L.L. Bean: A Search for Growth

Case Solution

Rajiv Lal, Walter J. Salmon, James Weber
Harvard Business School ()

In mid-2003, CEO Chris McCormick believed that L.L. Bean was in a good position to start growing 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 leading up to 1996, sales growth averaged nearly 20% per year. Sales reached $ 1 billion in 1995, but stagnated for the next six years, growing at less than 2% a year. The company reacted to this with a structural reorganization and investments in its Internet sales channel. In 2002 and early 2003, McCormick made efforts to reduce overhead costs and improve its internal systems, including cutting 1,000 jobs, reducing the number of employees by nearly 15% for the entire year. After these initiatives, the company remained profitable and had a strong balance sheet, but sales growth remained close to zero. Above all, L.L. Bean three retail stores in malls outside of Maine between 2000 and 2002. McCormick saw these three stores as the first in a chain of stores to create a new sales channel, and L.L. Bean would allow growth. The first results of the three new stores fell short of expectations; L.L. Bean spent a lot of time researching its retail operations to see where it could be improved. As the company began applying these findings to its stores, performance increased, fueling McCormick’s optimism that L.L. Bean could grow with retail stores.

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