9/1/2013
One year, teens are into board shorts and flip-flips; the next year, they prefer fedoras and velvet. For surf brands whose products are aimed at the sunny ideal lifestyle, these changing tastes often mean boom or bust. Yet, the licensing community has seen a flurry of deals in recent months involving properties and products reflecting the surf lifestyle that indicate a new swell is about to crest.
And a continued interest in the surf lifestyle among mainstream consumers has opened up opportunities for both large, established players, such as Quiksilver and Billabong, and smaller properties. “There’s no denying that we’ve seen some major surf icons take a hard hit over the last few years,” says Daniel MacPhail of Piping Hot, which originated in the Australian surf culture of the 1970s and is focusing on expansion outside its home market. Despite rapidly changing trends in fashion, teens have largely stuck with many surf brands, particularly PacSun, Volcom, Roxy, and Reef.
“We see a resurgence of faith in surf brands across the board, and this is definitely reflected in the licensing industry,” MacPhail tells us. “We believe this resurgence is in part due to a cycle in the population’s faith in brands, but also because those who seek the surf lifestyle are looking for authenticity in the brands they choose to identify with.”
Authenticity is key, agrees Maria Brophy of Son of the Sea, which has been licensing Drew Brophy’s surf imagery since the mid- to late-1990s. “Companies that want authenticity need to work with someone who lives the lifestyle,” she says. She sees a lot of surf-themed art in which the surfer is facing the wrong way or using the wrong stance, the board’s fins are wrong, or sayings are incorporated that do not resonate with those living the surf lifestyle. “Like saying, ‘Surf’s Up,'” she says. “That’s not cool.”
Brophy believes authenticity is important even for mainstream consumers that are interested in licensed products but do not surf or live at the beach. “When we started, the majority of our licensees were companies in the surf industry,” she says. “That’s really evolved. Now I’d say 90% of our licensees have nothing to do with the surf industry.” She cites promotional partner Verizon FiOS and licensees Skin-It and CheckAdvantage as examples of successful tie-ins with mainstream marketers.
“What we do is bring the authentic lifestyle to a brand that’s not in the lifestyle,” she explains. “Surfing represents good health and good times. It’s that feeling of freedom and just having fun. For someone living in landlocked Ohio, a licensed product may be how they get a piece of that lifestyle.”
Riding the Wave
Surfer magazine, published by Source Interlink Media division GrindMedia, is embarking on several seasonal collaborations with the likes of Vans and Billabong and longer-term deals with J.Y. Rays for board shorts and ladies’ swimwear and Skin-It for electronic device covers.
And Deckers Outdoor Co. is transitioning its surf brand Sanuk from a “predominantly male one-season surf brand” to a lifestyle brand heavily targeting teen girls and young women. Some of the new product introductions include a woman yoga mat collection, Sidewalk Surfer sandals that transition from summer to fall, and more fall-appropriate shoes. “You’ll also see new boots from the Sanuk brand, including more new women silhouettes and feminine colors and patterns,” says Deckers’ Angel Martinez. Beginning in spring 2014, the collection will be available in department and sporting goods stores and outdoor retailers.
Outside Interests
Properties from outside the surf industry are licensing their marks into the surfboard, surf gear, and surfwear categories, often in limited editions. Andy Warhol’s artwork, licensed by the Warhol Foundation, is featured on a limited-edition line of surfboards from Bessell Surfboards, announced this spring, for example.
Others are launching surf-related subbrands. Earlier this year, PVH’s Tommy Hilfiger label launched a Surf Shack capsule collection with Art Production Fund that includes beachwear, footwear, sunglasses, watches, and bags, as well as limited-edition surfboards created by five artists, all sold in Tommy Hilfiger stores and a mobile pop-up shop.
And Steve Madden, which owns and licenses the Steve Madden and Betsy Johnson labels, recently launched a surf-inspired footwear and accessories line at Target called MadLove.
It’s Not Always Sunny
Fashion labels emanating from the surf world-including Quiksilver, Billabong, Hang Ten, No Rules, Piping Hot, Rip Curl, Hurley, and Body Glove, among others-have long had a strong foundation in retail and often have relied on licensing as a key part of their business models. Yet, these brands can also stumble when teen trends shift to other styles, such as preppie and goth-inspired.
In the second quarter, Quiksilver fell short of Wall Street expectations and is focusing on its three flagship labels, Quiksilver, Roxy, and DC.
Billabong International, founded in Australia in the 1970s, has seen its stock lose more than 90% of its value in just over a year, as the company experienced a record loss in fiscal 2012. Its turnaround plans include a renewed focus on its redesigned, 200-SKU women’s collection.
Some of the reasons for the big surf brands’ troubles, some licensors and observers believe, include:
- A blurring of the lines between surf, skate, and snow and other sports lifestyle brands, which has taken away from the strong surf identity the labels had in the beginning.
- The purchase of surf brands by nonsurf companies, such as Nike’s acquisition of Hurley.
- More energy and cutting-edge designs coming from smaller surf brands. Two brands acquired by Billabong, for example, RVCA and Nixon, both have attained levels of recognition and respect equal to or higher than their parent, especially among surf aficionados.
Licensing to the Rescue
Despite these industry challenges, several classic surf labels (both on the strong and weak ends of the financial spectrum) are making licensing moves of late.
At Quiksilver, CEO Andy Mooney, formerly of Disney and Nike, is moving the company to a licensing-based business model.
“Some licensing categories will be almost entirely incremental and then others will be trading our existing wholesale revenue for licensing revenues and improved EBITDA,” said Mooney in a June earnings call.
Hang Ten, a California brand introduced in the 1960s and currently owned by American Brand Holdings, announced earlier this year that it was “refocusing” on the U.S. market. It signed a deal with D6 Sports for sporting goods, including paddleboards, skateboards, and surfboards, along with beach accessories. Kohl’s, which signed a DTR deal with Hang Ten in 2008, continues to sell T-shirts, board shorts, and other items.
Body Glove International, best recognized for its branded wet suits and other surf and swim products, announced in July that it had licensed Pacific Health Laboratories for an energy shot called Body Glove Surge. The brand has been 100% licensed since the mid-1990s.
Contacts: Bruce Brown Films, Alex Mecl, General Manager, 3858 W. Carson St., #220, Torrance, CA 90503, 310-543-4360, amecl@brucebrownfilms.com, www.brucebrownfilms.com.
Deckers Outdoor, Angel Martinez, CEO/President, 495-A S. Fairview Ave., Santa Barbara, CA 93117, 805-967-7611, angel.martinez@deckers.com, www.deckers.com.
Interlink Media, Rick Stark, VP Sales, 831 S. Douglas St., El Segundo, CA 90245, 310-531-5076, rick.stark@sorc.com, www.sourceinterlink.com.
Piping Hot Surfwear, Daniel MacPhail, Business Development Manager, 228 St Andrews St., Brighton VIC 3186, Australia, 61 3 9592 1288, dm@pipinghot.com.au, www.pipinghot.com.au.
Quiksilver, Andy Mooney, CEO, 15202 Graham St., Huntington Beach, CA 92649, 714-889-2200, andy.mooney@
quiksilver.com, www.quiksilver.com.
Son of the Sea, Maria Brophy, CEO, PO Box 836, San Clemente, CA 92674, 949-678-8133, info@drewbrophy.com, www. www.drewbrophy.com.
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