Implus, which started out selling mail-order shoe insoles in 1988 and focused on footwear accessories for its first two decades, found itself at a crossroads seven years ago.
“We realized that if we wanted to continue our growth rate, we had to get in a broader set of categories,” said Seth Richards, CEO of the Durham-based business.
So the privately held company, which had made its first acquisition just a few years earlier, ventured beyond footwear by purchasing Little Hotties, a Kent, Wash., company that produced hand, body and toe warmers. That was the first of a series of acquisitions – including six in the past two years – that have transformed the business.
Today, Implus has more than 450 employees and expects to generate more than $300 million in revenue this year.
A broader range of products has enabled the company to post robust growth. The company has been growing at a 20 percent annual clip, Implus executives say, with roughly half of that growth coming from acquisitions.
For Implus, buying a company usually has meant expanding its brand portfolio, which now includes 16 different consumer brands.
“Most consumer product companies are very narrowly focused on where they distribute their products,” said Todd Vore, the company’s president. “We’re not intimidated … by managing multiple brands in different channels of distribution.”
The company’s products are sold in more than 50,000 retail outlets nationwide in a wide range of categories: big-box retailers such as Wal-Mart and Target; grocery stores including Publix and Harris Teeter; Walgreens, CVS and other drug stores; sporting goods stores such as Sports Authority and Dick’s Sporting Goods; Famous Footwear and other shoe stores; specialty running stores, including Fleet Feet Sports; department stores such as J.C. Penney and Macy’s; and online retailer Amazon.
Implus products are made by contract manufacturers in 50-plus factories in more than a half-dozen countries, including China, Pakistan, Canada and the United States.
Similarly, the company’s lineup of products defy categorization.
There’s no easy or quick way to encapsulate a business that includes the likes of: Sneaker Balls shoe deodorizers; DryGuy “forced air” dryers that dry out boots and gloves; TriggerPoint massage products; and FuelBelt hydration belts used by athletes to carry water bottles and other items.
Footwear accessories remain a crucial part of the mix. The company’s leading brand is Sof Sole, a line of insoles, socks and a lengthy list of other products – from waterproofer to cleats – that account for more than 40 percent of total sales.
The company’s acquisitions have been businesses with annual revenue ranging as low as $1 million to as high as $30 million.
“The smaller ones generally have to be a strong fit with one of our big units,” Richards said. “The larger ones can either be a strategic fit within an existing business unit or, in some cases, they have provided the foundation for a new business unit.”
Generally, said Vore, the brands that Implus has acquired were either leaders or pioneers in their category.
Most, but not all, of the company’s acquisitions have been successful.
A notable exception was the company’s 2009 acquisition of Highgear, which produced watches designed for hiking, skiing and other outdoor activities. Although that business flourished initially – growing fivefold in 24 months – Implus shut down Highgear in 2014 after Fitbit and other smart watches changed the competitive landscape.
“It got to the point that the technology was changing so rapidly we just couldn’t compete,” Richards said.
Most of the companies that Implus acquires are at a crossroads where they need to either make a major investment in infrastructure and people or, alternatively, find a strategic partner.
“In some cases, they simply can’t get the capital to address the growth of the company,” Vore said.
One of the key criteria for pulling the trigger on an acquisition is whether there are cross-selling opportunities.
Take, for example, the company’s acquisition of Yaktrax, a producer of shoe attachments that provide traction on snow and ice. If you had scanned a list of the top 100 retail customers that sold Implus products and the top 100 that sold Yaktrax, they had only 7 customers in common.
“So when we acquired Yaktrax, we were able to take our incumbent product lines into the Yaktrax customers, and the Yaktrax product lines into our customers,” Richards said.
The strong relationships that Implus has formed with its retail customers are key to its cross-selling efforts, said Greg Stryker, director of marketing.
Indeed, last year when Boston-based Berkshire Partners teamed up with Implus management to buy the company from a New York private equity firm, Trilantic Capital Partners, the announcement of that deal asserted that Implus “helps retailers to navigate resource and time constraints by using state of the art logistics, merchandising and marketing capabilities.”
Although Berkshire officials declined to be interviewed for this story, Implus executives fleshed out what that means.
Mine the data
For some retailers, it means “we actually write our own orders,” said Richards. In those cases, the retailers stipulate how much product they want in a given month but leave it up to Implus to make sure that “the right product is at the right store at the right time.”
“We have a category management team of people that literally mine the data and determine what store has the highest demand by SKU to generate the order,” Vore said. A SKU, or stock-keeping unit, is used to track inventory; each size or color of a product has its own SKU.
Rapid turnaround of orders also is crucial for retailers.
When nasty winter weather strikes, said Richards, Implus can receive new orders for Yaktrax products from up to 500 retailers in a single day.
“We need to turn those (orders around) in the same day because it’s a weather-dependent product,” Richards said.
Implus’ growth has outstripped its 310,000-square-foot headquarters building along T.W. Alexander Drive in Durham, which encompasses both office space and its warehouse operations. So the company is planning to expand into a new 135,000-square-foot building, under construction next door.
And it also remains on the prowl for new acquisitions.
“We’re not going to get into apparel. We’re not going to get into footwear,” Richards said. “But as long as it’s within the accessory business, we’ll look at anything that makes sense.”