For Superior Group of Companies (NASDAQ: SGC), a maker of uniforms for a wide range of industries, 2020 was always going to be a year to remember as the Seminole-based company celebrated 100 years in business. However, that milestone quickly took a backseat to the coronavirus pandemic — a crisis that forced Superior, like many other businesses, to make swift, sweeping changes to its business model.
In Superior’s case, it was already making scrubs for frontline medical workers, but it pivoted to become a producer of personal protective equipment (PPE) that was in high demand during the early days of the Covid-19 crisis. CEO Michael Benstock, whose great-grandmother started Superior in 1920, discussed the firm’s response to the pandemic during an earnings call on Monday that was highlighted by the news that sales increased by $150 million, or 40 percent, to $526.7 million compared to $376.7 million in 2019. Net sales for the fourth quarter ended Dec. 31, 2020, were $145.4 million, an increase of 34 percent compared to the fourth quarter of 2019’s $108.4 million.
Benstock said 2020 was “one of the most trying years in our 100-year history,” but the company rose to the challenge and “brought even greater shareholder value than ever.”
It’s difficult to overstate the importance of expanding its PPE capabilities to Superior’s 2020 results. The company went from selling $3.9 million worth of PPE in 2019 to more than $131 million in 2020. In addition to scrubs, Benstock noted in the call, barrier coats and isolation gowns have been and will continue to be big sellers.
“Demand for PPE still continues,” Benstock said. “The challenge is often not how much we can sell, but how we can find sufficient and reliable supply. The supply chain has been extremely tight on many products. We’re working with our teams across the globe day and night to source legitimate products that meet the rigid [specifications] of this market.”
Benstock said the surge in PPE sales was a buffer against headwinds in other sectors where Superior and its family of companies do business. But BAMKO, Superior’s Los Angeles-based subsidiary that specializes in promotional products, weathered the crisis quite well, in fact, correctly predicting that businesses would fork over wads of cash for face masks and other PPE emblazoned with their brand or logo.
“For the full year 2020, our sales were greater than $202 million, an increase of approximately 88 percent over 2019,” said Jake Himelstein, BAMKO’s COO and CFO, during the earnings call. “Industry-wide promotional product spend was down approximately 25 to 30 percent in 2020 compared to 2019. Despite these powerful industry headwinds, BAMKO’s core promotional product sales actually increased, year over year, by $11.9 million or 11.1 percent.
Himelstein added, “To re-emphasize, in a year where our industry was down upwards of 30 percent, BAMKO was up 88 percent overall, year over year, and when stripping out PPE, BAMKO was still up 11 percent, year over year. Just a remarkable performance in a very challenging market.”
To keep up with record-breaking sales, Superior went on a hiring spree, boosting its payroll from 3,200 to 4,600 employees in 2020, but more are desperately needed, according to Benstock. “We are growing at a faster rate in each of our businesses than the industries themselves are growing,” he said in the call. “As we increase our market share, we must have talent to take us to new, record levels.”
Looking ahead to a post-pandemic world, Benstock said he anticipates a surge in new business as companies look to redefine themselves to consumers who’ve been in austerity mode. He noticed a similar dynamic in the aftermath of the previous recession a decade ago.
“A lot of people were spending marketing dollars,” he said, “and one of the things they wanted to do was rebrand. A recession has never impacted a country the way this pandemic has. So we expect people to want to give their employees a lift, [and] want their customers to view them differently … it all fits together.”