FLY-FISHING ICON CASTING INTO TROUBLED WATERS

Orvis, Don’t Be Another Cabela’s


By Bill Schnieder, 11-29-07

 
 

It isn't often that a big company has a chance to let another big company test the waters, screw up badly, and make it easy to not repeat the mistake. But that's precisely what has just happened to The Orvis Company.

Orvis, the most well known and trusted brand in the fly fishing business, is just now starting to make the same major misstep Cabela's made (see last week's column), but fortunately, Orvis only has its toe in the water and can quickly jerk it out.

Cabela's can still escape its error in judgment, too, but the hunting and fishing retailer is in deep with about 250 brokers signed up and "trophy property" listings in 46 states. The Orvis operation is much smaller with only one real estate partner, Cushman and Wakefield of Colorado Springs, and only 14 listings in eight states.

I suppose this could be why I'm not a big-time CEO with a seven-figure salary, but I can't understand how Orvis could take such a risk, especially when they can see the growing firestorm of protest kicking up over Cabela's Trophy Properties.

It's true that many of these real estate transactions can zip through the system without publicity and that they might happen anyway without a slice of the pie going to Orvis or Cabela's, but it only takes one bad deal to start a firestorm. In Montana, Cabela's Trophy Properties brokered one large ranch under block management (a state-sponsored hunting access program) and as the ink was drying, the new owner announced the property would be closed to hunting and sold off in 20-acre plots.

I'm quite sure Cabela's doesn't want to promote rural subdivision and diminished hunting opportunity, nor is it the intent of Orvis to sell property traditionally open to fishing access and then see it suddenly closed to the public and sold off for riverbank condos--therefore adversely affecting the resource that keeps Orvis afloat, a quality coldwater fishery. If Orvis required significant setbacks for any new homes built on their brokered properties, plus mandatory conservation easements limiting development and allowing public access, then the real estate division could be rationalized, but such restrictions might limit sales potential, right?

 
  Licensing your brand to real estate brokers is risky business and makes you a soft target.
The point is, Orvis and Cabela's, you can sugarcoat your real estate biz all day, but at the end of the day, you can't control what the buyer does, and you will pay the price. Licensing your brand to real estate brokers is risky business and makes you a soft target.

That one deal-gone-bad in Montana resulted in the Montana Wildlife Federation (MWF), the state's largest group of hunters and anglers, making it a priority to stop Cabela's Trophy Properties. Since then, the 7,000-member-strong MWF has been making life miserable for Cabela's, mainly with calls to burn or return direct mail catalogs, and I happen to know that some MWF members are a long way from finished with Cabela's.

This same thing could easily happen to Orvis. In fact, I'll be shocked if it doesn't.

In a recent New York Times article, Cabela's CFO Ralph Castner admitted the company didn't make much profit from real estate, even though they've been doing it for almost four years, but that the trophy properties division was a "great way to build relationships with our customers."

Whoa, partner! That statement must have given the guys down in your public relations department a heart attack. I guess Castner hasn't heard about all the catalogs coming back to Cabela's distribution center with promises to never buy again, read the letters Cabela's has been getting or the pointy comments on last week's column, or heard rumors about the Billings store opening being picketed by people wearing camo, hunter orange and fishing vests and hoisting anti-Cabela's placards.

By Wall Street standards, we aren't talking about a lot of money. The New York Times reported that Castner told Wall Street analysts that Cabela's fondest expectation was that the trophy properties division might contribute up to one penny per share in income--that's $0.01 out of $1.29. That's for 2006 earnings, which probably means way less than a penny for 2007 earnings.

The numbers would obviously be much smaller at Orvis, but the percentages might be similar, which should make the decision even easier for the fly-fishing icon. Why would any company jeopardize the $1.29 to make $0.01?

Branding is a fickle equilibrium. Once you have a great brand like Orvis or Cabela's you need to guard it with your life--and with all the lawyers you can afford. These misguided forays into real estate sales could easily cause sharp drops in income from core businesses and destroy two of the best brands in the outdoor business.

I bet Orvis and Cabela's competitors are licking their chops when they read this. And both companies have plenty of competitors waiting to take their places on top of the market niche.

When you float down many rivers in western Montana, you see lots of ridiculously extravagant trophy homes (more likely trophy second homes) going up right on the riverbank with septic systems and with bright green, closely cropped lawns saturated with pesticides and fertilizer, all pouring into our famous trout waters. Orvis, you want to use your good name to fight this, not promote it.



Like this story? Get more! Sign up for our free newsletters.

NEW WEST FEATURES                                                                 More>>

Advertisement

Comments

By Craig Moore, 11-29-07
By Craig Moore, 11-29-07
By Tom Cat, 11-29-07
By elfman, 11-29-07
By Dave Skinner, 11-29-07
By Gman, 11-29-07
By elfman, 11-29-07
By Bill Goat, 11-29-07
By elfman, 11-29-07
By TCWriter, 11-29-07
By Gman, 11-29-07
By James, 11-29-07
By Derrick, 11-29-07
By Dave Skinner, 11-29-07
By Mark, 11-29-07
By Craig Moore, 11-29-07
By Mark, 11-29-07
By Craig Moore, 11-29-07
By Mark, 11-29-07
By Craig Moore, 11-29-07
By Kristen, 11-29-07
By Gman, 11-29-07
By thor, 11-29-07
By Jerry, 11-29-07
By mike, 11-29-07
By sweed7, 11-29-07
By Mark, 11-29-07
By elfman, 11-29-07
By sweed7, 11-29-07
By Craig Moore, 11-29-07
By Mark MT, 11-29-07
By elfman, 11-29-07
By Stan, 11-29-07
By Gus, 11-29-07
By elkman56, 11-29-07
By elkman56, 11-29-07
By James Hathaway, 11-30-07
By Marion, 11-30-07
By Craig Moore, 11-30-07
By Gman, 11-30-07
By elfman, 11-30-07
By bearbait, 11-30-07
By Craig Moore, 11-30-07
By elfman, 11-30-07
By sweed7, 11-30-07
By treebeard, 11-30-07
By Jerry, 11-30-07
By graydon, 11-30-07
By Dave Skinner, 11-30-07
By Larry, 11-30-07
By Larry, 11-30-07
By Marion, 11-30-07
By backcountryhunter, 11-30-07
By bearbait, 11-30-07
By Marion, 11-30-07
By sweed7, 11-30-07
By bearbait, 11-30-07
By Mark MT, 11-30-07
By Dave Skinner, 12-02-07
By Craig Moore, 12-02-07
By Craig Moore, 12-02-07
By sweed7, 12-02-07
By sweed7, 12-02-07
By James Hathaway, 12-02-07
By Craig Moore, 12-02-07
By Larry, 12-03-07
By elkman56, 12-03-07
By Richard Phillips, 12-04-07
By bearbait, 12-04-07
By Bill Schneider, 1-18-08

Comment policy:

NewWest.Net encourages robust and lively, but civil participation from our readers. By posting here, you agree to the NewWest.Net terms of service. You agree to keep your comments on topic, respectful and free of gratuitous profanity. Contributions that engage in personal attacks, racism, sexism, bigotry, hatred or are otherwise patently offensive will be subject to removal.

Other than using a filter that scans for comment spam, we do not moderate contributions before they are posted and we do not review every thread, so we ask that you help us in keeping the discussions civil and appropriate. Please email info@newwest.net to notify us of comments that may violate these guidelines. Thanks for your help and cooperation. Click here for some tips on how to best interact on NewWest.Net.

Your Comment

Name

Email

Remember my name and email address.

Notify me of follow-up comments.

Advertisement