Donald Trump and the Plight of L.L. Bean

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ll bean donald trump ceo stephen smith

Despite flat sales and unwanted attention on social media, president and CEO Stephen Smith is convinced that there is room for the L.L. Bean brand to grow. / Photograph by Greta Rybus

On the second Monday of January, Stephen Smith, the 46-year-old head of L.L. Bean, arrived in Salt Lake City for a retail trade show. An avid telemark skier, he was tempted to blow off meetings and head to the nearby slopes of Park City, which were buried under 2 feet of fresh powder, but the 6-foot-6 executive was still recovering from a torn Achilles tendon and chose to hunker down at his hotel. There certainly was plenty of work to be done.

By all measures, it had been a turbulent 12 months as president and CEO for Smith, a marketing whiz who cut his teeth at Hannaford Supermarkets before a stint with Walmart International in China. There was the unsettling financial report in March 2016 that sales were flat; the company’s recall of 6,700 children’s water bottles due to lead contamination; the strange land feud with a cemetery association, over access to an ancient graveyard near L.L. Bean’s headquarters in Freeport, Maine; not to mention persistent operational problems, including a steady onslaught of Bean Boot look-alikes flooding the market.

During that trip to Salt Lake City, after a busy few days scoping out new gear for Bean’s sprawling product line and listening to manufacturers pitch the latest in high-performance microfiber technology, Smith’s mind raced with ideas that he could bring back east to help get New England’s most iconic brand back on track.

The distraction, however, was short-lived. On the final morning of his trip, he flicked on the TV in his hotel room, tuned into Fox News, and watched a disaster unfold. Appearing on Fox & Friends was board member and controversial Mainer Linda Bean, who had come under investigation by the Federal Election Commission for political donations she made to the pro–Donald Trump organization Making America Great Again. Despite an initial backlash, the 75-year-old heiress took to the popular morning show to defend her support of Trump and antagonize her progressive critics. “I’m not going to back down,” she said, looking grandmotherly in a bright-red turtleneck sweater, her rosy cheeks flushed. “I never back down.” Then she poked fun at Barbra Streisand for not following through on her promise to flee the country if Trump won the presidency and remarked on L.L. Bean’s tote bags. Smith knew it was bad PR, but what he didn’t know was that things were about to get a whole lot worse.

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Donald Trump’s tweet praising board member Linda Bean brought national attention to a boycott of the brand.

Not long after Linda Bean’s comments aired, Trump blasted an impromptu tweet to his roughly 20 million followers. “Thank you to Linda Bean of L.L.Bean for your great support and courage,” he proclaimed. “People will support you even more now. Buy L.L.Bean.”

Trump’s message landed with the subtlety of a hand grenade. Suddenly, the brand had been hijacked, those tote bags now symbols of political partisanship. By the time Smith returned to Maine later that day, L.L. Bean was snarled in one of the largest crises the 105-year-old company had ever faced. In an anti-Trump frenzy, longtime customers cut up their L.L. Bean credit cards, returned orders, and pledged allegiance on Facebook to competitors Patagonia and REI. It was mutiny. At the same time, Trump fans proudly said they’d follow their leader’s marching orders and buy Bean products in bulk as a show of solidarity. The Trump effect was tearing apart Bean’s carefully cultivated image, and there was no playbook the new CEO could turn to for help. “This is extraordinary,” Smith told me in the midst of the crisis, painfully aware that the brand’s reputation and thousands of jobs in Maine, including his own, were potentially at stake. “I never would have imagined that we would be where we are.”

 

Smith never thought running L.L. Bean would be easy. The company, after all, is a century-old family-owned business—more than 50 Bean family members remain associated with it, including six on the board of directors—with annual net sales of $1.6 billion. But this latest episode, a mere year into Smith’s tenure, was particularly difficult to swallow. From inside the company, it seemed like L.L. Bean’s sterling reputation and millions of dollars in donations to environmental causes were all but forgotten and replaced with a single, all-consuming word: Trump.

L.L. Bean is no stranger to battling forces beyond its control. Previous CEOs survived the Great Crash, the rise of e-commerce, and the Great Recession—emerging each time stronger than ever. Could a tweet really bring down what Black Tuesday had not? If there was hope for Smith, it was in the rugged resilience that’s encoded in the company’s DNA.

