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Perry Ellis Makes Moves to Grow Surf HQ

Perry Ellis International Inc. has expanded its Irvine operation as it looks to become a bigger player in the market for surf-inspired clothes.

The Miami-based clothing company doubled its local operation to about 13,000 square feet after making a few acquisitions and expanding its swim division, said John Sabo, Perry Ellis senior vice president of action sports marketing and business development.

The most recent buy came late last year: Newport Beach’s Gotcha International LP, which owns the licenses for Gotcha, GirlStar and MCD.

Perry Ellis first edged its way into surfwear with its acquisition of Encinitas-based Redsand Inc. some two years ago. The company moved Redsand to Irvine.

The company now has about 15 workers here, up from nine initially.

“For action sports and active swim, Orange County is the center of the universe,” Sabo said. “If you’re going to be a serious player, that’s where you’ve got to be.”

The moves make the Irvine office the West Coast hub for what Perry Ellis calls its action sports and active swim divisions, Sabo said.

The company has added people in design, merchandising and planning. Plus, it’s searching for more.

Seth Ellison, president of Perry Ellis’ action sports/active division, said the company expects to double to 30 workers by the end of the year, with its marketing and product divisions set to see a boost.

The company already has lured workers from some of OC’s hottest surf brands, including Irvine-based Billabong USA, Huntington Beach-based Quiksilver Inc. and Costa Mesa-based Hurley Inc., a unit of Nike Inc.


Former Hurley Guy

Ellison was Hurley’s former president. Perry Ellis pursued him after he left the company and took some time off to be with his family, Ellison said.

His position is a new one for Perry Ellis, as it makes a bid to grow its swim and action sports brands. Action sports is used to describe mostly surf, skate and snowboard clothes.

“Everything is global and it’s all driven out of Southern California,” he said. “There is so much talent to tap into.”

Perry Ellis’ swim division includes its own brands, Jantzen, Perry Ellis and Penguin. It also makes the Nike Swim line under license.

The company’s action sports division started with Redsand and now includes Gotcha, MCD and Girl Star.

Perry Ellis is on the hunt for more labels.

“They see swim and action sports as one of the biggest opportunities for the company,” Ellison said. “We’ll continue to look at other brands.”

Perry Ellis is gearing up to take back production of Gotcha, GirlStar and MCD when current distribution licenses expire this year.

The first collections under Perry Ellis will debut in spring 2007, Ellison said.

Perry Ellis will continue using a San Diego-based licensee for Gotcha’s T-shirts, but will make the rest of the unit’s garb in the U.S., including board shorts, walking shorts, tops, pants and jackets, Ellison said.

“One of the things we felt it missed has been a nucleus,” Ellison said.

Gotcha has been “footballed” around a bit, Ellison said.

It was founded in a Laguna Beach garage in 1978 by Michael Tomson and Joel Cooper. The founders and investor Merrill Lynch & Co. later sold their Gotcha stakes to Marvin and Sherri Winkler.

Gotcha filed for bankruptcy in 2002. At the time, Gotcha was mired in a licensing battle with Ederel Sport Inc., which had made surf-wear under Gotcha trademarks.

Ederel sued Gotcha, alleging breach of contract among other claims. Gotcha countersued.

The brand has been squeezed by the crowded surfwear industry. At its peak in the 1980s, Gotcha’s global sales were reportedly upward of $100 million, but now are just a tiny fraction of that amount.

Still, the brand has retained a “strong identity,” Ellison said.

One reason: Quiksilver, Gotcha’s European licensee, has done “a good job positioning the brand” and keeping it “alive,” Ellison said.

“We see a huge opportunity to rope that brand back in a bit and create a common vision and message throughout the world,” he said.


Brought in Quiksilver Designer

Gotcha brought in a former designer from Quiksilver to give the domestic collection a new face and more attitude, Ellison said.

Gotcha garb will target males ages 13 to 18, while Redsand is going after the 18- to 25-year-old crowd, Ellison said.

Redsand has seen its own changes.

“We had a bit of disconnect between product and marketing,” Ellison said. “There has been some confusion there.”

Ellison said the company spent the past two months redefining who the brand’s consumer is and tweaking its marketing.

Meanwhile, Perry Ellis recently extended its license to make Nike Swim through 2009, the company said.

The agreement includes men’s, women’s and children’s swimwear, apparel and swim equipment.

The company is aiming to improve the quality of Nike swimsuits and clothes sold to sporting goods, department stores and swim shops.

Plus, Perry Ellis is looking to launch MCD in the U.S. The brand is big in Brazil and Japan but hasn’t done much here, Ellison said.

“It’s been simmering under the surface,” he said.

MCD is up against stiff competition, with fierce players like Billabong and Quiksilver, Ellison said.

But he said “retailers are looking for something new.”

“There are a lot of retailers out there wondering what’s coming next,” Ellison said. “And there’s really not anybody filling the void.”

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