Blair Corp. shuts down Allegheny Trail

The history of Allegheny Trail will read as follows: launched on July 15, 2003, by Blair Corp. (Amex: BL) with a flourish, died April 30, 2005, with a whimper. Thus ends what has to be one of the shortest tenures of a new company in the history of outdoor industry launches.

SNEWS® learned at Outdoor Retailer Winter Market that Allegheny Trail had pulled out of the show, and that the company’s general manager, Dick Holcombe, had accepted a position at Filson, taking a job as an executive vice president.

The decision by Blair’s board of directors to shut down Allegheny caught retailers and company staff somewhat by surprise, though conversations SNEWS® had with staff in late 2004 indicated that the waters for Allegheny were pretty choppy and getting stormier. Allegheny Trail was Blair’s first venture into the world of wholesaling, and apparently the board was not entirely enamored with the process.

Bob Crowley, a senior vice president with Blair and a member of the board of directors, confirmed to SNEWS® that the board had made the decision to shut down Allegheny primarily as a result of the findings presented in a New Horizons study, conducted on behalf of Blair by the national marketing and strategy firm, McKinsey & Company.

That $2.2 million study helped Blair reach the conclusion that the company’s core competency was serving customers who were women over the age of 60 and with a lower income. Allegheny Trail, on the other hand, fell well outside the focus of the study, according to Blair.

Crowley also told SNEWS® that, “We struggled to get it (Allegheny Trail) going and kept getting promises, only some of which came through. We were a long way from becoming profitable.”

Though no one at Allegheny would talk with us on the record in February or March, in looking back at notes from conversations we had with company executives last year, it appears that Allegheny saw things one way, the Blair board another.

Toward the end of last year, we were told that Allegheny was “poised to be profitable in 2005” and that sales were expected to be in the $15 million to $18 million range by the end of ’05. That’s a far cry for being a “long way from becoming profitable” and “struggling to get the company going.”

When we asked Crowley why Blair didn’t try to sell Allegheny, he informed us that a potential sale was discussed, but it fell through. As such, Blair was simply shutting Allegheny down to, as the company announcement stated on Jan. 25, leave the wholesale industry so that, “our financial resources can be invested in the areas of the company that focus on our core customer base and better position Blair for long-term success.”

SNEWS® View: Reading between the lines here, it is not hard to see what probably occurred. Wall Street probably wanted Blair to diversify outside of its catalog and direct marketing of men’s and women’s apparel and home products business, so Blair thought, “Nifty, we’ll start an outdoor apparel brand and begin a wholesale division.” Seemed like a good idea at the time since Blair has fantastic sourcing resources in Asia and would be able to help such a launch achieve rock-bottom prices and good retail margins right out of the gate. With Holcombe on board, it had an industry veteran who understood the apparel biz and who liked to run things a bit differently. Anyone who saw Allegheny’s ugly person ads (one of which was awarded an Addy recently, we’re told) or ads that poked fun at margins certainly knew Allegheny wasn’t going to be a run-of-the-mill operation. Trouble is Blair is a conservative company, while Holcombe and team are far from conservative. In addition, Blair’s numbers weren’t exactly stellar and, being a company that knows, loves and understands cataloging and retail, it likely wasn’t too hip when it came to running a wholesale biz — retailers and wholesalers are like oil and water when it comes to approaching business.

So, in 2003, and on the heels of the study by McKenzie (one that was reportedly run by three women all over the age of 50 according to insiders — not exactly the Allegheny Trail demographic), Blair first axed the Crossing Pointe catalog. Insiders told us that near the end of 2004, Allegheny Trail was being asked to justify expenses and in many ways its business plan — a nice way of saying “you ain’t getting any more money from the board unless you can convince us it is worth it,” in corporate speak.

Doubtless, Blair needed another write-off on the books and there was only one company left, after saying goodbye to Crossing Pointe, and that was Allegheny. Could Holcombe have convinced Blair to support Allegheny for a bit longer? Perhaps, but that would have meant a personality change for him, since those who know Dick best know that he is not a boardroom kind of guy. He’s a creative, street-smart, roll-up-the-sleeves and get it done kind of guy, and boardroom glad-handing and dancing just isn’t his cup of tea, and in the end, that probably cost him and cost Allegheny as well.

End of story? Perhaps, but it would not surprise us to see Allegheny sold. However, unless Holcombe is at the helm, it’ll just be another off-price brand doomed to struggle.