It all started in 1912 when outdoorsman Leon Leonwood Bean—tired of suffering from cold, wet feet while hunting game in the root-snarled wilderness of Maine—lashed a strip of leather to a rubber sole and christened it the Maine Hunting Shoe. To drum up sales, Bean mailed a flier to every person who held a nonresident hunting license. “You cannot expect success hunting deer or moose if your feet are not properly dressed,” it read. “The Maine Hunting Shoe is designed by a hunter who has tramped the Maine woods for the last 18 years. We guarantee them to give perfect satisfaction in every way.”

The pitch worked, and Bean received 100 orders. Unfortunately for customers, the boots were poorly made, and 90 percent of that first batch fell to tatters. Bean showed an early knack for customer service, though, and he stood by his guarantee—taking on a loan to refund the purchase price and fix the busted merchandise. In addition to the mail-order business, Bean kept a small store in Freeport, Maine, where he sold bait and buckshot to fishermen and hunters. To accommodate late-night shoppers, he installed a bell so they could wake him anytime they needed. In 1951, Bean removed the locks from his shop and proudly declared it open 24 hours a day, 365 days a year.

As sales grew, so did the company lore, aided by the likes of Ernest Hemingway, Babe Ruth, and Arctic explorer Donald MacMillan, all of whom proudly wore Bean’s gear. In an era when the mail-order-catalog business was king, Bean quickly mastered the art, and his illustrated covers became a fixture on coffee tables throughout New England and across the country. Inside, the pages were filled with everything a fashionable sportsman could desire—from fly-fishing rods, hunting knives, and canoes to snowshoes, flannel jackets, and winter gloves.

Leon Leonwood Bean remained in control of the company until he died in 1967 at the age of 94. In stepped his grandson, Leon Gorman. History has shown that industry scions are often less business-savvy than their forebears, but by all accounts, Gorman had the Midas touch that would take the company to even greater heights. In no time, he ratcheted up marketing efforts, expanded the product line, and opened the first stores outside of Maine. The company grew approximately 20 percent each year for 30 consecutive years. In 1995, L.L. Bean joined the exclusive club of billion-dollar companies.

Then, of course, the Internet came along and the whole world changed. The dual forces of economic upheaval and technological disruption upended the catalog model, and L.L. Bean’s sales stalled. Catalogs had been a $100 billion business at the start of the new millennium, and Bean was one of the biggest in the industry, mailing a staggering 200 million each year. Among the upsides to this approach was predictability: Based on the number of pages and products in the catalog, L.L. Bean could accurately forecast its sales and carefully control its inventory. But as search engines gave consumers around the world the ability to shop for flannels and snow boots whenever they wanted, catalogs lost their luster, and Bean struggled to adapt.

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Employees handcraft and test L.L. Bean’s signature boots in Maine. The wait list has grown to more than 50,000 people in recent years. / Photographs by Greta Rybus

After more than 30 years at the helm, Gorman stepped down as CEO in 2001 and turned his corner office over to Chris McCormick, a Bean veteran who had spent nearly two decades with the company. To stop the bleeding, McCormick cut 15 percent of the workforce—roughly 1,000 jobs—on his way to trimming $40 million in overhead expenses. Unlike other apparel companies at the time, though, Bean never panicked or diluted its brand. “Look at Ralph Lauren,” says Matt Rubel, CEO of Varsity Brands. “They opened up so many outlet stores, and all they’re doing is chopping up fabric to make more polo shirts to sell at a discount. That’s not what L.L. Bean did.”

Instead, Bean survived and even thrived while others in the industry flailed and filed for bankruptcy. Gone were the years of 20 percent growth, but the company focused its marketing effort and aligned its online and catalog offerings. Then, in 2014, McCormick, who by that point had spent more than half his life at Bean, announced he would be stepping down in two years. The clock to find a suitable replacement began ticking.

Meanwhile, on the other side of the world, Smith was working for a Walmart subsidiary and raising a family. He didn’t know it yet, but a family crisis was about to change his and L.L. Bean’s fortunes forever.

 

The odds were stacked against Smith from the very beginning. L.L. Bean needed to finds its next great CEO, and the last thing company brass wanted was an outsider to run the show. Executive chairman Shawn Gorman says he and the Bean family had “hoped we would never be in a position where we wouldn’t have an internal candidate. But Steve just kept coming back.”

