horses don’t eat the same grass twice.’ I already went through the path one time, and I really wanted to do something completely new. I felt I was so far ahead in electronics. Most of the people at the time called me the future shock. So, it was a good time for me to veer off and get into something new.’
But it was a humbling experience going from tech wizard to standing in small sales booths at conventions trying to sell clothing. It was “emotionally devastating,” Mow conceded.
Master of an 80s Fashion Fad
And nurturing a new business wasn’t that easy, either. Bugle Boy suffered $2 million in losses during the first four years of operation.
But in 1984 Bugle Boy hit gold. It sold 10 million pairs of casual nylon twill pants peppered with zippers. The unique style of pants became known as ‘parachute pants,’ defining the style for a generation of young men.
The pants were a fad, though, and when tastes changed, Bugle Boy was left holding thousands of pairs of the pants.
“That’s the fickleness of youth,” Okamura observed. “A pants style can be in one year and out the next. It’s tough trying to stay on the cutting edge of such a market.”
Despite the downfall of the parachute pants craze, Bugle Boy’s line of products still had name recognition. The company was high on the vendor rosters of most major department and specialty stores, earning Bugle Boy a niche in the apparel retail industry.
By 1993, Bugle Boy had made money each of the previous seven years and profits had jumped to $15 million annually. Mow owned 90 percent of Bugle Boy. He began talking about going public to raise the cash he needed to help him achieve his goal: a billion dollars a year in sales.
The Quick Decline
Some analysts, however, began voicing skepticism.
Harry Bernard, a partner at Colton Bernard, a San Francisco-based apparel consulting firm, told the Los Angeles Times: “The history of the company has been fast-paced and geared toward trading merchandise. That’s still their strength, but in many ways it’s their vulnerability. It’s very difficult to make a transition from young men to other lines.’
As sales dropped in the late 1980s, Bugle Boy attempted to diversify. The company used its network of Asian suppliers to create a less flashy and more basic line of shirts and pants. It even built a T-shirt plant in Rancho Dominguez. Still, moving the inventory was slow, so Bugle Boy made a bold move and opened 109 nationwide outlets.
Along the way, Bugle Boy made a lot of mistakes — expansion only exacerbated the problems.
A department store manager in the 1980s, Dion recalls the frustration of buying from Bugle Boy. Deliveries were often late and many times they included items he hadn’t ordered.
“Bugle Boy has some customer franchise, but it was more the boys and not the pants who asked for the brand,” he said. “As kids came of age, Bugle Boy had turned off enough retailers that many were not carrying them. When Bugle Boy started opening its own stores, it was the nail in the coffin for its wholesale business because retailers don’t want to compete with manufacturers.’
By 1999 Bugle Boy was struggling to reposition itself in the apparel market.
“The company was in slow decline,” Okamura said. “Their inventory was building up and they were having a hard time moving it. Bugle Boy still had name awareness, but I’m not sure they had what it took anymore. They were losing touch with their young fashion customers.”
In 2000, Bugle Boy began targeting the young women sector. In January 2001 the company announced an alliance with One Line Clothing, a Los Angeles-based company. Gail Vasquez, director of licensing at Bugle Boy, said her company’s offerings would be “fashion forward” and include layered T-shirts, crocheted tops, denim, twills and novelty trims.
But by February, it was obvious that nothing could keep the Bugle Boy enterprise afloat, and the one-time fashion powerhouse filed for Chapter 11 bankruptcy. Founder William Mow quietly left the company. It abandoned its headquarters building, began laying off its 3,796 workers, and started the painful process of closing down its 150 locations. Bugle Boy reportedly owed its principal lender, Foothill Capital, a division of Wells Fargo, more than $80 million.
In April, the Columbus, Ohio-based Schottenstein Corporation, a leading Midwest department store chain, bought Bugle Boy’s wholesale operations for $68.6 million. For that money, Schottenstein got Bugle Boy’s trademarks, inventory and accounts receivable and the right to license the brand.
The Bugle Boy brand, however, has minimal value, according to Dion. “GAP, American Eagle, A&F, and Old Navy own the young customer market today, and their brands are 10 times stronger,” the retail analyst said.
William Mow has dropped from sight.
“We see it all too often today,” Dion said. “Many retailers don’t understand that they have to be proactive to thrive. Dr. Mow thought he had a winning formula, but the world changed and he was not willing to change with it. The lesson to be learned is simple — innovate or die.”
Business reporter Ron Chepesiuk is a Rock Hill, S.C.-based journalist. He can be reached at 110423.2656@compuserve.com. |
