Helly Hansen (1877), a company review

Helly Hansen - A hardcore history

My first memories for the Helly Hansen brand are fleeting, and they involve boats! I live in a fishing village in Ireland, so this isn’t surprising. But something happened. Like the story of evolution, the brand morphed from the water to land. When I researched them some more, I found another fascinating story of an outdoors brand that started life ‘hardcore’.

Although today owned by Canadian Tire, the famous HH brand traces its origins back to 1877 when Captain Helly Juell Hansen and his wife Maren Margarethe went in search of better protection from the extremely harsh Norwegian elements. Their early experiments involved soaking coarse linen with linseed oil - which was what they had used for water-proofing the boards. And the result was water resistant clothing for workers at sea, that wasn’t as stiff ‘as a board.’ Some say it was the first real oilskin.

And Helly Hansen was born, just like that. The Hansens launched a business producing waterproof oilskin jackets, trousers, sou’westers and tarpaulins made from this coarse linen. Their waterproof gear was a success, landing their first product award - a Diploma for Excellence - at the renowned World Expo in Paris in 1878. The first factory was located in the town of Moss.

The company continued to run and grow under Helly’s stewardship until he died, in 1914, when its leadership passed to his son, Leiv. From this point on, there were a number of material evolutions, which points to HH being an innovation led organization from those early days. Firstly, in the 1920’s, Linox was born and this eventually became their first dalliance with PVC. But it was the development of Helox in 1949 that was the game changer. “THE NEXT EVOLUTION IN WATERPROOF: Helox fabric featured a thin sheet of translucent PVC plastic that was sewn into coats to make them waterproof. It was a revolutionary technology that became the must-have protection for outdoor use and was used by the Norwegian delegation at the 1952 Olympic Games in Helsinki.” About 30,000 Helox coats were produced each month. Plarex, a heavier-duty version of Helox, backed by fabric, was developed in parallel, specifically for workwear.

“After WWII, Helly Hansen’s management and engineers traveled to the United States in an effort to understand plastic production. Afterward, Helly Hansen was among the first to adopt plastic in clothing production. This was a technological innovation that revolutionized the clothing industry.”

The next big innovative evolution came in 1961, when Helly Hansen partnered with Norwegian Fiber Pile Inc. and developed the original Fiberpile, which was essentially the first fleece. As expected, it featured a high warmth to weight ratio and maintained its thermal qualities even when wet, making it a favorite of lumberjacks and also outdoor enthusiasts of various kinds. Amazing to see it’s more popular than even in 2024.

With the creation of LIFA in the 1970s, the layered narrative was finished. Because LIFA's polypropylene fiber pushed moisture away from the body (wicking), it kept the skin warm and dry, making it the perfect base-layer material for outdoor and workplace applications. It was the beginning of the three-layer clothing system, which consists of rain gear for protection, fiberpile for insulation, and LIFA close to the body.

Interestingly, HH continued to develop for extreme workplaces in parallel. And I think this built a huge amount of brand integrity, credibility and trust. And still does to this day. This is a common thread that runs through a lot of these brand deep-dives. A brand story and history that derides trust. Something we can all learn from.

And they have always played on this. The boat Berge Viking circumnavigated the world in 1981 as the first Norwegian vessel to compete in the Whitbread Round the World Race. The squad had a bespoke waterproof jacket made for them. One of the most recognizable Helly Hansen patterns, that is still available in the Salt Collection today, which was red with two white and one blue horizontal stripe on the chest. And HH tell us that… “Today, our products are used by elite sailors, over 55,000 mountain professionals, and guides in over 200 ski resorts.” This is a huge part of their brand marketing.

HELLY TECH waterproof/breathable technology was launched in the 1980’s, winning awards and the Prowool (renamed LIFA® Merino) base-layer for cold weather conditions was launched in the late 90’s, combining LIFA® technology with Merino wool for both moisture transport and added warmth. Again, materials technology innovation leads the way.

Footwear followed in 2004 - first for the extreme and then into mainstream, following true to their roots. As did ODIN in 2008, H² FLOW in 2012, MAGNI in 2015, the Elevation Jacket in 2016 and so on. But before all of this came the evolution to the high-street in the 90’s. Like I mentioned previously, outdoor wear became cool to wear off the trail. And Helly Hansen, like The North Face, Patagonia, Moncler and many others took advantage of it. And the rest, as they say, is history.

Orkla, a multinational based in Norway, owned the company by 1995. In that year, Orkla sold a 50% share in Helly Hansen to Resource Group International, a company that merged with Aker in 1996.

Investcorp acquired the majority of Orkla's and Aker's shares in 1997, giving it 70% ownership of Helly Hansen, which was then valued at c. $160 million.

A private equity fund called Altor Equity Partners purchased shares of Helly Hansen from Investcorp in October of 2006.

The Ontario Teachers' Pension Plan purchased a 75% share in Helly Hansen from Altor in 2012.

The Ontario Teachers' Pension Plan grew its stake in the company in 2015 and bought Altor's remaining shares. For CA$985 million, Ontario Teachers sold the business to Canadian Tire, a publicly traded company, in May 2018.

I don’t wear Helly Hansen. Maybe the HH is a little too ’in your face’! But that’s just me. Many, many others disagree. The brand generated C$837.2 million (€576.2m) in 2023 sales versus C$781.9 million in 2022. That’s impressive in a crowded and relatively difficult market. But they have something on their side. Authenticity, and 147 years of heritage to call on…

Outdoor Brands - financial benchmarks

Last week, I briefly mentioned the recent benchmarking report from the Outdoors Industry Association. Here it is again, this time with the percentages attached (thanks to Eoin Comerford on LinkedIn.)

The percentages help to make this real - and there is a huge amount in this little table. Again, remember the sample size as a caveat.

The key takeaways for me are:

1. How high COGs are / low gross profit is. Most likely due to the deep discounting that’s going on at the moment.

2. With all the challenges, there is still profitability. If correct, this will most likely be in organizations that have a very close eye on expenses. Nearly 12% is very healthy.

3. More revenue = higher profit %. This is a reflection on being able to offset fixed costs against a larger figure.

4. Op Ex is key for me. Top quartile controls it at 24.4%, but the bottom is more than double that. Enough said.

5. If you’re in the hard goods business and think it’s tough, look at apparel + footwear.

Let’s take a look at the Ops summary:

Again, a huge amount here. I have (crookedly!) highlighted what I see as being a key stat. given the nearly 14% swing - Media Ads. This would suggest that newer brands which are likely to have more of a D2C focus are finding it difficult, as CPA’s rise and attribution becomes more difficult. And, it definitely highlights the pros of having multiple routes to market.