Fit, with blue eyes and neatly trimmed light-brown hair, Smith, in a pinch, could double as one of the company’s catalog models. He grew up in suburban New York and from a young age thought he was destined to become an architect. When it came time to commit to a five-year program, however, he got cold feet and opted for a liberal arts education at Dickinson College, in Pennsylvania, where he played Division III hoops, majored in art history, and minored in physics. After graduating, Smith had little interest in heading back to the classroom for an MBA or a JD. Instead, he says, “I just kind of wanted to get working and make some money.”

Smith’s first stop was J. Walter Thompson, the revered New York City ad agency, followed by a marketing gig with AT & T. A company man Monday through Friday, Smith spent weekends with his now-wife, Lynn, escaping Manhattan for the White Mountains of New Hampshire. After five years of city living, they moved to Maine in 1997 when Smith accepted a sales position at Resort Sports Network, a small-time cable outlet that broadcast snowboard competitions and mountain-bike races. “We went through the venture capital boom and raised loads of money and hired lots of people and fired lots of people,” Smith recalls. The job may not have been ideal, but life in Maine was “magical,” he says. “It’s summers and winters; it’s seafood and beef; it’s humility and confidence. It’s all these fascinating juxtapositions.”

For all of Maine’s glories, though, its job market has never been one of them. With a growing family, Smith wanted better job stability and took a position in the marketing department at Hannaford Supermarkets. He excelled, and before long was asked to spearhead projects for the grocery chain in Florida and Belgium. Smith’s experience abroad ultimately paved the way to a cushy position at Walmart International in Shenzhen, China, a densely packed city of more than 10 million people adjacent to Hong Kong. Smith delighted in watching his daughters grow up as global citizens, but there was a cost: the lingering fear that he might not get home fast enough in case of a family emergency.

It wasn’t unfounded. Smith’s father had struggled with heart disease and cancer for years, and in late April 2014 took a turn for the worse. Fearful he wouldn’t get the chance to say goodbye, Smith rushed back to his parents’ house in Amherst. After a marathon round of consultations with doctors and family, Smith’s father was moved into hospice care. Smith spent the following days at his father’s bedside, pouring out his heart and promising he’d be there to take care of his mother and sister. He wasn’t sure what that meant in practical terms, but the sentiment hung heavy in his heart.

A month later, at Smith’s father’s memorial service in June, more than 300 people packed into the First Congregational Church in Amherst to pay their respects. Somewhere in the day Smith found himself talking with Tara Knupp, a college friend who was working at L.L. Bean. Knupp handed Smith a folded-up piece of paper, looked him in the eye, and said, “It’s time for you to come home.” Smith unfolded it to find an internal memo announcing that L.L. Bean’s CEO, Chris McCormick, was stepping down and that the company was looking for his replacement.

Convinced it was a sign, Smith worked every connection he could find to get on the company’s radar. The vetting process took months, and Smith flew from Shanghai to Portland for a week at a time to meet with various members of the Bean family. Finally, in August 2015, Smith faced his final test: 80-year-old Leon Gorman, the man who had turned his grandfather’s $2 million company into a billion-dollar brand.

Smith sat in a beige boardroom across from Gorman. Though Gorman’s body was frail from cancer, he still possessed the piercing intellect that had guided the company for so many years. “I was scared,” Smith admits. They talked about retailers Smith admired and their mutual love of the White Mountains. Gorman appeared less interested in Smith’s ability to run a company and more concerned about making sure he wouldn’t jeopardize its values for a quick buck. At the end of the interview, as the two men were walking toward the door, Gorman stumbled and fell backward. Smith stepped forward, caught the elderly executive under his armpits, and sat him down in a nearby chair before heading home. That day was the last time they’d see each other: On September 3, after having endorsed Smith as the “real deal,” Gorman passed away. “It just feels fateful,” Smith says. “This whole process started with the death of my dad. And there I am in front of a 70-plus-year-old man [who had a long-term illness]. It was heavy, and it was heavy all the way through.”

Smith arrived for his first day of work at L.L. Bean on January 4, 2016, with a clear vision for the company. As far as he was concerned, there was no shortage of room for the brand to grow. “Everybody knows L.L. Bean in America,” he says. “But there are a lot of people we just aren’t relevant to.” The company, he points out, has only 41 stores in the United States, the vast majority of which are confined to the Northeast. Moreover, Smith says, Bean’s customer base is slim—just 2 percent of American consumers. “We need new customers,” he says bluntly.

