FosterGrant, Inc. - Company Profile, Information, Business Description, History, Background Information on FosterGrant, Inc.

500 George Washington Highway
Smithfield, Rhode Island 02917

Company Perspectives:

AAi.FosterGrant, based in Smithfield, RI, owns one of the leading brands of sun and reading glasses in the United States and is also a leading designer of costume jewelry. The FosterGrant brand provides the consumer with eyewear representing exceptional styling, quality and features at competitive prices.

History of FosterGrant, Inc.

FosterGrant, Inc. is the leading U.S. marketer of moderately priced sunglasses, and one of America's most recognized brand names. The company also manufactures reading glasses. The company was the first to popularize sunglasses, which had their initial vogue in the 1930s. Foster Grant was well known for its long-running advertising campaign, "Who's behind those Foster Grants?," which it revived in the late 1990s. The company passed through many different owners since the 1970s. It is now a subsidiary of Aai.FosterGrant, Inc. Aai, formerly Accessories Associates, Inc., purchased the company in 1996 and moved its headquarters to Rhode Island. Foster Grant maintains sales and marketing facilities as well as warehouses in Rhode Island. Its manufacturing facilities are located in Rhode Island and overseas in Asia and Africa. Foster Grant sunglasses are sold through many mass-market outlets in the United States, including Target, Wal-Mart, and the Sports Authority. The company also sells its sunglasses in Mexico, Canada, England, and Germany, and is expanding into other European markets and into South America as well.

From Health Aid to Fashion Must During the Depression

Sunglasses were not popular until the 20th century, but they were invented far earlier. The mastermind behind tinted lenses was a London inventor and instrument maker, James Ayscough. Ayscough specialized in manufacturing microscopes, and also made spectacles. In 1752 he devised glasses with green or blue-tinted lenses, because he thought plain lenses created a harsh glare. In ensuing years, people with weak or delicate eyes wore tinted lenses. These early sunglasses were far from considered fashionable, as they were associated primarily with invalids. The glamour we now associate with sunglasses came from the spectacles the Foster Grant Company began selling in the seaside resort town of Atlantic City, New Jersey in 1929. The Foster Grant Co. was founded in 1919 in Leominster, Massachusetts, by Sam Foster and Bill Grant. The two men went into business together to manufacture women's hair accessories. The company apparently did well at first, but then ran into trouble in the mid-1920s when women's hair styles changed from long to short. Foster Grant was a pioneer in plastic injection molding. Leominster eventually became a plastics manufacturing mecca, and now holds the National Plastics Center and Museum. But Foster Grant may have been a little ahead of its time in the 1920s, and it took a while before the company had a viable product. In 1929 Foster and Grant sold a half-interest in their firm to Goody Products, a New Jersey manufacturer of hair ornaments and accessories. That year, Foster Grant began selling sunglasses at the Woolworth's store on the famous Boardwalk of Atlantic City. Foster Grant was able to produce sunglasses cheaply at its Leominster plant. Although it displayed the dark glasses with other medical aides at Woolworth's, these were the first sunglasses sold as an over-the-counter consumer item. Previously, people wanting sunglasses had to have them made to order by an optometrist.

Foster Grant sunglasses became popular among fun seekers in Atlantic City, and the fad spread quickly. Very soon, movie stars like Greta Garbo were wearing them. The king of Egypt sported a pair. The image of sunglasses changed completely. No longer were they for people with weak eyes. They offered an air of luxury and mystery to men and women alike. Steve Ainsworth, writing on the history of sunglasses in Optician (March 14, 2003), claims it is significant that sunglasses became popular during the depths of the Great Depression. "Sunglasses spelt glamour and wealth in years which had precious little of either," he writes. Foster Grant glasses gained wide popularity, though the company soon had other significant competitors. Foster Grant's Leominster factory also turned out a variety of other injection-molded plastic goods. By 1938, the company owned more than 100 injection molding presses, and it made barrettes, curlers, and combs as well as sunglasses.

Postwar Growth

During World War II, the Foster Grant factory was refitted for defense work. It continued to make and sell sunglasses, and it did very well immediately after the war. Its parent company, Goody, was not as profitable, and Goody frequently borrowed against its Foster Grant stock. In 1965 Foster Grant initiated an advertising campaign that became a 20th century classic: "Who's behind those Foster Grants?" The ads, which ran both on television and in print media, featured celebrities of the day wearing Foster Grant sunglasses. The campaign was created by the Geer DuBois agency, and used the faces of film stars like Woody Allen, Raquel Welch, Peter Sellers, and Anthony Quinn, all trendy and rising young actors of the era. The Foster Grant name gained wide exposure with its celebrity ads. Although the rich and famous wore Foster Grants in its advertising, the company sold its glasses at mass marketers like Woolworth's and Walgreens. Foster Grants were moderately priced. Although by 1976 the company had some higher-end glasses that sold for $15, most of the line retailed for between $2 and $10.

