NEW YORK — Speedo, a shark in the competitive swimwear market, is trying to make a big splash outside the pool.
This story first appeared in the July 18, 2003 issue of WWD. Subscribe Today.
Roger Williams, president of Authentic Fitness Corp., a division of the Warnaco Group, which holds the U.S. license for Speedo, said, “We used to be a racing heritage brand, but now we’re turning into a lifestyle brand. We’re developing products that can be used in and around the water.”
About 30 million units of Speedo merchandise is sold annually in North America.
“That’s a lot of people,” Williams said. “It doesn’t matter if they’re buying Speedo to play volleyball or to lie on the beach.”
That’s the switch in the corporate strategy. Speedo-clad swimmers have won more gold medals than any other Olympic sport and the company remains devoted to hard-core swimmers training five or more times a week. But it also sees the potential of less serious water fans who are more relaxed about their water sports. So, the company is trying to position itself as more of a lifestyle brand by offering more products that go beyond the beach, like activewear and footwear.
“I don’t know that the swim business has changed that dramatically, but the market conditions have changed,” Williams said. “Consumers want to feel good with the brand they’re buying. Retailers feel comfortable coming to buy Speedo now that we’re out of bankruptcy.”
Founded in Australia as MacRae Knitting Mills in 1928, Speedo was introduced in the U.S. in 1960, thanks to Santa Clara Swim Club fans Bill Lee and Frank Metlick. They both had children who swam for Santa Clara. The duo became familiar with the brand during their trips to Australia, and Metlick, a former Pan Am pilot, initially brought samples of the product to the U.S. for the Santa Clara swimmers.
Lee and Metlick eventually set up American distribution through White Stag-Speedo because they believed the established White Stag outerwear label had more brand equity than an unknown Australian swim brand. In 1968, Speedo stood on its own as a separate company.
In the past few decades, the company has built on its success in performance swimwear by expanding into other categories. In the Eighties, Speedo introduced men’s water shorts and boys’ swimwear. Aquatic swimsuits for water fitness classes and girls’ swimwear were added to the mix in the Nineties. Over the years, Speedo broadened its assortment of accessories beyond its signature swim goggles to include swim caps, nose clips, bags, watches, towels and underwater radios, among other things. String bikinis and snug fashion T-shirts will be launched at this weekend’s Miami swimwear trade show.
Last year, the U.S. business generated $339 million in sales. That figure includes the $35 million generated by Speedo’s 44 freestanding stores in the U.S. Women’s swimwear accounts for nearly 10 percent of the brand’s total sales and that business has doubled in the past 10 years, Williams said. Further growth lies in activewear, footwear and “active-leisure” swimsuits for more recreational pursuits rather than training, he added.
Mark Sidle, owner of Swim-n-Sport, a 30-store chain based in Miami, said Speedo is probably the most recognizable label in the industry. That has partially been achieved through marketing and advertising, he said. Now, the brand “has come a long way in a short period of time” in plugging the fashion side of its business, he said.
“They started with product and are educating consumers. They’re following through with marketing and advertising,” Sidle said. “It worked for the athletic side. Let’s see if it works for the fashion side.”
Unlike most swimwear companies, Speedo has the advantage of having design and product development offices in Los Angeles, Milan and London, Williams said. That vantage point gives the company a global grasp of the swimwear market, he added.
With 200 team dealers who sell Speedo products to an extensive network of swim teams in the U.S., the brand is the dominant force in the racing market with about 65 percent of the total business, Williams said.
Former Olympian John Naber, who endorsed the brand for seven years, credited Speedo with helping to keep top-notch coaches in the sport. The company was the first to set up a team of advisory coaches, who were paid to keep their swimmers in Speedo swimsuits. Naber, a 1976 medalist, recalled how he and his teammates would purchase swimwear from their coach.
Not known to be a high-paying job, swim coaches typically work long hours, practicing in the early morning and evenings, and traveling to swim meets on weekends.
