James Avery Craftsman, Inc. Business Information, Profile, and History

Company Perspectives:

From the very beginning, James Avery has believed in integrity and go od taste in all matters. Our jewelry must be as pleasant to wear as i t is to see. Our designers create jewelry that is functional as well as expressive, and our crafts people work with dedication and skill t o ensure each design is as it should be, from concept to completion.

History of James Avery Craftsman, Inc.

James Avery Craftsman, Inc., is a private company based in Kerrville, Texas, that designs, manufactures, and sells jewelry, primarily Chri stian in theme. All told, the company offers about 1,100 designs and 14,000 different pieces of jewelry, sold through 40 company-owned sto res located in Texas, Georgia, Oklahoma, and Colorado; 200 independen t retailers; mail-order catalogs; and an Internet site. The mostly fa mily owned company is still headed by its founder, Homer James Avery, well into his 80s, assisted by sons Paul and Chris Avery.

Founder Turns to Jewelry Design After World War II

James Avery was born in 1920 in Milwaukee, Wisconsin, the son of a te acher and an insurance agent, who grew up attending a Presbyterian ch urch. By the time he joined the service during World War II and becam e an Army bomber pilot he was what he called a "defensive agnostic." He retained a certain level of spirituality, however. He wore an amul et made from the horn of an animal, given to him by an African native who said it would protect Avery from "boom-boom"--anti-aircraft fire . He managed to survive 44 missions over Germany, a feat not easily a ccomplished without injury. The charm also would presage his eventual career.

Married during the war, Avery returned home and went to college, majo ring in industrial design at the University of Illinois and earning a bachelor of fine arts degree in 1946. He then became an industrial d esign teacher at the University of Iowa, then at the University of Co lorado in Boulder. While teaching a class in applied design at Colora do, Avery tried to provide some variety for his students, who had gro wn weary of making furniture and silk screening fabrics, by looking t o jewelry. He learned the rudiments of jewelry making from a library book.

By this time Avery's marriage was on the rocks. After returning from a trip with his sons to visit his parents in Chicago, he found a note from his wife asking him to call her lawyer. The breakup of his marr iage caused Avery to take stock of his conduct in his marriage, which was punctuated by alcohol and stormy fights, and at the behest of hi s mother he visited an Episcopal minister in Boulder. His agnosticism gave way to a rekindled faith, strengthened by his natural interest in the kind of ritual and symbolism offered by the Episcopal church. In 1951 he made his first cross, inspired by a Southwestern Pueblo In dian Cross that he came across in a Denver store. Some of the college students were attracted to the cross and asked if he would make one for them. "I just charged for the metal I had to buy," he told the Houston Chronicle in a 1988 profile, "but then I saw how moved t hey were, and realized that this is important in life--to give meanin g to others."

Founding the Company in 1954

During this period Avery met a 19-year-old sophomore, ten years young er than he was, Sally Ranger, who came from Kerrville, Texas. When Av ery's divorce was finally settled, he married her in 1953. The couple then moved to Minnesota so he could pursue a master's degree. His in ability to complete a required French class, however, derailed his pl ans, and lacking money they were forced to move to Kerrville and live with Sally's mother. Unsure what to do with his life (he even though t about driving a beer truck to make a living), Avery decided to go i nto business after his mother-in-law offered him the use of her two-c ar garage as a design studio. Thus, in 1954, James Avery built a work bench and fashioned a sign to hang on the garage; it read "James Aver y Craftsman" and featured a candelabra logo. Both the name and image would remain part of the company thereafter. Avery was not entirely s ure what kind of craft he would actually pursue, but he settled on re ligious symbolic jewelry, although for a while he dabbled in a number of knickknacks as well.

Avery was a novice in every way. "I wasn't a jeweler. I didn't know a nything about jewelry," he told the Dallas Morning News in a 2 000 interview. "I was out here in the country. I got a sign out on a farm road that says, 'Jewelry, 1 mile.' I mean, how dumb can you get. ... I didn't know anything about stones; I couldn't tell a piece of glass from a diamond." He managed to sell a couple of pieces out of t he garage, but the first break he received was when his mother-in-law took over the commissary at a local summer camp and began selling so me of Avery's jewelry, which at the time was mostly Christian symbols such as crosses, fish, doves, and lambs. The items were simple, uncl uttered, and sincere--and to many it would be the best work he ever d id.