To boost profits, Smith has a plan. Right now, Bean’s product line consists of more than 150,000 different items, from lobster-shaped dog toys to shotguns to leather couches. A quarter of these products are produced in the U.S. and four of them—the Bean Boot, the dog beds, the belts, and the Boat & Tote—are made at the company’s factories in Maine; most of the others come from overseas. The logistics of maintaining such a vast inventory are dizzying and expensive, so he wants to whittle the Bean product line down to the essentials. “We have too much stuff,” Smith says. “If we narrowed it down, we’d have a lower cost of goods, and then we’d be able to make a little bit more money and put that money back into growth.”

It turns out the company also has too many employees. In hopes of cutting 10 percent of his workforce, Smith is offering buyouts to longtime workers with the aim of eliminating about 900 jobs. The belt-tightening also includes a freeze on the company’s pension plan. Then there is the matter of the Bean Boot, the brand’s most iconic and sought-after item. Bean’s boot makers have struggled to keep up with demand, and waiting lists have grown in recent years to more than 50,000 people. It’s no surprise, perhaps, that this level of devotion and desire has created a thriving market for look-alikes. Brands such as Steve Madden, Sorel, Sperry, and other competitors have all tried to get a piece of the action. “Right now, there are about 40 copies of the Bean Boot, and I find it incredibly frustrating and irritating,” Smith says, insisting that there are components of the boot that are proprietary. While the company has not taken any legal action as of yet, Smith doesn’t rule it out. In the meantime, he’s closely watching Boston-based Converse, which has gone to war against other shoemakers in federal court in hopes of protecting the look and design of its Chuck Taylor sneaker. For now, at least, Smith is confident that the Bean Boot can hold its own against impersonators. “Everyone else can copy it,” he says with a grin, “but none of them are made in Maine.”

 

If 2016 was a year of learning how the house of Bean was hard-wired, then Smith wanted 2017 to be the year of tightening the screws so that everything could run a little smoother, a little faster, and a little more efficiently. Then, in the first week of the new year, Linda Bean entered the picture and short-circuited everything.

This was not the first time Leon Leonwood Bean’s granddaughter had made headlines; for years, she’d been a walking public-relations disaster. She unsuccessfully ran for Congress as a Republican on two occasions, including a bitter 1992 campaign during which she labeled her Democratic opponent an “extreme leftist” and blasted her own party for being too moderate—not great when the company bearing your name is in the business of selling outdoorsy stuff to liberals and conservatives alike. Then there were those poor lobsters, Maine’s sacred icon. In 2009, she launched Linda Bean’s Perfect Maine Lobster Roll, a chain of fast-casual eateries—and soon came under fire when a video surfaced showing employees at a processing plant, according to PETA, “ripping live animals apart limb from limb.”

But where those previous kerfuffles had failed to make much noise outside of Vacationland, Linda’s latest debacle would be very different. On January 6, the Associated Press reported that the FEC was investigating her for allegedly making tens of thousands of dollars in excessive contributions to a pro-Trump political action committee. Meanwhile, several thousand miles away, in the San Francisco Bay Area, a marketing professional and anti-Trump activist named Shannon Coulter was deciding whether to make L.L. Bean her next target.

Two months earlier, Coulter had co-created the Twitter hashtag #GrabYourWallet as a call to action for American consumers to boycott certain companies that aligned with Trump or his family. It was in response, she says, to Trump’s public “Grab them by the pussy” bombshell. Coulter’s posts instantly went viral as she zeroed in on companies including New Balance, MillerCoors, and Bed Bath & Beyond.

Coulter, though, initially wasn’t certain about adding L.L. Bean to her list. “I definitely wore L.L. Bean growing up,” she says. More important, the FEC’s investigation pointed to the actions of a single board member, Linda Bean, and not the company itself. Unsure what to do, Coulter sat down in her apartment, opened her laptop, and asked thousands of #GrabYourWallet Facebook followers whether the actions of Linda Bean merited a companywide boycott. The answer was a resounding yes. “Boycotting now,” one commenter wrote. Another added, “Say it isn’t so LL?! Boycott list they go…” “Damn it,” another lamented. “I’m wearing my Bean boots and my Primaloft coat from them today actually. Le sigh.” Satisfied with the response, Coulter added L.L. Bean to her boycott list and tweeted it out.

