NEW YORK (TheStreet) - "If I had to choose one word to describe my Swiftwick socks, it would be unbelievable. I wear them day in and day out as well as for training and racing, and they don't break down. They stay put on my leg, even the tricky mid length 7". Wash after wash I keep expecting to find holes or tattered edges but no, these socks hold up! Forget about the lifetime warranty, I'm not sure I'll ever have to use it. Thanks Swiftwick!" - Trapper Steinle
Whether it's on Facebook (FB) , through Twitter (TWTR) hashtags or even article comments like the one above, it's easy to see why Swiftwick socks is the performance sock of choice for serious and professional athletes.
The secret for this growing Brentwood, Tenn.-based manufacturer is first and foremost the quality of product that's creating a fanatical fan base. However, there's more to the story.
Not unlike other small-business success stories, Swiftwick has a passionate entrepreneur steering the company. Entrepreneur Mark Cleveland, CEO and co-founder of Elicit Brands, bought the Swiftwick brand and design rights in 2008.
And so he started growing the business that way, making socks for companies like RadioShack (RSH) , Sun Life Financial (SLF) , the University of Purdue and others. But he also knew he could sell retail.
Retailers are moving to "micro-customization," Cleveland told TheStreet in an interview this month. "Here's a company whose reason for existence were small lines of customization. I knew I could make black white and grey socks to sell at retail stores. I knew that we could scale it."
The 25-employee company operates within a tight niche, with little interest in expanding into lower priced, mass-merchandised products that would distract the company from focusing on its target customer even if it did add to revenue. Swiftwick also knows that serious athletes like to shop in specialized stores as opposed to big-box retailers like Dick's Sporting Goods (DKS) or Sports Authority. The company is methodically expanding in the retail space to only those stores.
|Swiftwick CEO Mark Cleveland is looking to change the sock industry with performance-specific socks.|
Swiftwick is owned by Elicit Brands, which describes itself as a "technical apparel" manufacturer of antimicrobial socks in medical and military applications to specialty athletic socks and performance apparel. But it is best known for the Swiftwick socks.
The company has more telltale signs of today's small, yet vibrant companies - its emphasis on being environmentally friendly by striving to reduce energy use and its overall carbon footprint as well as being 100% Made in the U.S.A., both in terms of material and the workers who assemble the socks.
Before that Swiftwick, was operating as a commercial company that made custom logo-printed socks primarily to be given out at promotional events - races, charity events and corporate events, etc. Cleveland also owns Dirt Sweat & Gears, a company that promotes 24-hour mountain bike endurance racing that used Swiftwick socks as a giveaway during one race. He was so impressed with the sock, he bought the Swiftwick brand.
(Among other professional endeavors, Cleveland was part of the management team at Truckload Management when it was sold to Affiliated Computer Services in 2004. ACS was acquired by Xerox (XRX) in 2010. Cleveland had left the company before then.)
Today, Swiftwick sells in 1,500 stores nationwide, slightly modifying its compression socks to meet the needs of specific sports - running, golf, fishing, cycling, for instance. It recently inked a deal for its very first large retailer, the Bass Pro Shops. Swiftwick already sells a specialized golf sock in PGA Tour Superstores.
The company will even play a part in the 2014 Winter Olympics in Sochi. Cleveland says many National Hockey League players already wear Swiftwick's cut-resistant hockey sock, and that the U.S. Olympic hockey team, as well as the Latvian team asked Swiftwick for the socks.
Cleveland hopes the use of the hockey-specific socks for professional players will trickle all the way down to youth sports, in this case hockey.
"People who care about performance will connect with Swiftwick," Cleveland says in a written note following TheStreet's interview. "People who care about jobs and creativity in the U.S.A. will connect with Swiftwick - because that is what we stand for - firmly. What we have experienced is the enthusiasm our customers have for our shared values. It shows up in sales growth but it really is evidenced in the raw enthusiasm people have for our brand."
However Cleveland says he's not looking to sell merchandise in most big-box retailers.
"First, think about why someone walked into a specialty running store instead of Dick's or Wal-Mart (WMT) , they are coming to the specialist to get advice from someone they trust on what equipment. These are consumers who spend a lot of time carefully analyzing their cycling or shoes purchase," meaning they are more likely to purchase higher-end socks as well, he says. "You can't get exposure in a big box store."
Cleveland is not only looking to make a good sock, but to change an industry by making an environmentally-friendly product within a company that has some serious social responsibility.
When Cleveland talks about refusing to use dyes on the socks (like most socks worn today) or his unwillingness to make a sock that has "a 15-20% performance deficit" just to be able to sell in more stores, his passionate becomes evident.
"I have a desire to do things not just for the sake of doing it but because it fits in with a value system. I've run a lot of different companies. We talked about what kind of company we would be for two years before even opening the door," he says, adding that he wanted to change the industry instead.
