L.L. Bean: A Search for Growth

Rajiv  Lal; Walter J. Salmon; James  Weber

Case | HBS Case Collection | March 2004

L.L. Bean: A Search for Growth

by Rajiv Lal, Walter J. Salmon and James Weber

Abstract

In mid-2003, CEO Chris McCormick felt L.L. Bean was in a good position to begin to grow again. For nearly 90 years, the company sold clothing and gear for outdoor enthusiasts through its catalogs and a single retail store in Freeport, Maine. In the three decades prior to 1996, sales growth averaged nearly 20% per year. In 1995, sales hit $1 billion, but stagnated for the next six years—growing at less than 2% annually. The company responded with a structural reorganization and investment in its Internet sales channel. In 2002 and early 2003, McCormick led an effort to reduce overhead and improve its internal systems, including the elimination of 1,000 jobs—which reduced year-round headcount by nearly 15%. After these initiatives, the company remained profitable and enjoyed a strong balance sheet, but sales growth remained near zero. Most significantly, between 2000 and 2002, L.L. Bean opened three retail stores in shopping malls outside Maine. McCormick viewed these three stores as the first of a chain of stores that would form a new selling channel and enable L.L. Bean to grow. Early results from the three new stores were below expectations; L.L. Bean spent significant time examining its retail store activities in an attempt to learn where it could improve. As the company began to apply those lessons in the stores, performance picked up, fueling McCormick's optimism that L.L. Bean could grow with retail stores.

Keywords: Business History; Restructuring; Growth and Development Strategy; Cost Management; Sales; Performance Improvement; Diversification; Distribution Channels; Resignation and Termination; Retail Industry; Web Services Industry;

Language: English

Format: Print

20 pages

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Citation:

Lal, Rajiv, Walter J. Salmon, and James Weber. "L.L. Bean: A Search for Growth." Harvard Business School Case 504-080, March 2004.

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L.L. Bean: A Search for Growth

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