Harvey Sanders Interview
(CEO of Nautica Enterprises)

It's not often that you get to talk to the guy at the top, but that's exactly what we were able to do.

Harvey Sanders is the Chairman, President and Chief Executive Officer of Nautica Enterprises, Inc., a fashionable, trendy, clothing line.

Last year Nautica's sales topped the $300 million dollar mark. There are 38 Nautica outlet stores in the United States. The international outlook for Nautica is strong with licenses in South America, Central America, the Caribbean, Australia, New Zealand, and the Pacific Rim Countries. New stores are expected to open in Chile, China, Costa Rica, Japan and Mexico.

With that in mind, we talked to Harvey Sanders about his position at Nautica and the future of the company.

Q. You were in Syracuse last year, talking to students at Syracuse University about Nautica and retailing. I would guess that to get a guy like yourself to do a lecture, is a rare occurrence. Am I right about that?
A. Well, yes. Leon Genet, who I happened to meet at the time I was coming to Syracuse impressed me as a wonderful man who was doing such a good job for the University, in terms of bringing people in our industry, up to Syracuse to talk to students. We always like to do things for younger people out there. It wasn't a big deal. I said yes immediately.

Q. Do you lecture at other Universities?
A. The only other University I do it at is my alma mater, which is the University of Maryland.

Q. Now, when you show up at the office everyday, is there a routine for you or is every day different?
A. Well, every day is different other than the fact that when I don't have a breakfast meeting or a meeting early in the morning, I come in and put down what I would like to accomplish for the day, and people that I need to talk to, call, and talk to, and things that need to be followed up on.

Q. Do you have a say in the creative end of the business? Do you approve the fashion styles Nautica markets?
A. The creative end of the business, the approval, is done by Mr. David Chu. He is the president of the Wholesale Division and the Head Designer.

Q. So you don't concern yourself with that?
A. I try not to, only in terms of content, not in terms of the design.

Q. How many hours a day do you work?
A. I get in early and I leave anywhere between five thirty and six thirty. So, I'm in from seven 'til six. Sometimes I'll come in early in the morning, get a work out in prior to working, so I'll get to my desk at eight or eight fifteen. But, I have two little kids so I usually leave here by six o'clock.

Q. Does this job require you to travel extensively?
A. Yeah, there's a lot of traveling. It used to be more internationally as I was involved in the merchandising and production end of it, but now, it's more domestically.

Q. Is being a CEO everything you imagined it would be, when you were starting out?
A. To tell you the truth, I never imagined myself as a CEO, because I grew up basically with an athletic background, being part of a team, and having it drilled in my head that everyone is an equal member of the team, regardless whether you're the President or the ball boy. But, you know, it's fun. The bigger you get and the more you grow, the more people that are involved, the more problems you have. Fortunately, they've been good problems for us.

Q. Syracuse is pretty much a jean and t-shirt city. People really don't dress up here. This isn't Palm Beach, or Palm Springs or New York City. With that in mind, how does the Nautica merchandise sell here?
A. Actually, our Kaufmann's store which is the Carousel Mall is one of the best Kaufmann's stores in the past year, in terms of trending for Nautica product. Not the biggest in their chain, but the trend has been as good as any other store within their chain of stores. So, it sells rather well up there in the college environment.

Q. These shops that carry the Nautica product in stores like Kaufmann's are supported by a group of merchandise coordinators and retail analysts.
A. Yes.

Q. When do these groups of people come in to do their job?
A. Well, a merchandise coordinator will get to a store depending on the store, and the size of the store anywhere from once every two weeks to once every five or six weeks, depending on the size and proximity to their territory. The retail analyst who works with the buyer on assortment planning would only be there once or twice a year.

Q. Who at Nautica came up with this whole concept on "in-store" shops? That's an original Nautica idea isn't it?
A. No. Actually we would love to say we were the first to do it. We've tweaked it a little bit in terms of how we would like to run a shop, within a department store. But, the first ones to really do this were really Ralph Lauren Polo.

Q. By positioning a Nautica shop at the entrance of a store, you must have to pay a fortune for that privilege?
A. No. If we were not good, we would not have that position. If our business wasn't good, we wouldn't have that position. The negotiation is, there are many resources that are very good in the collections world which is where we sit, and why should we get the prize location versus Polo, or Tommy Hilfiger, or Claiborne or anybody else. So, that's where the negotiation comes in. It's usually based on pure business and how much volume you're doing in that market, or that particular door.

Q. You're planning to introduce a women's clothing line?
A. We've introduced that clothing line.

Q. When did that happen?
A. Last fall ('96).

Q. Your net sales were $303 million dollars and from that your net earnings were $32 million dollars. Does that mean Nautica is operating on roughly a ten per cent profit margin?
A. That's correct, sir.

Q. That seems like you'd really have to be selling a lot of merchandise to make it all worthwhile. The profit seems low.
A. Not really. On a net basis that happens to be one of the highest in our industry.

Q. In the annual shareholders report it states, "Retail in general has been difficult in outlet malls." Why is that? Aren't more people turning to outlet malls these days?
A. No. As a matter of fact, the outlet mall business is having a rather difficult time of it. That's because the only brands that are doing well in the outlet malls are for the most part the brands that are doing well in the department stores, the brands that are putting money behind their product to advertise and market it to the consumer. There are less and less of those; so why would someone drive an hour or two hours to an outlet mall to get a brand which they can probably find on sale anywhere they'd like to? Nautica's position is we're a very attractive brand with a good awareness amongst consumers. The consumer will drive that hour and a half to get a deal, a good buy on a Nautica product.

Q. I've noticed the word Nautica spelled out in big letters on the sleeve of one of the jackets you sell. You realize of course that when a person walks down the street with one of those jackets on, it's an invitation for someone to try and steal the jacket off the owner. Why does the company find it necessary to spell out Nautica in such big letters on the jacket sleeve, thereby inviting trouble?
A. It's part of the design. I guess it could be smaller, but obviously if people are buying it with the larger name they like it. It’s a Catch 22.

Official Website: Nautica.com

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