On the ball
On the ball
Knott, 44, has learned to trust his gut over the years because it has been right more often than not. It led him to start his company and eventually leave a gig as sales rep for clothing maker Burberry Ltd. He lifted the name “Peter Millar” from an antique lawn-bowling ball his mom gave him because he thought it and the ball gave him enough of a story to hang a marketing campaign on, and he’s built it into one of the hottest brands in golf apparel. At the PGA Tour’s BMW Championship in Chicago last September, 12% of the competitors wore shirts made by Cary-based Peter Millar LLC, second only to Adidas’ 13%, according to Los Angeles-based Darrell Survey Co.
Though basic economic principle says prices rise with demand, Knott’s conservative approach has worked. After he started the business in his garage nine years ago, it grew to nearly $10 million in sales by 2005 and expects to gross more than $30 million this year. Peter Millar clothing is available in just over a thousand stores, with a goal of maxing out at about 1,500 by the end of next year. Its bedrock is colorful cashmere sweaters and knit shirts, and it’s been expanding offerings — from boxers to formal wear — in hopes of claiming a bigger share of every well-dressed man’s closet.
But unless you shop at Nordstrom, you won’t find Peter Millar in your favorite department store anytime soon. Knott, who focuses on design, and CEO Scott Mahoney have turned down $3 million orders because they think golf shops and other specialty stores are their best bets to protect their margins, cachet and focus.
It’s not a wildly popular strategy for coping with a weak economy, Knott admits. “In these tough times, to not take a $3 million order — nobody is doing that, that I know of.” But company executives worry about what will happen to their brand and their cozy niche if they get into a high-volume slugfest. “If you live for the minute,” Mahoney says, “and you take that $3 million order without understanding the impact it has on you two years down the road, you lose.”
Some people go their whole life without knowing what they really want to do with it. Many wait until college to make up their minds. Not Knott. He grew up on a tobacco farm near Fuquay-Varina, which was then “a lot like Mayberry.” By the time he was a teenager, he had learned to sucker and to pull a plant bed. That taught him the value of hard work and the reward it could bring, but it was hot and dirty in the fields and warehouses. He was drawn more to the world he saw each August when his mother took him to shop for school clothes at Ashworth’s Clothing, a family business that has been on Main Street since 1937. “That’s when the clothing business caught my eye.”
In his teens, he worked at the store after school and on weekends. “The Ashworth family instilled in me the idea of value and quality. They never chased a bubble, either. I was 16 years old and going with Steve Ashworth to New York on buying trips. We’d bunk with sales reps and go for $300 for the week. Today, you spend that in one day. I was lucky to see the industry at a very young age and said, ‘This is where I’ll be happy.’”
After earning a bachelor’s in merchandising at East Carolina University in 1987 — while working part time at a Greenville haberdashery, Coffman’s Menswear — he spent more than 10 years as a sales rep for lines such as Hugo Boss and Joseph Abboud. In 2001, while working as an independent contractor for Burberry, he found an underserved niche — cashmere sweaters priced below the market. In early 2002, he formed Barcelona LLC — he saw the word in a magazine and liked the way it looked and sounded — designed the sweaters and had them made in China. He shipped his first batch that August. They retailed for $250 to $275, undercutting British-made sweaters that sold for about $395. “I found a market but very quickly figured out that if you ship sweaters for fall, you don’t have any money coming in for spring.”
But spring is a fine time for knit shirts. Most of the good ones were from Italy and very expensive. “I saw the need for a knit shirt that washed the right way, looked the right way, was priced right, fit me the right way. I couldn’t find a knit I liked, so the next venture was into knit shirts.”
Many of the brand names he considered when starting his company were already in use or claimed by URL and trademark speculators. He had used the bowling ball as a prop for clothing shows as a sales rep and decided to use the name on it. He doesn’t know why the name was on the ball or who Peter Millar was, but, as with Barcelona, he liked the image it projected. One of the company’s early advertisements and promotional pieces featured well-dressed golfers on a seaside course with a hundred words of text that built on the idea that “Peter Millar was the emblem of an era. He was worldly, sophisticated, honest and unflappable. A modern renaissance man.”
