About SmartWool

Founded in 1994 by two New England ski instructors, SmartWool designs and markets Merino wool socks and apparel products. Its extraordinary comfort and performance enables it to expand its offering beyond socks to premium wool-based apparel and accessories both domestically and internationally.

The company pioneered the wool performance category as an authentic brand grounded in functional and purposeful innovation. Using a unique technology and proprietary materials sourcing process, SmartWool has perfected the no itch, no shrink approach to wool performance base-layers. In doing so, it also won several prestigious product awards in the industry, including Backpacker magazine’s Editors’ Choice award for its hiking socks, trekking socks, and base layers and continues to win numerous consumers’ choice awards in industry publications.

SmartWool is headquartered in Steamboat Springs and is now operated as a wholly owned subsidiary of The Timberland Company (NYSE: TBL).

Stripes’ History With SmartWool

In 2003, Stripes acquired SmartWool with RAF Industries. SmartWool was looking for an investor who could provide assistance with strategic and organizational planning, human capital development and SKU and brand positioning. In December 2005, Stripes and RAF sold SmartWool to The Timberland Company (NYSE: TBL).

In Our Time As Partners:

• Ken Fox assumed the role of “Chairman”
• Stripes played a key role in bringing in five senior executives and an in-house product developer
• The SmartWool brand positioning and promise were simplified to reflect the Company’s unique products and culture
• The product offering was streamlined to re-focus on SmartWool’s core “merino wool” value proposition
• Smartwool launched a direct sales effort via the internet, and expanded distribution to the casual market
• Revenue and EBITDA nearly doubled
• SmartWool initiated “footwear collaboration” with Timberland to develop and market performance Timberland footwear featuring SmartWool linings. SmartWool was then sold to Timberland in December 2005.

SmartWool sold to the Timberland Company

During Stripes’ ownership of SmartWool, Stripes and its partner in the investment, RAF Industries, Inc. were successful working with the company to build a strong management team, improve the communication structure, reposition the brand, reduce the stock keeping unit (SKU) count and strengthen financial performance.  During the life of the investment, Stripes encouraged management to build relationships with a number of potential strategic acquirers. In doing so, Stripes initiated several joint partnerships for SmartWool, including a product development partnership with The Timberland Company, in which Timberland sold SmartWool socks with a subset of its hiking boots. Not only did this build significant brand equity for SmartWool amongst strategic players, it was the beginning of a deeply rooted relationship between Timberland and SmartWool.

In the fourth quarter of 2005, Stripes and the rest of the Board retained a prominent investment bank focused on outdoor goods and ran a formalized auction process of SmartWool. At that point, Stripes and the board believed that the Company’s future growth would be driven by (1) penetration into new, larger apparel verticals (like jackets, pants, etc) and (2) continued (and increased) use of merino wool, a relatively high margin product central to SmartWool’s value proposition. These were two factors best addressed by a large strategic player who had access to more channels, manufacturing lines and volume efficiencies.  Accordingly, in December 2005, Stripes and RAF successfully sold SmartWool to Timberland, generating a profitable outcome for all.

SmartWool’s Growth during Stripes’ Ownership