Harold Alfond - Founding Dexter Shoes

Founding Dexter Shoes

After graduating from high school in 1934, Alfond got a job at Kesslen Shoe Company in Kennebunk, Maine, where his father worked. In a short time, he rose from odd shoe boy to factory superintendent. In 1940, Alfond and his father bought a shoe factory in Norridgewock, Maine, and founded Norrwock Shoe Company. They sold the company to Shoe Corp. of America in 1943 and Alfond stayed on as president for 25 years.

In 1956, Alfond left, purchased an old woolen mill in Dexter, Maine and founded Dexter Shoe Company. There, he produced shoes for the private label catalog market, supplying stores such as Sears, JC Penney, Spiegel, and Montgomery Ward & Co.. Although Dexter was successful from the beginning, Alfond tired of being controlled by a few large customers and decided to go into the "branded" business. He developed a line of shoes under the Dexter name, hired a sales force and began selling to independent shoe stores across the country.

Alfond is often credited with the invention of the factory outlet store. Because factories make mistakes, not all shoes come out as first grade. The mistakes are called FDs (factory damaged). The practice in the industry was to sell these FDs to jobbers for about a dollar a pair, who would then resell them for five times their cost. Alfond thought that was a pretty good mark-up so in the 1960s he opened an outlet store at Dexter's Skowhegan factory and started selling his own FDs. Soon, the factories weren't making enough mistakes to supply the store so Harold decided to put in stale inventory (first grade shoes that weren't selling in the wholesale market). This worked so well that Dexter's log cabin style outlet stores started popping up on all the heavily traveled roads throughout New England. Other manufacturers caught on to the idea and as Dexter put up new stores, other manufacturers would open their outlets next door. By the 1990s the Dexter Factory Outlet chain had expanded to over 80 stores. About this time, Dexter also stopped building freestanding log cabins and began leasing stores in outlet malls.

Dexter continued to grow rapidly throughout the 1970s and 1980s, and from time to time corporate suitors came calling to see if they could entice Dexter into a marriage. Many were national retail chains that promised rapid expansion, but would emphasize foreign production and likely, a departure from Dexter’s family style of running the business. Alfond eventually decided to sell to Berkshire Hathaway, with an agreement to not interfere with the family's continued management of the business. In 1993, Dexter and its affiliates, Pan Am Shoe and Ocsap Ltd., were sold for $433 million in stock; eight years later Warren Buffett decided to fold Dexter into another business, admitting in 2008 that it was "the worst deal that I've made."