In today’s knee-jerk world of social media movements, anyone able to gain a following like Coulter’s can wield tremendous influence and turn a few sparks into an inferno. And that’s exactly what happened. Within hours of Coulter’s call for an L.L. Bean boycott, Twitter erupted and liberals began shunning the company and returning previously purchased items en masse. Newspapers ranging from the Portland Press Herald to the New York Times caught wind and news of the boycott spread like wildfire.

L.L. Bean did what any company might do and tried to distance itself from Linda Bean’s political leanings. The company issued a statement on Facebook explaining that it is apolitical and does not endorse candidates or make political contributions. “Like most large families,” the statement said, “the more than 50 family member-owners of the business hold views and embrace causes across the political spectrum, just as our employees and customers do.”

After several days, it looked like the worst had passed; the negative headlines dissipated and Smith flew to Salt Lake City for the trade show. But then Linda made her appearance on Fox & Friends, followed by Trump’s endorsement, and everything went to hell. Suddenly, the company—whose flannel-clad image had long been among the least controversial brand identities imaginable—was under scrutiny like never before. After the Trump incident, no Bean move went unnoticed, no platitude untrolled.

On Martin Luther King Jr. Day, the company tweeted a scenic picture of Maine’s rocky shoreline and a lighthouse, accompanied by a quote from Dr. King: “The surest way to be happy is to seek happiness for others.” Almost immediately, the over-the-top responses started coming in. “Mr. King would be aghast if he found out LL Bean sends cash to White Nationalists/KKK. Horrible! Spreading the Boycott.” Then came a cartoon of two KKK members, one holding a “Vote Trump” sign. Ever devoted to customer service, L.L. Bean tried to respond to one of the less caustic messages, but it only encouraged attackers and made things worse.

Proving that no line is so thin as the one between love and hate, L.L. Bean elicited the most passionate customer response of any company that Coulter placed on her #GrabYourWallet list. She’s received uplifting messages of support, she says, as well as her first real threat. Still, Coulter remains firm, insisting that L.L. Bean isn’t coming off the list until the company boots Linda Bean from its board.

 

Two days after Linda Bean appeared on Fox, Smith sat behind the wheel of his black Dodge Durango driving toward the company’s flagship store in Freeport, Maine. From there he was headed to two nearby customer service centers where employees were still being blitzed by angry callers, emails, and social media screeds. Smith hoped to gauge the fallout and assure workers on the lower rungs of the company ladder that they were all in this mess together. “There’s a great Chinese proverb, which is ‘May you live in interesting times,’” he said with a laugh of disbelief before getting out of his truck. “We’re in them now.”

Just as no one could have foreseen that an FEC notice would turn into a national controversy involving the White House, no one can say if this latest PR debacle will have a lasting effect on the company. For more than a century, L.L. Bean has banked on predictability. Now that it’s Smith’s turn to lead the company, he finds himself in a world that’s more unpredictable than ever—especially for America’s biggest brands. In early February, Trump blasted the department store Nordstrom on Twitter for treating his daughter Ivanka “unfairly” after the company announced it would no longer sell her line of clothing and accessories. Boeing, Ford, and General Motors have also received the president’s wrath over social media. With each new company that Trump assails, attention is drawn away from L.L. Bean, but Smith is painfully aware of how quickly chaos can emerge these days.

Regardless of what comes next—be it layoffs or even radical changes to its customer service policy—L.L. Bean remains impressively self-assured when so many clothing companies are suffering identity crises (look no further than Abercrombie & Fitch, Gap, and Tommy Hilfiger). The brand is flannels and fireplaces, and Smith knows not to mess with what works. “We’re not intentionally trendy, but we have lot of trendy things,” he says, acknowledging that sometimes the company just gets lucky and what’s en vogue happens to align with Bean’s style.

Luck, though, can only carry a company so far. For L.L. Bean to remain profitable and grow, Smith knows he needs to bring a laserlike focus to everything he does. Of course, that’s easier said than done when Linda Bean is on your board and Trump is throwing lightning bolts from above. “I feel the weight of the job all the time,” Smith says. “This is a 105-year-old successful business, and I don’t want to screw that up.”

Source URL: https://www.bostonmagazine.com/news/2017/02/21/ll-bean-donald-trump/