Swiftwick also got the endorsement of former NFL wide receiver Derrick Mason, best known for his years on the Tennessee Oilers (now Titans) and on the Baltimore Ravens. In 2009, Mason made an investment in Swiftwick. Financial terms were not disclosed.
Mason's answer on why he invested in the company was similar to customer reactions. "It's simple," Mason said in the October 2009 release, "just wear a pair of Swiftwick socks and you instantly recognize something special. It seemed like an outrageous claim at first, their promise that this would be the best sock you've ever worn, but then I put them on. They're simply addictive."
Former NHL star Steve Sullivan, who began and ended his career as a New Jersey Devil, is also an investor, according to Cleveland.
At first glance, Swiftwick socks are pricey, given a pair of its socks generally run between $12 and $20 with sport-specific and other specialized socks running higher. Yet, for athletes who are serious about improving performance and understand the mechanics behind the creation of this specialized sock, these socks provide souped-up comfort and support by employing terms like performance compression and "moisture-wicking technology." In other words, the socks will help to improve blood circulation in lower extremities, the padded foot beds prevent blisters, they don't slouch and most importantly, the material the socks are made out of dries quickly and "wicks" sweat and water from the skin.
Swiftwick's VIBE line, a sock with the slightly-padded foot bed won't bunch or blister, sells $13 and $15 a pair.
Another option is the company's SUSTAIN sock line, created with post-industrial recycled nylon that appeals to the earth-conscious athlete, Swiftwick says, because no chemicals are used to wick away moisture, yet the socks still offers great compression and moisture-wicking capabilities. The socks sell for between $12 and $17.
The 'Sock' Market
The market for athletic socks is just under $2 billion - roughly 37% of the total $5.34 billion sock industry, according to the most recent numbers from The NPD Group.
Marshal Cohen, NPD's chief industry analyst, says the fastest growing segment in socks is performance-wear socks.
"Welcome to the new world of product. If you want to sell products and get growth, you have to have an innovative product and the sock industry is one of the few industries that have figured that out," Cohen said. "It's a very good thing."
"You can be a new brand emerging on the scene, whereas if it was just the same old basic business a new player doesn't have a chance" when it comes to getting shelf space or wall space, Cohen noted.
Cohen says whether the socks truly help improve performance or if it's just a marketing gimmick, it doesn't really matter. The fact is customers perceive the benefit in buying socks like Swiftwick.
That speaks to a bigger trend in retail these days. Companies like Under Armour (UA) , Lululemon Athletica (LULU) , Nike (NKE) even Gap (GPS) , through its Athleta subsidiary, are benefiting from performance improving gear.
"One of the very few hot areas in all of retail is athletic- inspired product," Cohen said.
Cohen adds that while two-thirds of consumers that purchase a running-specific sneaker, for instance, don't use them for running, "it is about inspiration and this lifestyle trend," he says. "That goes for food, supplements, fashion product and it even goes for some sporting goods and products."
While Cleveland wasn't willing to talk a lot of specific numbers, he did say that sales were roughly $6 million in 2013. "This year we have plans to put another 50% growth up," he says.
Cleveland believes there is plenty of opportunity for Swiftwick by expanding internationally, but also by expanding its compression-sock design to innovate in other industries, not just sports.
Last year, Swiftwick launched the first athletic compression sock for prosthetic limbs. This quarter, Swiftwick plans to launch a medical compression sock.
"We tend to swim upstream and we went in a space that nobody was innovating in, [a problem] that nobody was solving ... [amputee] athletes whose leg would fall off [during races]," he says. "For a micro-marketplace those people are so happy."
Still, Cleveland acknowledges that major challenges exist if the company wants to grow internationally. "Our focus has to be on supply chain [and] quality management because ultimately if I make a promise to a customer and they buy it ... the sock has to last," he said.
That can only happen if he finds partners that share the same values as Swiftwick, he noted.
But each time the company hits another milestone, bigger decisions will have to be made, says Miro Copic, principal of Bottom Line marketing and a marketing and branding lecturer at San Diego State University.
"The challenge that companies like Swiftwick will be faced with is how far do you want to carry this? At some point Swiftwick may have to sell in those big-box sports retailers if it wants to get to a $50 million company," Copic said.
"He's got a lot of upside on every level and my bet in the next few years he will have a line of products in Sports Authority or Dick's. It won't be the full line. But it will only be when he hits other milestones," Copic stated.
Cleveland says he's content on running the company as is. "I've been a part of taking company [public] before. I've run management teams. I can't think [of anything else] I would rather do with my time," he exclaimed.
"We have enough capital for what we want to do. We've been approach a couple of times to sell and it hasn't been attractive," he says. "We'll probably grow this thing as big as socks can get and there are a lot of people in the world that need socks."
--Written by Laurie Kulikowski in New York.