Knott decided to sell his wares in stores like the ones he knew in his youth — Ashworth’s in Fuquay-Varina and Coffman’s in Greenville. But several of his sales reps around the country placed the shirts and sweaters in high-end golf resorts and pro shops, and the merchandise moved. “They’ve been right on target,” says Chris Dalrymple, the proprietor of The Gentlemen’s Corner in Pinehurst. “They understand their customer. They use color very well. I like to believe I sell nice clothes a man can play golf in. That’s what they do as well.”
The fashion world took notice — and so did Mahoney, then vice president for golf and tennis at New York-based Polo Ralph Lauren Corp. “Peter Millar seemed to crop up everywhere. They did surprising things — a cashmere outerwear vest, golf shirts styled differently from what everyone else was doing.” Mahoney liked the business and brand so much that in 2005 he joined Knott as a partner. That same year, Knott sold a 60% stake in the business to Sea Island Co., a real-estate and resort-management company in Sea Island, Ga. He and Mahoney split the remaining 40%, though they won’t say how it’s divided. The company name changed to Luxury Apparel Group LLC.
Last year, Sea Island sold its stake for an undisclosed price to Winona Capital Management LLC, a Chicago private-equity firm, and Luxury Apparel Group became Peter Millar LLC. In Winona, Peter Millar found a partner that didn’t want to change the apparel maker’s distribution strategy, Mahoney says. “One group that looked at buying Sea Island’s stake said that in six months they wanted to blow this thing out in major department stores. That’s not want we want to do.”
Recession hits specialty stores particularly hard, says Erin Ashley Smith, a retail analyst with Argus Research Co. in New York. But manufacturers can command higher prices and bigger margins there than in the major chains. “You’re kind of at the mercy of the big-box players. They’re going to say, ‘We’ll pay this amount.’ And if you want your product there, you have to go with it.”
Selling clothes through a specialty shop also gives manufacturers more ability to shape their image. They have more control over how products are displayed and more sales support in the store. “If you sell $39 fleece sweats, you can sell them anywhere, because kids can buy them,” Knott says. “But if you’re like Peter Millar and you’re selling $100 woven shirts, you have to be in places where the salespeople can romance the product a little bit. They can’t do that in a big-box store. They don’t have the wherewithal to do that.”
In building his brand, Knott tried to correct many of the irritants he had endured over the years. The company ships its shirts with stainless-steel clips instead of pins, and the pearl-colored shirt buttons are unbreakable. Labels for men’s boxers are sewn on the outside of the leg.
The company has worked hard to distinguish itself among its retailers, too. Boxes with Peter Millar shipments contain a mint and sometimes a voucher for a free cashmere sweater for whoever opens the box. “We want the guy in the stockroom or the shop owner to open our box first and get the product on display,” Mahoney says. “We work hard to make sure our paperwork is perfect. If the paperwork is screwed up, the guy in the stockroom will put off dealing with it. The magic’s in the little details.”
Though sales have flattened some in recent years, Peter Millar has held up better than many clothing makers, partly because of its consistency, Mahoney says. “A lot of companies are pigs with their margins. Chris priced everything below these Italian companies that were thriving in a hot economy, and he sourced things incredibly well. Then the last 18 months, the super-luxury world has plummeted. We’ve been positioned in this little sweet spot the whole time.”
Today, Peter Millar has 30 employees and operates out of a 27,000-square-foot office and warehouse. Its headquarters bustles with energy from the youngish staff and exudes an informality that fits a company marching to its own beat. Flip-flops are fine, and employees get summer Fridays off to go to the beach or mountains. Mahoney and Knott are comfortable pitching their wares to sophisticated buyers in a formal club setting but also kicking back and having a sandwich with the guys in the shipping room.
But they can’t relax too often or too long. Though the economy seems to be on the mend and the company’s spring sales are projected to grow 30% over last year, Knott hasn’t forgotten something Dalrymple, a mentor and longtime customer, once told him: It’s not the bad times that will kill you — it’s the good times. “What he meant was that when things are good and you’re riding the wave, you don’t pay attention to the details. You lose sight of what made you good in the first place. Then when things turn sour, you’re in trouble.”
Lee Pace is a Chapel Hill freelance writer.