The campers who bought Avery's jewelry wrote to order more jewelry af ter they returned home and spread the word about the country artisan, and he gradually built a reputation. During his first year in busine ss he sold $5,500 worth of jewelry, followed by $7,500 in 195 6. He outgrew the garage and built a studio and house close by. It wa s also in 1957 that Avery hired his first employee, Fred Garcia, and produced his first catalog, 16 pages long, offering 39 items. The bus iness continued to enjoy steady growth, spreading statewide through a n assortment of retail outlets, including clothing boutiques and chur ch gift shops. In 1965 it was incorporated as James Avery Craftsman, Inc. and by 1967 had once again outgrown its facilities. Avery secure d a Small Business Administration loan, bought 20 acres of land, and built a corporate headquarters, studios, and workshops.

By the start of the 1970s the company employed 35 people and generate d $400,000 in annual sales, but the business was in clear need of an executive to take it to the next level. Avery found it in Chuck W olfmueller, a Kerrville native who in 1971 was working on his master' s degree in business at the University of Texas. For a term project W olfmueller analyzed James Avery Craftsman and made suggestions on how to improve production. Avery was so impressed with the paper that he hired the 23-year-old Wolfmueller in May 1971. As an example of how disorganized the company was, when he took over James Avery Craftsman the company was still filling 1970's Christmas orders.

Wolfmueller initiated a number of changes. First, he updated the equi pment, and then took steps to make the company more vertically integr ated. A machine shop was built to furnish necessary tools and dies, a nd a chain-making factory was established. In the first year the comp any saw an increase in sales of 40 percent, solidifying Wolfmueller's reputation as a boy genius. Avery was known to be harsh with his own children, but took a different approach with Wolfmueller, who quickl y learned how to present ideas that Avery could embrace and make his own. One of those ideas was for James Avery Craftsman to open its own retail stores. The first was established in North Dallas in 1973 and was decorated in a manner that would be followed by subsequent store s: stucco walls, wall sconces, oriental carpets, and old trunks and w ardrobes scattered about. In that same year, the company expanded on its secular product line. The Dallas operation was far from an immedi ate success, yet the company opened a second store in southern Califo rnia, followed by another in Laredo, Texas. Finally, the concept took hold in Houston, where a store generated $400,000 in 1975. A yea r later a San Antonio outlet opened and did even better. Business was so strong that the company had to postpone opening further stores un til the manufacturing operation was able to keep up with demand.

"Even as the legend of James Avery grew," wrote Texas Monthly in 1991, "his private life began to diverge from his public image. Th e catalyst was Carmen Espinoza." She started out working on the assem bly line but caught the attention of Avery, who moved her to the show room. He began having an affair with Espinoza, then divorced his wife and left her and their four sons to marry Espinoza and move to Lared o, where the company established a retail store and he set up a small factory. Avery periodically flew back in a single-engine airplane to keep tabs on the business, which was being run in his absence by Wol fmueller and his ex-wife, who controlled half the stock. She would re marry and move away, at which point Avery gave up on the struggling L aredo operation and moved back to Kerrville with his second wife. Sal ly then sold back her share of the company in 1979, a year after trag edy struck the family. According to the Dallas Morning News, o ne of their sons "committed suicide on Father's Day, 1978. Stephen, w ho was 19, suffered from schizophrenia that began manifesting itself shortly after his father left home in 1971."

James Avery Craftsman launched a catalog sales division in 1980 and m ailed its first seasonal catalog. The catalogs had the added effect o f driving traffic to the retail stores, which were now expanded to Ok lahoma. Business also increased when the Gemstone Department was adde d in 1983. As a result of the changes, sales that totaled $1.5 mi llion in 1975 grew to $14.3 million in 1985. Wolfmueller became p resident of the company and Avery, now 64 years of age, decided to pu t the business up for sale. Not satisfied with the only bid he receiv ed, $5 million, he asked Wolfmueller if he was interested in a ma nagement-led buyout. A plan was developed that would give Wolfmueller and six other managers ownership of the company if they met certain sales and profit goals. They would then be awarded bonuses to buy the company's stock over time, allowing Avery to retire. The seven manag ers signed on in May 1986, each paying $50,000 to complete the in itial stock payment. Although the retail operation would greatly expa nd during this period, including a move into Georgia, the plan would soon be derailed as a result of another affair Avery had with a woman , Sylvia Flores, who came to the company as a part-time typist while in high school but was 32 years old in the summer of 1987 when people in the office began to suspect that something was going on between h er and Avery. He separated from Carmen and began to express misgiving s about fulfilling the buyout plan, anticipating that his divorce fro m Carmen would prove expensive.

