Economy Hurts New Era

[dfwabel]

The NY Times ran a story on New Ear today, it also talks about the stitches needed to make particular MLB caps.

NYT Story on New Era

From the story:

"We?re seeing a very jittery landscape,? said Peter Augustine, the president of New Era, which has its headquarters in Buffalo, 20 miles north of the factory here. ?People are trying to stick to their most conservative plans. Even Yankee hats are down despite the year they are having.?

Sales have slipped 10 percent so far this year at New Era, a privately held company that is the country?s largest sports hat maker and the official provider of on-field caps to Major League Baseball. In the past week, the company has laid off 27 workers at its warehouse in Mobile, Ala., and 40 percent of its workers at its factories in the state because of low demand. Some of them could be rehired when production recovers.

New Era introduced the iconic 59Fifty model in 1954. Within two decades, all but four major league teams were wearing the company?s hats. In 1993, New Era became the exclusive manufacturer of M.L.B. players? caps.

But it was an unsolicited call from Spike Lee in 1996 that redefined New Era and the hat market. Lee asked New Era to make a red New York Yankees cap, heretical at the time. The company complied and, thanks to Lee?s visibility, the caps became an instant hit. Soon, Yankees caps in every conceivable color were in demand.

?New Era is almost its own category, like the way Nike has done in cornering the market for sneakers,? said Aaron Jones, a merchandise manager at DrJays.com, an apparel retailer. ?I?ve tried the same types of fitted hats from other companies, and they don?t move in the same way.?

[neo_prankster]

This may sound pretty harsh, but I say it's the wacky designs and not the economy that's hurting New Era's sales.

[BrySmalls]

This may sound pretty harsh, but I say it's the wacky designs and not the economy that's hurting New Era's sales.

No, it doesn't sound harsh at all. They've really come up with a lot of goofy and nonsensical patterns.

[BRice16]

I think its more that nobody wants to pay $40 for a hat. I sure don't, especially one that doesn't fit because of the new materials.

[oakland ehs]

The goofy designs sell. Get used to it - not sure how you haven't already.

[BrySmalls]

The goofy designs sell. Get used to it - not sure how you haven't already.

Simple; haven't bought one

[Jigga]

I think its more that nobody wants to pay $40 for a hat. I sure don't, especially one that doesn't fit because of the new materials.

I wanted to pick up an Orioles cap a couple weeks ago, because I was going to the game the next evening, but the damn hat was $31.99. That was just too rich for my blood.

[hormone]

I'm going to echo what everyone says. I don't want a hat with crappy graphics or a high rise fitted hat with a flat brim that stretches across north america...all for $40

[BallWonk]

This may sound pretty harsh, but I say it's the wacky designs and not the economy that's hurting New Era's sales.

How would this even work? Are you suggesting that 10 percent of potential New Era buyers are so pissed off at the sight of a wacky design that they decide not to purchase the regular Yankees cap they came into the store to buy? That's just not a realistic theory of consumer behavior. Very few people punish companies for offering too wide a range of products.

I know that in my case, I've not bought at least two new 5950 caps this year because even at $22 and $25 a pop, a new cap feels much more like a luxury than a necessity this year. If my own employer sees any increase in revenue next year, I'm sure that I'll go right back to buying a few extra caps I don't need every summer.

The good news for New Era is that it's a privately held company. Publicly traded companies are held to a standard of creating shareholder value, which in practice most often means growing revenue, regardless of profitability, whereas privately held companies can absorb a period of declining revenue without shareholders freaking out.

[Gothamite]

I don't like the silly fashion designs either, but it's foolish to suggest that people have stopped buying authentic caps because of them.

[Swampee]

I am not a fan of the styles that New Era puts out that glorify the thug life. I also don't like the flat-brimmed hats either. I also don't like the Spring Training hats that look like yarmulkes with a bill and I am probably in the minority here, but I like the 5950's as I don't like low-crown caps. I wish that when New Era changed materials from the wool, that they would have made the 5950's with the material from the Spring Training caps instead of what they have now.

But, since 5950 New Era is one of the few caps that aren't truckers caps or the low crown ones, I guess I don't have much choice. I buy my caps frpm www.minorleagues.com for $26 instead of the $31-$40 caps.

[The_Admiral]

I am not a fan of the styles that New Era puts out that glorify the thug life. I also don't like the Spring Training hats that look like yamakas [sic] with a bill and I am probably in the minority here

I'd say you're not in a minority at all!

[Cujo]

I hate to break it to you, but almost everyone it hurting because of the economy. I'm pretty sure New Era isn't the only clothing manufacturer, during recent times, who are down 10%.

[HowBoutThemFins]

you mean no one wants to pay $30-$40 for a freakin hat they'll wear once every few weeks? well hot dog.

[cheo25]

I don't think it's the designs (though much of their stuff sucks) as much as it is their prices keep going up and the economy keeps going down. Unemployment in the U.S. is more than 9 percent.

[Cola]

I'm not in their demographic- I don't wear hats.

[BadSeed84]

If you ask me, I dont see any reason why ANY sports hat should be more than $20. ($25 at MOST)

[Lee.]

Think about it kids, you're paying $30-40 to advertise a team or company for them.

I repeat. YOU'RE paying THEM to advertise THEIR COMPANY.

Plus, yeah, the economy.

[BrySmalls]

Think about it kids, you're paying $30-40 to advertise a team or company for them.

I repeat. YOU'RE paying THEM to advertise THEIR COMPANY.

Plus, yeah, the economy.

Wait, isn't that with every piece of clothing?

[pcgd]

Its the economy. Athletic fan gear is pretty much last on the list of most people's luxury items and its suffering for hats, apparel, shoes, you name it.

It'll get back. I'm honestly surprised their sales are only down 10%. I think you'll find many companies in other industries suffering much more than that.