SURFWEAR HITS SOME ROUGH WATERS
Byline: Kristi Ellis
LOS ANGELES — After two to three years of surging waters, several surf-oriented junior brands had a wipeout in department stores this spring and summer.
The rough surf action came in the face of oversaturation from labels and stores not normally in the category, on top of slow apparel sales in the entire junior arena.
The interest in surfwear and beach/surf motifs has weakened considerably at retail this season, particularly at the moderate and mid-tier levels, merchants reported. As a result, some department stores are pulling back and re-examining the category, while others are even considering abandoning it altogether for next spring.
Surf and beach-oriented manufacturers, who also felt the sting of lower sales in May and June, claim the downturn is temporary.
Powerhouse Roxy Quiksilver seems to have escaped relatively unscathed, according to market observers, although, at least one major retailer cited its poor performance. But manufacturers such as Op, Jimmy’Z and Hang Ten — established surf brands that have been on the comeback trail for the past year and recently went after the moderate and mass markets — are trying to catch their collective breath.
The surf/beach/lifestyle category in the junior market really started to explode from 1995-1996 with Quiksilver’s introduction of Roxy, which made board shorts a household name.
Roxy’s fall bookings are up 20 percent, according to Joe Teklits, an analyst with Ferris Baker Watts, who covers the brand.
Teklits noted that Roxy, the leader in the category with an annual volume of $100 million, hit its peak last summer.
Apparel retail sales in June slowed down across the board. The downturn has been attributed to a number of factors, including cooler temperatures in the Midwest and Northeast, the hike in gas prices and an increase in interest rates.
While the junior segment as a whole has followed the downward trend, retailers are taking a closer look at the surf category, which in some cases is down in the double digits in year-ago comparisons. Industry executives said one problem is that teenage girls are interested in music stars such as Christina Aguilera, Britney Spears and Jennifer Lopez, who prefer sexy looks to streetwear or surfwear.
Richard Baker, chief executive at Op, summed up the situation when he said: “There hasn’t been a real dominant junior company, and that’s why everyone jumped on the beach trend and exploited it. Some [retailers] are now paying the price.”
“In general, the junior business has been difficult,” said Gary Gladding, executive vice president of merchandising at Gottschalks, a regional department store chain based in Fresno, Calif., that operates 42 department units and 20 specialty stores. “It’s more of a question of emphasis, moving forward.”
The movement in juniors and young men’s toward more career clothing has combined with a lack of trends in the junior market to drag down sales in the area by single-digit percentages in June, Gladding said.
The surf/lifestyle category has not performed well within the struggling junior sportswear segment, he noted, adding that Gottschalks must decide whether to take money away from the surf/beach category and put more into career for spring 2001.
The three most affected vendors in this category at Gottschalks are Op, O’Neill and Roxy Quiksilver.
“They are all generally not doing well,” Gladding said. “There are unbranded [lines] under them who are knocking them off and consumers don’t want to pay the prices for brands anymore.”
The junior sportswear business, including surfwear, at The Bon-Ton Stores, a 72-unit group based in York, Pa., “was not good,” according to Michael Gleim, its vice chairman and chief operating officer. In the surf category, Bon-Ton carries Op and Hang Ten.
“Op was not one of our strongest performers,” said Gleim. “We will probably continue carrying the brand, but how much we buy will be related to its performance, which is off,” said Gleim. He added that labels such as Hang Ten and Miken, a new line by men’s resource Gotcha, have performed “OK.”
Mervyn’s has bucked the downturn in surf sales, according to Chris Daniel, vice president of trend merchandising for Mervyn’s: “For us, the whole beach, California lifestyle business [in California] has been good.”
Daniel noted that about half of the chain’s 267 stores are in California, with the other stores spread out in 14 other states.
“The people who got burned were the people who thought graphic Ts and beach shorts were strong, but it wasn’t about that at all,” Daniel said, adding that many retailers lumped the sportswear in with swim, which has been soft this summer.
“The key is to evolve fabrics and silhouettes in the category,” said Daniel. “Skirts were good, for example, so we added them in the beach/lifestyle category.”
“When trends start a downturn, you have to move fast and broaden your assortment, which is what we did,” he added.
Manufacturers in the surf/ beach/lifestyle segment of the business concede that the market has been tough this spring and summer. Some expect business to turn around as early as back-to-school, but others feel it won’t be until next spring.
Baker claimed that some of the business will evaporate as a shakeout occurs on the manufacturing end.
“The amount of brands in the surf category this spring and summer was significant,” said Baker. “That will shake out next spring.”
He said that junior manufacturers who “latched on” to the surfwear trend will move on to more feminine styles next spring because business has softened.
“There will be a larger piece of a smaller pie in the surf/ beach/lifestyle category in department stores. If there were six brands to a matrix this spring, there will only be three next spring.”
He said that oversaturation, led by junior companies trying to catch a piece of the surf business, led to the chaos at retail.
Op, founded in 1972 under the name Ocean Pacific Apparel Corp., has shifted its marketing to a new outdoor lifestyle image and is aimed at department stores like Dillard’s, Belk’s and Federated. Baker maintained that Op’s wholesale volume has not been affected by the recent declines at retail, and said that his junior business has grown this spring compared to last year.
He claimed that Op’s worldwide volume this year will climb to $180 million, compared with $120 million last year and stressed that young men’s and children’s wear have both done well at retail. He further noted that the junior sportswear segment has been strong in core surf shops and specialty chains.
Baker conceded, nonetheless, that the brand will have to offer up more “fashionable, modern” looks and move beyond the traditional beach styles.
Hang Ten, founded in 1960, has struggled in the past two months, according to Paul Epner, president of the company.
“We are going to have to write off summer and get back on track for fall,” he added.
The label, which was recently redesigned and is distributed by Koral Industries, is available in mid-tier department stores, including May Co., J.C. Penney Co., Bon-Ton and Dillard’s, Epner said.
Sales decreased by double-digit percentage points in May and June, Epner said, attributing the poor performance of the label to three factors: cold weather, high gas prices and higher interest rates.
“Surf was doing tremendous until May. All three of the factors hit at the same time and caused consumers to make less trips to the mall, and many West Coast lifestyle companies felt the brunt of it.”
But Epner was quick to point out that the downturn is temporary. He said that the company’s worldwide volume should be even with last year’s $525 million.
“Despite the slight downturn here over the past two months, we have had increases in the global market,” said Epner.
In a separate development, the company said this week that it has signed four new licensing agreements that will expand its reach into markets for toddlers and infants, backpack and luggage, footwear as well as boys.
Some manufacturers took a stronger stance. Jim Wright, vice president of sales for Trends Clothing Inc., which holds the license for Op junior sportswear and also owns the Jimmy’Z brand, downplayed the long-term impact of the downturn but admitted that the junior business has taken a hit.
“Spring and summer was slow,” he said. “Overall it was not near the performance we wanted it to be.”
He noted that the company kept pace at retail but not enough to make business grow or get reorders. He said that retail performance is 50 percent lower than last year’s in terms of the number of units that checked.
Wright has his own reasons for the decline.
“The surf market did wholesome looks like board shorts for spring and not enough skimpy, bare, sexy looks, which is what the customer wanted,” said Wright.
He agreed that the influence from young pop singers and their sexy attire has impacted the surf area. To make matters worse, back-to-school was produced in March and April so those lines won’t have the bare, skimpy looks either.
“My gut tells me that back-to-school won’t be a lot better than spring/summer,” Wright said, but he added that his fall/holiday business will improve over last year’s because the lines are in more doors.