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Stretching the Fabric at 5.11

After a career stretching almost 40 years in retail, Troy Brown was ready for retirement.

Then he got a call from 5.11 Inc.

“I thought I had finished my life’s work” in retail, Brown told the Business Journal.

However, 5.11 is “the opportunity to take what I did every day from a passion work perspective, and then connect it really meaningfully with what my family is all about.”

The tactical apparel and gear company based in Costa Mesa named Brown in January as its new chief executive, replacing co-founder Francisco Morales, who is now the executive chair for 5.11.

Brown is taking over as CEO of a company that recorded more than $500 million in sales last year and is aiming to quadruple its store count from 123 to 400 in the coming years.

“He’s coming in with a fresh set of eyes and not only that, but with a lot of expertise,” Morales told the Business Journal.

Zumiez Expertise

Brown was previously North America president for Zumiez Inc. (Nasdaq: ZUMZ), which operates 756 stores that sell action sports apparel. The company, which has a market cap around $300 million, last week reported fiscal 2023 sales fell 8.6% to $875.5 million.

He’s also worked at Zion’s Co-operative Mercantile Institution, as well as Eddie Bauer, Nautica International and Tommy Bahama.

In 2019, Morales helped to convince Brown to join 5.11’s board of directors and then convinced him again to be its new CEO this year.

“I feel like we had a great football team, and now we have a quarterback with a specific [skill set],” Morales said.

Brown was praised for his operation skills by 5.11 owner Compass Diversified (NYSE: CODI), which has a portfolio of 10 companies—its other local holding is Newport Beach’s Lugano Diamonds—and is valued at $1.8 billion.

“Troy Brown, who had very high positions at Zumiez for many years, along with many [other] relevant businesses, we believe is very strong at operational excellence and he’ll be working with Francisco Morales [who] understands brand and product development and will stay on as executive chairman,” Compass CEO Elias Sabo told analysts on last month’s earnings call.

“We believe Troy is very strong at driving operational efficiencies and at delivering for the end customer in a DTC (direct-to-consumer) environment, and we think that combination will really yield tremendous benefits.”

Passion Customers

Morales and partner Dan Costa launched 5.11 in 2003 to manufacture more durable clothes for public safety professionals, starting with a pair of pants specially made for the Federal Bureau of Investigation.

5.11 now works with thousands of government departments and distributes products to wholesalers in 120 countries alongside its DTC website and retail stores.

Since 2016 when Compass paid $408.2 million to acquire 5.11, its revenue has grown almost fivefold. In 2023, sales climbed 9.4% to $533 million while its operating profit increased 7.4% to $46.7 million.

Among Compass’ 10 brands, 5.11 is the largest unit by sales.

5.11’s passionate customers who serve are what makes the company stand out, Brown said.

Morales credits its core group of customers, including military, first responders and similar workers, with sparking the effort to improve 5.11’s apparel.

Brown said he knows well 5.11 because he’s the father of sons who have served as a policeman, a prison guard, a firefighter in training and in the Air Force. Brown noted he understands the importance of 5.11’s long-lasting clothes and gear.

“That’s why I took the call so quickly because I know this is a passion-based brand,” Brown said. “What we need to really focus on is a growth mindset and the set of activities that’s going to allow us to scale its passion.”

The pair intend to work closely together; their offices are next to each other in the Costa Mesa headquarters.

“This is about two leaders, who are very passionate about the same consumer segment, partnering to use our collective strength to have an impact,” Brown said.

“We’re doubling down on leadership,” Morales added.

Tactical DNA

5.11 can expand beyond its “rabid, core consumer,” Brown said.

“There are consumers out there who will love this brand,” Brown said. “It’s in their DNA, but they may not be fully aware of it yet and that’s part of why I’m here.

“I bring a set of experiences and some tools to help the team think a little differently than they’ve thought about in the past, grounded in this idea of [knowing] who our consumer is and [needing] to understand what they expect.

“We’ve got to figure out how to exceed those expectations, which then creates a very evangelistic set of consumers, which then starts to feed on itself and starts to grow the brand itself,” Brown said.

The new CEO will lead 5.11 by adding new types of customers.

“I think one of the things you’ll see is us starting to develop a deeper connection with other communities,” Brown said, citing sectors such as off-roading and hiking.

Brown said that 5.11 will start to host more community events and meetups with these additional communities “to become part of the fabric of their lives and expose them to 5.11.”

“To [the point] where we’re just part of their communities and to be where they expect us to be,” Brown added.

Past store openings have included fitness competitions between local fire and police departments. Brown wants to figure out how to expand these experiences with customers at a larger scale beyond existing markets.

“It may be obvious when you look at somebody who’s on a police force or in the military, but you may not be thinking the same thing about somebody who’s out in the outdoors hiking in Moab, or riding a bike,” Brown said.

Luggage on a Mission

5.11 Inc.’s “purpose-built” designs have been applied to all kinds of apparel and gear, from jeans and jackets to dog harnesses and flashlights.

“You will continue to see us innovating,” former Chief Executive Francisco Morales said of his transition to executive chair.

The apparel company’s co-founder has typically kept an ear open to customer comments on any product, so 5.11 can jump on improving or reinforcing the design. There have also been items that unexpectedly surge in popularity from time to time.

One category that has recently experienced fast-paced growth has been its luggage line.
5.11’s duffel bags were originally designed with tactical input from traveling trainers of military and first responders, known as “road warriors,” and were introduced to the market several years ago.

Over the years, improvements have been made to the overall structure and design to increase durability and functionality for use by a variety of consumers, from tactical professionals to traveling athletes.

“I’m confident to say we make the best suitcases in the market to fit a wide range of missions,” Morales said.

The bags range in price from $52 to $285.

He noted that there hadn’t been any extra marketing for the product.

“A substantial amount of growth came from post-COVID ‘revenge travel’ as consumers started traveling again,” he said.

5.11 followed suit by ramping up inventory and advertising both on its website and in stores.

“We see that as one of the categories that will continue to be at the forefront of what you will see this year,” Morales said.

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