Q&A with Timberland CEO Jeff Swartz

June 14, 2011, 12:17 AM UTC

Can Timberland remain true to its roots, as part of a large conglomerate?

Jeff Swartz

Timberland Co. today agreed to be acquired for $2 billion by VF Corp. , a brand empire that already includes Wrangler, The North Face and 7 For All Mankind. So we spent some time chatting with Timberland president and CEO Jeff Swartz, about what the deal means for his company and the future of its environmental mission:

Fortune: In the announcement, you said that VF would be able to maintain Timberland’s “unique culture and DNA.” Why are you so confident of that?

Swartz: Two things. One is the long track record they have in acquiring brands. VF assets that it operates brands it acquires as individual brands under an agreed-open strategy. Once everyone agrees to a plan, it’s up to the brand to deliver results. They have an enviable track record of doing that, and you can inspect it for yourself at companies like North Face or JanSport. Talk is cheap, but their outcomes are impressive.

Second, what VF values about Timberland is the authentic, New England outdoor reality of our brand and our dedication to environmental sustainability. For example, they like our Earthkeepers idea that has driven sales and rates of sales, and think it could be scaled faster. You don’t hear them tell us to go hug a tree, but they do want us to deliver on a promise to consumers because they believe in handsome performance that’s also green.

Ok, but do you expect Timberland to maintain its current environmental and social programs, like its employee workdays and sponsorship of City Year?

I expect that whoever sits in this chair, now and in the years ahead, will have to make choices to balance commerce and justice. Just as I have always had to do running a public company with fiduciary responsibilities.

For example, Patagonia’s CEO Yvon Chouinard can say he’s switching to 100% organic cotton fabrics because it’s a private company. I care about the same environmental outcome Yvon does, but I can’t make those types of hyperbolic statements if I can’t back it up with a business case. So we blend organic cotton into everything we do, and increase that percentage each year. But I’m also responsible for delivering gross margins for our shareholders.

By partnering with VF, some of our choices will be better informed. They have a very large portfolio with a lot of smart eyes. Any environmental justice cowboy who thinks he can do it by himself is naïve and arrogant. We’ll get to hear ideas from the Vans people or the Reef people, some of which we’ll have already thought of and some of which we won’t have. Plus, we’ll have a huge opportunity to sell ideas into their network, get collaboration and then scale. Remember, the biggest user of organic cotton is Wal-Mart, not Patagonia.

It’s been said that your family has been willing to listen to takeover offers for years. True?

Well, as a fiduciary you’re always open to conversations. In fact, VF first approached Timberland in 1981 and talked to my dad and uncle about an outdoor version that hasn’t changed much in 30 years. My dad was at the offices today talking about it…

We’ve been open to conversations with others, but always on the same basis of how they will serve what’s important to us. First is our fiduciary responsibility. We are the majority shareholder in terms of votes, but are not the only shareholders – which is why we’ve had an independent board since the first day. As my grandfather said, if you take money, you owe a return.

Also, we want to collaborate with people who share our vision and mission. Not just what we do but how we do it. I think this is a great deal for Timberland and for the outdoor industry. It also shows that the impact of sustainability is not just pie in the sky.

Speaking of which: You’ve taken a lot of heat over the years for the time and money Timberland spends on what some people view as non-core activities. Is this sale at this price a validation of your strategy?

I think it would be wrong to say “validates,” because it would cheapen the notion of mission. A friend of mine in the civil rights movement said that if you achieve you goal it isn’t a worthy goal. You should always die one inch short.

But, that said, I hope this deal will help show the critics and the skeptics and even the cynics that they’re wrong when they say our strategy can’t work. You can run a for-profit business and be mindful of basic human rights and your environmental impact. You can run a for-profit business in a way you’d be proud to tell your children about and face your God about.

I read VF’s investment in our story as an interim update on the thesis that says commerce and justice don’t have to be antithetical. A progress report that I hope becomes a trend, a wave and, ultimately, irresistible.