Early 1990s: A Period of Notoriety

Discontent within the company reached a head in the summer of 1989. A very turned on Wolfmueller, insisting that he be more decisive and lo se weight. (Avery, a fitness fanatic, preferred trim employees.) Wolf mueller responded with a lengthy memo that in essence suggested that it was time Avery practice what he preached, referencing the passage in the employee handbook that "a person not adhering to the company's moral standard could be dismissed." A day after submitting the memo to Avery, Wolfmueller was asked to resign. He promptly filed a $1 2.3 million lawsuit against Avery, Sylvia Flores, and the company, an d Avery responded with a counterclaim. Two more managers resigned, fo llowed by a third who refused to sign a statement releasing Avery fro m the buyout plan. Wolfmueller's lawsuit went to trial in 1990. It wa s a well publicized case, filled with embarrassing details of Avery's personal life, far from consistent with his public image as a Christ ian craftsman. To the surprise of many, on the eve of the trial Avery and Carmen reconciled, and she sat in court each day in support of h im. The question at hand was the legality of the buyout plan, and in the end a jury awarded Wolfmueller $15,000 for the buyout plan an d $360,000 for the invasion of his privacy, because his office de sk had been broken into and the contents examined without his consent . That amount would be reduced to $29,000. Within a matter of day s, Avery and Carmen were divorced; she received a settlement worth 36;5 million. Wolfmueller vowed to appeal the jury's decision, but se veral months later he reached an undisclosed settlement with Avery.

Avery made an effort to reconcile with his five sons, giving them eac h 4,000 shares of stock. His youngest son Paul, a former horticulturi st, joined the business and would oversee retail operations. He was f ollowed by brother Chris, an anesthesiologist by training, who became company president. In April 1991 their father would marry a fourth t ime. He met his new wife, Estela, a registered nurse 30 years his jun ior, at a fund-raising event at a Catholic school.

Under Paul Avery's leadership, James Avery Craftsman introduced corpo rate governance policies, granted more power to executives, and insis ted that a succession plan be put into place. James Avery remained in volved in the company, but day-to-day decisions were made by Paul and the company's chief financial officer, Mark Hogeboom, a former execu tive with Zale Corporation. Primarily, James Avery oversaw design and never entertained further plans to retire.

Despite the unwanted publicity of the Wolfmueller trial, James Avery Craftsman continued to grow during the 1990s and into the new century . In 1994 the company produced its first specialty charm catalog. A f ourth jewelry workshop was opened in Comfort, Texas, in 1998. Another workshop opened in 2001, this one located in Hondo, Texas. Although other companies were quick to embrace the Internet, James Avery Craft sman held back, not because it was opposed to the technology, but bec ause the manufacturing operation could not keep up with current deman d from catalogs and retail outlets. It was not until 2003 that a comp any web site was launched. In 2005 James Avery came full circle in a way. In July of that year James Avery Craftsman opened a retail store in Denver, located in the state where he first learned the craft of jewelry making from a library book.

Principal Divisions: Catalog Sales; Gemstone Department.

Principal Competitors: Zale Corporation; Signet Group plc; Wal -Mart Stores, Inc.

Chronology

• Key Dates:
• 1954: James Avery begins crafting jewelry in a Texas garage.
• 1957: Avery builds a studio and hires his first employee.
• 1965: The business is incorporated as James Avery Craftsman, I nc.
• 1973: The first retail store opens.
• 1980: The catalog sales division is launched.
• 1983: The Gemstone Department opens.
• 1988: The first retail store opens in Georgia.
• 1994: Specialty Charm catalog is introduced.
• 2003: A web site is launched.
• 2005: The first Colorado store opens.