“It’s a tough job to make a decent living at,” Naber said. “Speedo helped keep great coaches in the sport longer than expected.”
As a sponsor of USA Swimming, the sport’s governing body that represents nearly 300,000 competitive swimmers, Speedo provides products and travel money for athletes to compete. A current Speedo-sponsored athlete, Lenny Krayzelburg, a three-time gold medalist and 2004 Olympic hopeful, said, “Thanks to Speedo, I’m able to make a good living. Our sport is a full-time job. We’re training six hours a day.”
Rod Davis, chief marketing officer of USA Swimming, said the company has had a “tremendous impact on the sport in a number of areas.” In addition to giving elite swimmers marketing opportunities and enabling them to train without having to work in more traditional jobs, Speedo also works on a grassroots level to get children involved with the sport.
The company also is committed to developing better fabrics and fits that enhances athletes’ performances by testing buoyancy and water resistancy.
“This is a sport where a blink of the eye makes all the difference between winning a medal and not,” Davis said. “Speedo is very much the fabric of the industry.”
Speedo USA also is reaching out to more recreational swimmers. Styling continues to be important for the brand, due partially to the $2.1 billion women’s swimwear market’s shift away from misses’ looks.
Aquatic performance-oriented suits that are not as technical as the racing styles are another strong area. That component of the business is being fueled by the estimated 20 million women who exercise in swimming pools regularly, Williams said.
Fashion is the third area that is gaining steam. In addition to offering more printed suits and other fashion-conscious styles, Speedo sees its activewear business as a growth opportunity.
Despite Williams’ optimism, the company has had its knocks along the way. In June 2001, the Warnaco Group filed for bankruptcy and did not exit until this February. In November 2001, chairman and chief executive officer Linda Wachner departed.
In the face of Warnaco’s woes, Speedo continued to woo customers with the introduction of an activewear line and an emphasis on recreational styles. During that time, the number of Speedo freestanding stores was reduced from 144 to 44. Closings took place throughout the country, from the Lexington Avenue store near Bloomingdale’s in Manhattan to the Dallas unit.
Wachner declined to comment for this story. In 1986, she led a leveraged buyout of Warnaco with an investment group, wrestling away control of the company from existing management. Wachner and her group paid 14 times cash flow — $500 million in borrowed money and a $200 million revolving credit line for working capital — at a time when the going rate for that kind of deal was about six times cash flow.
She took Warnaco from a $425 million-a-year apparel smorgasbord to a sharply focused, branded apparel maker that, 15 years later, generated sales of more than $2 billion.
For his part, Williams returned to Warnaco in 2001, after a nine-year hiatus from the company. During his break from the firm, he worked for Donna Karan, Guess Jeans and did some private consulting for other companies. Upon his return, the company was coming out of bankruptcy and that had triggered “a lot of turnover,” Williams said. Design and sales were two that remained “extremely stable,” he added.
Susan, Guensch, president of Speedo’s U.S. division; Tim Tate, executive vice president of sales, and Stu Isaac, senior vice president of sales and marketing, have been instrumental in product extensions and improved marketing, Williams said. Each of those executives has been with the company for 18 years or more, he noted.
In the last year, the company has worked to extend its product line by 25 percent. There’s also been a push for better deliveries, something that came about through investing in information systems and improving scheduling and forecasting, Williams said.
In terms of fabrics, Speedo continues to reinvent itself by working on the quality and benefits of its materials. The company is using nine-thread flatlock machines to help prevent seams from pulling, for example. Next year, Speedo is set to launch a swimwear fabric called Endurance.
“Endurance withstands chlorine and won’t lose stretch,” Williams said. “It’s a revolutionary fabric in the women’s swim area. We will show it at the July swim show.”
In addition to its testing and research laboratory outside London, Speedo USA works with universities and fabric vendors to do experimentation on fabrics and swimwear.
“The research of swim is a continual effort,” he added. “We treat it like a science.”