Ric Cabot followed his father and grandfather into the sock business, and by 2003 the company had hit rock bottom. Cabot Hosiery Mills in Northfield, Vt., was by then an anomaly in northern New England: a still-operating factory amid the ski resorts and rustic bed-and-breakfast inns of the de-industrialized Green Mountain State.
Ric’s father, Marc, launched Cabot in 1978. “From a young age, I always had socks in my head,” Marc Cabot says. The company quickly became one of the most prominent players making private-label socks for the big guys, including The Gap, Eddie Bauer, Talbot’s and Banana Republic. But, one by one, these longtime customers canceled their contracts, sometimes on short notice, after finding cheaper hosiery suppliers overseas.
“As strong as our relationships were with those companies, and some of them went beyond production, the dollar ended up being more powerful,” says a much better-situated Ric Cabot today. “Anything that could be outsourced was.”
It got bad. “At the low point, maybe 2003 or 2004, we had pretty much defaulted on our loans to the bank,” Cabot says. “We’d be in meetings with the loan officers that would end with them backing out of the conference room saying, ‘Please, no more surprises.’ They expected us to declare Chapter 11 minutes after we drove out of the parking lot.”
That didn’t happen. Ric Cabot sat down with his dad, who is still with the business, and made a list—things that had to be done immediately to keep the company afloat. “It was a bleak time,” he remembers. “I felt that we could lose everything, and we’d taken our eye off the prize on a number of issues. My first child was about to be born, and the company was really struggling. But when you’re on the verge of going out of business, you work hard to ensure you’ll never be in that position again, and it makes you darn tough.”
And Darn Tough turned out to be the solution. Cabot had a vision that turned into a way out. Instead of trying to sell socks wholesale (for, at most $2.50 a pair) to companies that could find them cheaper elsewhere, Cabot Hosiery Mills went upscale with its own brand. Darn Tough socks are a premium product that sells for $15 to $26 a pair at retail shops (there’s no online ordering). And they come with a lifetime guarantee that covers their replacement for any reason. The dog chewed them up? No problem, they’re replaced with no questions asked.
The new brand wasn’t launched overnight. The Cabots had to convince their bankers to trust them again. And that meant getting their self-confidence back. “You need support to get you out,” Cabot says. “I remember a great quote from that time: ‘If you want to go quickly, go alone, but if you want to go far, go with others.’ ”
The Cabots also adopted their own novel marketing scheme, based on confidence in the product: Instead of advertising, the company gave away socks—thousands of pairs. “Our hosiery is for people with active lifestyles, and we were aiming for the top of the market,” Cabot says. “So we started by putting 3,500 pairs of Darn Tough socks in participant bags for runners at a bank-sponsored marathon here in Vermont. At the time our footwear wasn’t available in stores, but we were able to take the inquiries we got at our new website—people saying things like, ‘This is the first time I didn’t get any blisters’—to specialty retailers, and they were sold. Then we hired reps who had territory all over the country, and it spread from there. We’ve given away socks all over North America, and in Japan, South Korea and Japan, too.”
The privately held Cabot Hosiery Mills now sells 4 million pairs of socks annually, and is a profitable business with annual sales in the teens. It’s out from under bank workout, and the loan officers return Cabot’s calls. The 110 employees can be reasonably confident their jobs will never be sent abroad. A banner on the mill wall reads, “Nobody ever outsourced anything for quality.”
What makes Darn Tough socks so, well, darn tough? “If it was just one thing that makes them stronger, then anyone could do it and we’d be out of business,” Ric Cabot says. “We bring three generations and 35 years
of sock-making experience to the table and combine that with the knowledge of our very experienced workforce. It’s not just the high-tech machines we have or the yarn we use.” But maybe elastic arch support and top-quality Merino wool help.
The guarantee stands, and Cabot says only 0.001 percent of Darn Tough socks come back. “We’d be idiots if we guaranteed something we didn’t make,” he says. “We look at every pair that comes back, and we learn from what we see.”
And that guy whose dog chewed up his socks? “That’s exactly the guy we want to send a free pair of socks because he’s not really expecting it,” Cabot says. “He’s going to tell his family and friends about his amazing experience, and that’s how our business grows.”