CEO Jim Heese forecasts dynamic growth based on the brand’s supply chain and a fragmented market.
In search of better headwear for cycling, Alan Romick founded Headsweats in 1998. One product snowballed into more than 100 SKUs as the company’s hats began making regular appearances at events like the Tour de France and Ironman Kona.
As of 2021, Headsweats has sold more than 1 million hats to date that have been worn by more triathlon finishers and winners than any other brand. The catalog includes a range of hats, caps, visors, and headbands, as well as lines of men’s and women’s performance apparel.
Miami-based Intradeco Apparel acquired Headsweats in 2018. Heese, who served as executive VP at Exxel Outdoors prior to joining Headsweats in summer 2021, liked the idea of running a small brand with a big parent.
“The business was much smaller than what I was going [at Exxel Outdoors], but it was attractive because of the fact it was owned by a much larger group,” says Heese. “Intradeco is a very large group that has licenses for Fruit of the Loom, Tommy Hilfiger, Calvin Klein, Wrangler Workwear, Gerber Babywear — a pretty big group with 12,000 or 13,000 employees worldwide.”
Marrying Headsweats with Intradeco’s vertically integrated operation was “a fascinating opportunity” for Heese. “There really was tremendous upside with what could be done,” he says. “I have a pretty decent Rolodex, if you will, with the major retailers of the world, whether it’s National Sporting Goods or the Targets and the Walmarts.”
Where Headsweats manufactures
Manufacturing at Intradeco-owned factories in El Salvador and Honduras, Headsweats is an anomaly in the country’s $2.5 billion headwear market.
Most big headwear brands in the U.S. — Nike, Imperial, New Era, and the like — manufacture in Asia. “Those guys are all beholden to these big Asian manufacturers,” says Heese. “[The industry] is dominated by three major groups that do it all in Bangladesh and Vietnam. When I looked at that, I said, ‘This is very unique, because no one is building headwear in Latin America” — aside from Headsweats, that is.
Central American manufacturing brings several benefits to the brand. The first is tied to free trade with the CAFTA-DR trade agreement. “You’ve got obviously the duty advantage,” says Heese.
Then there’s shipping: “Transit time from Central America to Miami on ocean freight is only three days. Transit time from Asia, depending on the speed of the boat, is anywhere from 14 to 21 days, and obviously we see tremendous congestion in the space.”
Sustainability is a prime directive at Headsweats. “We do a whole line of recycled yarns,” says Heese. “Headwear is a space where sustainability’s never really figured prominently into the story that people have told, so I think that’s a phenomenal opportunity right now.”
“We are in the process of developing a whole new line of headwear that tells a much more advanced technical story around moisture management, UV protection, and weight and comfortability,” says Heese. “We’ll supersede what we’ve done and what other people have done in the space.”
He continues, “The big brands, largely speaking, just use technical headwear as a brand billboard, to the extent that Nike doesn’t even own their own headwear business — it’s licensed out to another group. As a result, it tends to be a highly fragmented space, and I think you’re seeing a move in the price points that is very interesting.”
Heese points to lululemon’s new run hat that’s priced at $58 retail. “Obviously, that’s a pretty rich price point, and you can fit a lot of technical story into a piece of headwear at that price point. That certainly is the direction that we’re looking, with some advanced yarns that make our moisture-management story far more compelling.”
About 30 percent of the business is private labeling for outside clients. “For us to dominate in the headwear space, we not only need to supply ourselves, but we need to supply others. We’ve already picked up a half-million units for ’22 in private-label work for some other good-sized brands.”
It all adds up to a “huge opportunity” for Headswears, says Heese. “I don’t think you need a lot of stones for our sling to take out Goliath on this one. We need to be very focused and efficient to be able to go after the likes of these bigger guys.”
After “flat” years in 2020 and 2021, the growth curve is steepening. “We’ve already doubled our forecast for ’22 over ’21,” says Heese. “It’s not just pie in the sky — it’s hard opportunities.”