Zephyr ‘cap’-italizes on fans’ basic gear

LOVELAND — A quick head count demonstrates the market boom that has Loveland-based Zephyr Graf-X Inc. knocking down walls and building more warehouse space.

Start with the heads on college campuses nationwide — about 12.5 million. Throw in the 14.6 million heads that bob along in high-school hallways. Add those that flock to professional sports stadiums and arenas.

Now, count the ones wearing baseball caps that bear sports-team logos.

The number is big enough to explain why Zephyr, six years after its founding, has climbed to the upper reaches of the sports-apparel industry.

“As long as people have heads, we’ve got places to put our product,” Zephyr founder David Gormley said.

“People are really into their hats, and they’re getting more into their hats all the time. When I was a little kid, I had two baseball caps — a (Minnesota) Twins cap, and the one I wore in little league. That was it.”

Now, the average college student has at least a dozen. Some have many more. And chances are the labels inside the band say “Zephyr.”

Each week, 125,000 caps are trucked out of Zephyr’s warehouse at the Fort Collins-Loveland Airport Business Park, destined for the smallest college bookstores and the largest sports-apparel retailers.

An unconventional business strategy, and a true-to-the-roots philosophy, have made Zephyr the No. 1 supplier of college sports logo caps and has made the gulf between Zephyr and its competition a vast one. Zephyr is poised to hit $28 million in sales for 1999.

“We supply between 250 and 300 colleges,” Gormley said. “Our competitors have maybe 40, 50 at the most.”

“They’ve been No. 1 in the college headwear category for the past two years, and they’re No. 4 in apparel overall,´ said Kit Walsh, spokesman for Collegiate Licensing Co., an Atlanta-based clearinghouse for college and university sports-logo marketing. “They’ve been very, very creative, and they’ve tapped into what the fans want.”

CLC handles licensing contracts for almost $2 billion in college trademark business, and head gear is its fastest-growing component.

Zephyr’s competition — New Era, Majestic Apparel and a handful of other licensees of college and professional sports logos — were once Gormley’s suppliers. As a Southern California franchise holder for Pro Image, a nationwide chain of sports-apparel stores, he learned that the supply chain was flawed in ways he could fix.

With an eye on problem-solving, Gormley founded the company in 1993 and soon brought in his brother, Wesley, their nephew, James Seilbach, and his father, Jim Seilbach. The four, all graduates of Greeley West High School, are equal partners in the business.

“Retail opened my eyes to supply lines that weren’t being filled, to demand that wasn’t being met,” Gormley said. “I saw this massive niche.”

Getting nearer the top of the sports-apparel food chain also insulates the four partners from the perils that retailers — especially those that operate in major shopping centers — face every day.

“The biggest lesson I learned in retail was that I didn’t want to be there,” David Gormley said. “The problem with retail is that, no matter how much marketing you do, if an anchor goes out at a shopping center where you’re located, you’re toast.”

Zephyr’s office and warehouse complex on Earhart Road shows all the signs of burgeoning growth: Updated computer equipment is fresh out of the boxes that still lie stashed in hallways and corners. Offices have a “moving-day” look. But what dominates the decor are hats. They’re hung on walls, scattered on desktops — and are on the heads of most of Zephyr’s 60-plus employees.

“We live with the product,” Gormley said.

Freezer-size cardboard boxes in Zephyr’s 13,000-square-foot warehouse, which is about to double with a new addition, are loaded with hats bearing logos of colleges, National Hockey League teams, and minor-league baseball franchises.

A row is devoted to Colorado Avalanche caps. Other boxes accommodate smaller lots for even the tiniest colleges, a few of which have become Zephyr’s biggest sellers.

Bradford College’s “Fighting Squirrels,” thanks to Zephyr, have gained fame far beyond the Massachusetts campus of 500 students. Likewise, caps bearing the “Anteaters” logo show up on campuses thousands of miles from the Irvine, Calif., branch of California State University.

Zephyr recently added a National Hockey League license agreement to its holdings, and has already zoomed into the top five NHL licensees, NHL spokeswoman Joy Kalfus said.

While Gormley said he is in the market for more big-league business, and that a National Basketball Association deal might be in the works, colleges would remain as Zephyr’s business focus for the near future.

“I’m not rushing it,” Gormley said of the NBA possibility. “I don’t expect that we are even a third of the way to where we want to be with the colleges. That’s where the growth is, I think.”