Reef swimwear has a minuscule clientele — the few tanned, taut winners of the Miss Reef competition.
This story first appeared in the July 11, 2007 issue of WWD. Subscribe Today.
Next spring, however, the top maker of outdoor sandals intends to be a real player in swimwear and in sportswear.
Reef, based in Carlsbad, Calif., is expanding its reach and today will unveil a complete swimwear line at the Miami SwimShow. For those who prefer to cover up, a sportswear line will begin shipping in December for spring.
The leap into women’s sportswear and swimsuits pits the sandal specialist against surf apparel companies — Billabong, O’Neill and Roxy are on the Mount Rushmore of women’s surf brands — that have fiercely loyal followings in the junior market. The company aims to wrest customers from competitors’ labels or attract new customers by targeting shoppers beyond their teens and adding fashionable details.
“Fashion is really important because our girl is into fashion — she is a little bit older,” said Karin Trevino, Reef’s women’s design director, who noted the 17- to 24-year-old age group was the desired demographic. “We definitely look to higher fashion. Also, we look to other cultures.”
In swimwear and sportswear, a Mexican blanket print with green, yellow, white and pink horizontal stripes honors the brand’s Latin roots. A colorful Asian safari print splashes bikinis with black, green and aqua. “Jungle love,” used in sportswear and in swimwear, is a floral pattern that resembles an animal print.
There are about 40 styles of swimwear, three of them one-pieces. Bikinis, manufactured in Brazil, are sold as separates, with tops from $19 to $21 at wholesale, and bottoms from $20 to $21. All bottoms are offered in two styles: a skimpy Brazilian cut and a wider cut that Reef has named Youniversal. Halter, bandeau and triangle tops are available, and there’s a style that can be switched between a triangle and a bandeau.
The debut sportswear collection has 87 styles, including a boot-cut jean in a dark enzyme wash, a cotton poplin jumper and eight dresses featuring eyelet, smocking and lengths that extend from above the knee to the ankle. “We’re more detailed than Forever 21 and H&M,” said Trevino, pointing out a keyhole on the back of the dresses that will become a staple accent of the sportswear.
Wholesale prices for the women’s sportswear run from $12 for ribbed tanks and elastic shorts with 2.5-inch inseams to $39 for reversible satin track jackets in a cherry blossom print. Reef also tries to appeal to core surfers with $21 animal-print boardshorts and $16 short-sleeve rash guards.
Tandi South, national sales manager for Reef’s girls’ division, estimated that the new lines would be launched in 6,000 surf store and swim specialty boutique accounts, but the brand is holding off on department stores for now. Although declining to project girls’ sales, she said Reef expected sportswear to constitute about 60 percent of first-year revenues and swimwear to make up the remainder.
Reef previewed the line for about eight surf stores two months ago. Jill Klein, girls’ buyer for online retailer Swell, didn’t have high expectations. She had passed on other shoe brands-turned-apparel makers, including Vans, in the past and expected to do so again.
“I haven’t yet seen a shoe brand break into the apparel industry in a successful way,” Klein said. “[Reef’s] whole image was translated well into apparel. I really appreciate that because when a customer thinks of a specific brand and we have had success with them, we want that to translate into other categories. It represents surf and it is feminine, which our girl is.” She is probably going to pick up Reef’s woven tops, select dresses and swimwear with bold prints.
Heather Lamb, head buyer for South Coast Surf Shops’ five units in California, gave Reef sportswear a nine of out 10, and swimwear, a seven out of 10. “They had to come to the table with something amazing because the market is so saturated already. I was highly impressed,” she said, adding that the dresses and fashion tops were standouts. Bottoms teetered on being too basic for her taste, and she thought swim could be improved with better color combinations.
Lamb and Klein acknowledged that Reef had strengths that most start-up apparel makers did not: name recognition and a history in the surf industry. While the buyers might avoid many newcomers, they’ve been able to depend on Reef as a footwear resource and, to shoppers, the brand’s more than 20 years of purveying the surf lifestyle gives it instant credibility.
“We definitely have brand loyalty within the core surf brands that we have been carrying for a while,” Klein said. “If the customer trusts the brand that we have carried, she is going to continue to go to that brand. Loyalty is especially important in the surf industry.”
Reef spent years doing research to be confident when it launched girls’ sportswear and swimwear. Company president John Wilson said Reef initially discussed entering the women’s apparel market as early as 2002, when it was preparing to kick off a men’s clothing line for spring 2004. Yet, for Reef’s market and brand position, he said it was more strategic to tackle with men’s first.
“The junior market is a lot more fickle and faster-moving than men’s,” said Wilson, who was named president last year by VF Corp., based in Greensboro, N.C., which acquired Reef in April 2005 for $187.7 million. “We wanted to make sure we did our homework.”
VF is putting more focus on lifestyle brands, including Reef and The North Face, which yield higher profit margins than traditional apparel brands. To support this strategy, the company sold its intimate apparel business to Fruit of the Loom for $350 million in January. In March, VF chairman and chief executive officer Mackey McDonald said that the growth of VF’s California brands, including Reef, “has been terrific,” with double-digit gains in 2006 and the same expected for this year. For the entire company, VF projects for annual revenue growth of 8 percent, according to its annual report filed with the Securities and Exchange Commission in February.
After being acquired, Reef added $47 million to VF’s revenue in the first four months of last year. VF reported that net income totaled $533.5 million on revenue of $6.22 billion in 2006, compared with income of $506.7 million on revenue of $5.65 billion from a year earlier.
Reef joins more and more footwear companies that are stretching their brands from toe to head. Marie Case, managing director at Board-Trac, a market research firm based in Trabuco Canyon, Calif., said it wouldn’t be difficult for footwear brands to evolve into clothiers as long as they already had respectable market share in shoes and stayed true to their roots.
Reef ranked as the number-one sandal in Board-Trac’s 2006 Waveriding Report, a survey of 1,000 male and female surfers. In the shoe category, Reef came in second, behind Vans, based in Santa Fe Springs, Calif., which also is owned by VF.
The windfall in surf apparel can be big. The Surf Industry Manufacturers Association, a trade group based in Aliso Viejo, Calif., reports that sales in the sector grew to $7.48 billion last year, up 15 percent from $6.52 billion in 2004. Women’s apparel sales increased 31 percent to $327 million in 2006 from $249 million in 2004. In contrast, overall shoe sales were down — sandal sales were an exception, rising more than $50 million to top $300 million last year — and sales in the high-margin accessories business, including sunglasses, watches, bags, hats and belts, were declining.
To capture the windfall, Reef must convince women that its swimwear and apparel isn’t just fit for Miss Reef contestants. Argentine brothers Santiago and Fernando Aguerre, who established Reef in 1984, started Miss Reef shortly after to lure male customers. The brand didn’t stray from men’s merchandise until women’s sandals bowed in 1998.
The Miss Reef competition hasn’t been welcomed by all women. Case said she was “offended” by the Miss Reef contests. Reef is aware it is stepping into difficult territory trying to sell its brand to a broader population of women and, simultaneously, promoting an event involving scantily clad contestants to attract the attention of men.
The two images can coexist, said Lindy Williams, marketing manager for Reef’s women’s business. “Even though they are two girls, there’s still a flirtatious element that’s part of the Reef brand,” Williams said.