The company spent about $1 million annually on advertising in the mid-1970s, and sponsored the World Series of baseball. Foster Grant's success did not go unnoticed. Goody had continually raised money for itself by using its Foster Grant stock as collateral. In 1970, Goody's chairman Len Goodman was informed by his bankers that United Brands, a large conglomerate, had bought up a significant stake in Foster Grant from the estate of one of the founders. United Brands was known as an aggressive speculator, and Goody's bankers were worried that it was planning to wrest Foster Grant away from its parent. This situation continued uneasily for some years. Then in 1974, United Brands suffered a major blow when a hurricane wiped out its banana plantations in Honduras. To raise cash, United Brands sold its stake in Foster Grant to the U.S. subsidiary of the German pharmaceutical firm Hoechst A.G. Goody decided to sell Hoechst its stake as well, so Foster Grant had entirely new ownership after 1975.

Changes of Ownership in the 1980s-90s

Foster Grant retained a 35 percent share of the drugstore sunglasses market through the mid-1980s, but conditions in the industry became increasingly competitive. Warner-Lambert, which manufactured another popular moderately priced line of sunglasses under the Cool Ray brand name, quit the sunglasses business in 1980. Warner-Lambert claimed that cheap imports were making it increasingly unprofitable to manufacture sunglasses domestically. Makers of more expensive sunglasses had only sluggish sales. Foster Grant reported sales of $150 million for 1980, with roughly a 10 percent increase over the year previous. Despite this good year, overall market conditions worsened in the early 1980s. Consumer demand for sunglasses dropped by close to 15 percent from 1981 to 1983. By 1983, some 80 percent of all sunglasses sold in the United States was imported. Foster Grant remained a large player in a very fragmented market, and so fared better than some competitors. In 1980 it introduced a line of reading glasses it called SparePair. These became the second best sellers in the reading glasses market. But in 1983 the company dropped a higher-priced designer sunglasses line, which had not done well, to concentrate on its basic line, which sold for around $12. As the cheaper end of the market picked up over the next several years, Foster Grant's sales and market share began to fall.

In 1986, Foster Grant was bought out by a private investment firm called Andlinger & Co. Andlinger was headed by Gerhard R. Andlinger, an Austrian businessman who had worked for the conglomerate ITT until the mid-1970s. In 1976 he and other ITT executives formed Andlinger & Co., and specialized in picking up undervalued businesses for cheap. Foster Grant seemed to be just the kind of company Andlinger liked. Although it had strong brand name recognition, its sales were declining. Foster Grant had discontinued its signature ad campaign in 1984, and in the mid-1980s was advertising primarily in car and motorcycle magazines. In 1987, Foster Grant changed its advertising agency and initiated a new, more fashion-oriented campaign.

But this was apparently not enough to rescue Foster Grant. Its sales continued to decline, from $60 million in 1985 to $50 million in 1989. Sales had been three times that a decade earlier. Imports from Asia skewed the market heavily toward sunglasses that retailed for less than $5. Foster Grant, which had moved some of its manufacturing facilities to Arizona and Mexico, could not compete in the lower tier of the market. Andlinger had planned to move Foster Grant into a more upmarket mode, but this did not happen. The company had very heavy debt stemming from Andlinger's buyout, and it could not afford to advertise. By mid-1990, Foster Grant had let half its employees go. With $43 million in debt, the company filed for bankruptcy in September 1990.

Shortly after it filed for Chapter 11 (a type of bankruptcy proceeding that allows the company to continue operating), the Dallas, Texas-based Bonneau Company made an offer of $9 million for Foster Grant. Bonneau quickly revised its offer downward, and Foster Grant eventually went for only $4.9 million. The sale excluded the company's technical products division, based in Leominster, which sold goods to the automotive and computer industries. Bonneau had been in the sunglasses business for some time, and in 1986 it acquired Pennsylvania Optical, a maker of reading glasses. Pennsylvania Optical had doubled its sales under Bonneau's leadership.

