March 21, 2010 in Business

Broken promises leave company off the green

By The Spokesman-Review
 

First Sgt. Dennis Frederick took up golf while stranded at Ft. Sill because his unit and equipment had gotten separated before deployment to Iraq.

As he walked through the rough and out-of-bounds areas looking for his own errant tee shots, he found dozens of golf balls bearing corporate logos. Was anyone, he asked the course pro, doing something similar with military insignias?

Told no, he took out his entrepreneur wedge and swung for the green. Frederick is still swinging, but he and Stryker Golf have yet to reach the hole, except the financial one that threatens to take his home and that of his in-laws.

The Ford, Wash., resident said he and partner Dale Winfrey figured in 2006 they had a $600,000 order in hand from the Army Air Force Exchange Service, better known to many as the PX.

The two had flown down to AAFES headquarters in Dallas to meet with buyer Ken Warden. Based on catalog sales, and sales at the Ft. Lewis PX, Frederick says Warden told the pair to prepare a purchase order he could sign.

But as they bought equipment and hired staff to meet projected demand, their purchase order landed in the rough. And stayed there.

Warden became elusive, Frederick says, an assertion backed by copies of e-mails. Warden was moved on, and his successor was less enthusiastic about Stryker’s product.

Online sales continued, but what little product was ordered for seven stores ended up in rural outlets where there was little hope Stryker could generate enough sales to get into the 100 domestic and 30 offshore stores Warden had promised.

“Our whole business plan was based on being in the stores,” Frederick says.

In February 2008, Divisional Merchandise Manager Tom Wilmoth notified Stryker the company would be dealing with a different buyer.

“Any financial stress you currently incur was not caused by AAFES,” Wilmoth wrote.

He said Warden never gave Stryker any commitments and was guilty only of poor communication.

“For that reason, Mr. Warden was removed from his buying duties.” Wilmoth said, adding that catalogs were the best place for the company’s golf balls.

Vice President Ana Middleton followed up with a letter in July 2008 pegging catalog sales at $19,000 to that point. Poor retail sales did not merit further stocking, she wrote.

“AAFES wishes that the initial vendor retailer relationship with Stryker Golf had been conducted in a more professional manner,” she wrote, concluding with an offer to resume carrying the items in the catalog.

Although failure to license the insignia was also a problem cited by Middleton, Frederick says his use was grandfathered, and the issue has since been resolved.

Meanwhile, he says, the Navy Exchanges continue to sell the golf balls online and in 30 stores. But the cash flow still does not cover expenses and debt service, and a June balloon payment looms on the debt he took out to start Stryker.

Pleas to the Washington Department of Veterans Affairs, the American Legion, congressional members and others have so far brought no help.

“It’s just been a nightmare,” Frederick says. “I never would have done it if I had any inkling.”

He says he’s hanging on hopes that Navy sales, a recent pickup in catalog business and forbearance by his lender will give Stryker more breathing room.

And not turn that entrepreneur wedge into a club.


There are three comments on this story. Click here to view comments >>

Get stories like this in a free daily email