At the last round of tradeshows, I saw that the Truth Soul Armor booth was packed with buyers. I decided to check in with owner Jeff Ray, right, to see how the year turned out.
The brand added lots of new accounts, including some national chains, doubled revenue, and is moving to a new corporate headquarters in San Clemente. I asked Jeff some questions, including his outlook for 2009.
We’re nearing the end of 2008. How did business go for Truth this year? How much did revenue grow and how did profits hold up?
It’s been another great year for us; we doubled revenue again to $3.9 million, so that’s really good. Our year-over-year margins have actually improved, and we expect to beat our plan for the year.
Any new big accounts that spurred the growth?
Obviously the Buckle helped! They have a great team there and have been pretty supportive, adding some juniors stuff this year really helped. Aside from that, it was just the core stores going a little deeper and adding an average of 16 new stores per month. That’s almost one new store a day! We’re also currently starting a number of new significant regional, and national relationships and are optimistic regarding ’09, in spite of current economic conditions.
You mentioned Truth is moving to a new headquarters. Why is the company moving and how big is the new space?
We’ve just outgrown our spot. My office is now the conference room, we’re trucking inventory in and out of the warehouse daily. It’s just time to move.
We were able to negotiate a bigger place at a better price, right here in San Clemente, so it was a no-brainer. In addition, the new corporate office lays the foundation for additional growth opportunities. The new space almost doubles the square footage of our old building.
I’ve heard lots of reports from brands that retailers are canceling and/or delaying orders for holiday and spring. Are you seeing that as well?
We have experienced a little of that, but what’s been really challenging has been a couple of the stronger retailers saying, “We can’t prebook spring.” They are like, “Yes, we’re completely sold out of your product, but our managers/owners are saying we have to wait and buy in season.” That’s a bit hard to swallow, but like others, we are taking all this in stride, until things get back to normal.
Where retailers are not ordering ahead for spring, what are you doing? Are you still making the stuff assuming they will buy it? Are you nervous at all about taking on that inventory risk? And how do you decide how much to make?
Inventory is the nemesis of any small brand, and we have learned our lesson the hard way through the years.
For spring ‘09 we have ordered a small amount of cut and sew product to hold, but when it’s gone, that’s it. After that, it’s all about printables and anything else we can turn quickly and domestically.
I don’t want to sound whiny, but the timing of the spring tradeshows really exacerbates this problem. Our offshore resources are quoting 120 days. Even if you collect all your orders by the end of September, you’re already behind. I’m wondering why those shows aren’t in July?
What are you forecasting for 2009? Is the launching any initiatives to help it navigate the economic recession?
We have scaled back our growth plans a bit to adjust for current market conditions, but we continue to be optimistic. We still have a lot of growing to do, so we made a few key hires, added some great athletes to the teams (which we are ecstatic about), and are really excited to go live with our new software system, Full Circle from Innovative Solutions. We did a lot of research, and are convinced it’s the best solution for Truth.
What some see as doomsday, we’re viewing as a challenge with opportunity around the corner.
What kind of accounts are the “sweet spot” for Truth these days?
That’s a tough question, because honestly we’re still evolving as a brand. … The brand really transcends so many genres. It’s a good problem to have, but we find ourselves succeeding in core surf and skate shops, MX shops, national chain stores, and high fashion boutiques. … They’re all sweet spots!
At the core of every remarkable brand is an authentic story, and we have the opportunity to put on display the greatest story ever told! Our brand message is one of hope, and who can’t use a little hope right now.
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