Bonneau itself was acquired three years after it bought Foster Grant. Benson Eyecare Corporation, a new consolidator in the market, paid $21 million for Bonneau in 1993. Benson was run by Martin Franklin, a young British-born investor. In 1992 Franklin began acquiring optical companies, aiming to be a big player in a market filled with many small companies. By 1994, Benson Eyecare had revenues of $169 million, and it owned roughly a dozen sunglasses brands in addition to Foster Grant. Like Gerhard Andlinger before him, Martin Franklin hoped to have a sleeping giant in the undervalued Foster Grant. "The Foster Grant brand has languished," Franklin told Fortune magazine (April 17, 1995), "but we're counting on its tremendous name recognition to revive it." Benson turned its attention to advertising, and revived the famous "Who's behind those Foster Grants?" tagline in 1995.

But Foster Grant continued to be a poor performer. In 1996, Benson Eyecare sold some of its assets and changed its name to BEC Group. BEC consisted of the Foster Grant Group and Benson's other nonprescription eyewear businesses. BEC blamed a loss for the fourth quarter of 1995 on high returns from Foster Grant customers. Two quarters later, BEC posted a drop in net income of more than 50 percent from a year previous, again attributing the loss to a poor showing by Foster Grant. At that point, BEC put Foster Grant up for sale. Benson claimed revenues of $90 million from the Foster Grant Group for 1995. American Greetings Corp., a $2 billion greeting card manufacturer based in Cleveland, Ohio, offered to take Foster Grant off BEC's hands for a sum believed to be about $45 million. But this deal was quickly canceled. A few months later, BEC announced that a management group was going to buy Foster Grant. This deal also did not come off, and in December 1996 BEC sold its Foster Grant Group to a jewelry and accessories distributor called Aai for $29 million. Aai, formerly Accessory Associates, Inc., was based in Smithfield, Rhode Island. The company distributed costume jewelry, hair ornaments, and small leather goods to mass-market vendors like Target, Ames, and Wal-Mart. Most of its business came in the first six months of the year. It hoped to find a good fit with Foster Grant, whose business came principally in the second half of the year. Aai moved Foster Grant's headquarters to Smithfield. The subsidiary lost the space in its name and became FosterGrant, Inc. The parent company then changed its name to Aai.FosterGrant.

New Marketing Push in the Late 1990s

Aai.FosterGrant spent $3 million on new facilities for its corporate headquarters and a large new warehouse and distribution center. The company closed FosterGrant's operations in Canada and Georgia, and consolidated the business in Rhode Island. The new parent worked quickly to revive FosterGrant's advertising. FosterGrant came out with a new athletic line of sunglasses, its Ironman Triathlon line, in 1998. Association with the Ironman, a triple race of swimming, biking, and running, had been a good selling point with Timex, the watch brand, and Aai hoped the same would hold true for FosterGrant. Aai's most signal move, however, was to sign up model Cindy Crawford as the celebrity spokeswoman for the Foster Grant brand. The company wanted to build on its "Who's behind those Foster Grants?" theme, but with one recognizable figure who would appeal to a broad market base. Crawford was picked because she appealed to young and old alike. She had a long track record, but had a lot of exposure to younger consumers through appearances on the music television network MTV.

By the late 1990s, the sunglasses market overall was showing strong growth, and FosterGrant seemed to be in a unique position. FosterGrant's marketing director, Bill Potts, told Supermarket Business (July 1999) that his company had "the only brand name out there for sunglasses priced under $30." The company put some $3 million to $5 million into advertising worldwide, and seemed to get fast results. Sales per retailer increased markedly. The two models Crawford wore in the FosterGrant ads became the first and second best-selling sunglasses of 1999. The company found thousands of new retail outlets for its line, and FosterGrant began to look to international markets.

In 2002, the company was able to swap some $52 million of its debt for equity in FosterGrant. The company built up the sporty side of its image by signing on another celebrity spokesperson, champion Nascar driver Jeff Gordon. Cindy Crawford continued to appear in FosterGrant ads. FosterGrant seemed to be part of a trend of comeback brands in the sport and fashion industries. Other revived brands from the 1960s and 1970s included OP (Ocean Pacific), PF Flyers, and Pony. These all did well in the 2000s after losing steam earlier. By the early 2000s, FosterGrant seemed to have done what many of its previous owners had hoped for, and finally capitalized again on the tremendous name recognition it had built up in its early years.

Principal Competitors: Luxottica Group S.p.A.; Marchon Eyewear, Inc.


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