Magazine article Management Review

Sports Mania and School Spirit: A Lucrative Combination

Magazine article Management Review

Sports Mania and School Spirit: A Lucrative Combination

Article excerpt

SPORTS MANIA AND SCHOOL SPIRIT: A LUCRATIVE COMBINATION

In 1900, watchmaker Otto Josten diversified and began making emblems and awards for area schools. Hosten was a forward thinker, but perhaps even he didn't realize the gold mine he was tapping into. Today the Jostens Company, is ranked in the Fortune 500, and it is one of only a handful of firms listed on the New York Stock Exchange that hes enjoyed 30 or more consecutive years of increasing sales, earnings, and earnings per share.

Jostens, based in Minneapolis, may not yet be a household name, but its products continue to make their way into million of homes. This year it will supply medals and awards to the Winter Olympic Games. Jostens also has been selected to produce rings for the Super Bowl and the America Football Conference championship. Other products include class rings, yearbooks, diplomas, caps and gowns, photography, and, to keep pace with technology, its newest product, the video yearbook. the company also manufactures imprinted sportswear through Artex, its fastest-growing division.

TIGHT GRIP

Jostens' market is primarily students at more than 12,000 high schools and colleges across the U.S. Despite the dramatic changes that have rocked student populations over the past 30 years, Josten's hold on the market has never loosened. Sales have grown an average annual rate of 13 percent since 1958. At the same time, both net income and earnings per share have increased 15 percent annually. Dividends have risen every year since 1973.

"Our underlying goal is really to increase our shareholder value over time," says Don Lein, executive vice-president of finance and administration and secretary. "And that's what we continue to look toward as our objective."

That approach, along with the company's record, has made Jostens a darling of the investment community. Investors who bought $1,000 of the company's stock when it went public in 1959 have a $40,000 value today. Since 1976 the stock has appreciated ten times.

One reason for the company's success is its thorough knowledge of the education market, according to Lein. The market analysts are so familiar with the demographics of the industry that they know the makeup of the student population 18 years in advance.

"They have a dominant position [in that market], and they have a good product category in different segments too," says Elizabeth Toth, vice-president of research for security brokerage Janney Montgomery Scott Incorporated. "They can offer alloys that are cheaper for the students who can't afford gold. And yet they also offer top-of-the-line products."

Perhaps another factor contributing to Jostens' steady growth is the stability of its management team. Most of the managers have been with the company for 10 years or more. In general, Jostens promotes from within, although in some specialty areas, industry experts have been hired.

The Jostens' operation employs 8,000 full-time workers scattered throughout its 45 plants and offices. In addition to attractive compensation packages they enjoy job stability, often in communities that are economically depressed. the majority of employees are nonunion.

Jostens operates on a decentralized basis. Each division maintains its own sales, marketing, and management teams. In all, there are 1,200 independent sales representatives who work on commission.

Relaying information from the field back to headquarters is an essential duty of the salesforce. …

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