Kering SA announced this month it will spin off Volcom LLC, the Paris-based owner of the Gucci, Bottega Veneta, Saint Laurent, Balenciaga and Brioni brands.
The Costa Mesa-based surf and skate apparel maker, along with Puma, is part of Kering’s sports and lifestyle division.
Kering said it plans to unload the division to focus on its luxury offerings. It will “dedicate itself entirely to the development of its Luxury Houses high-end brands design, whose enduring appeal, built on creative audacity and innovativeness, will allow us to continue to gain market share and create value,” Kering Chief Executive François-Henri Pinault said in a statement.
Volcom posted $128.3 million in revenue in the first half of last year, a 6.7% year-over-year dip. Kering attributed the decrease to “operating conditions in the surfwear and action sport market,” which “remained very difficult with major distributors in the United States seeing revenue declines and streamlining their store networks.”
Sales at company-owned stores were up 11.7% for the first six months of last year, but wholesale dropped at about the same rate. North America, the brand’s leading market, accounted for 67.8% of total sales in the period.
Volcom continued on a similar trajectory in the October quarter, the latest reported, posting a 6.7% sales drop to $98.4 million. It operated 81 stores as of June 30, some in department stores in Europe.
Any Takers?
Richard Woolcott and his friend Tucker Hall started Volcom in 1991, taking it public in 2005. They added San Clemente-based eyewear maker Electric to the lineup in 2008 for $25.3 million. Kering, which acquired Volcom in 2011 for $608 million, sold Electric in 2016 to the brand’s management, a group led by Chief Executive Eric Crane.
So who would be up for plucking Volcom?
Huntington Beach-based competitor Boardriders Inc. just signed a deal to acquire all shares of Billabong International Ltd., so perhaps they should be counted out for now.
Then there’s Greensboro, N.C.-based VF Corp., whose prodigy, Vans Inc. in Costa Mesa, reported $2.3 billion in 2016 revenue and notched a 28% sales increase in the third quarter of last year.
Chief Executive Steven Rendle said during an earnings call in October that VF, which acquired Williamson-Dickie Manufacturing Co. in August, will continue to “reshape” its portfolio as it sees “many unique catalysts to ignite accelerated growth and value creation during the next several years.”
Jeff Harbaugh, president of action-sports consulting firm Jeff Harbaugh & Associates, said Volcom will be much better off if it ends up being owned by a nonpublic company, citing publicly owned Deckers Outdoor Corp.’s 2011 acquisition of the private Sanuk USA LLC in Irvine for $120 million.
The Goleta-based company, which also owns the UGG and Teva brands, consolidated Sanuk’s operations and headquarters in 2016, and closed 25 of its retail stores amid declining sales. Sanuk posted $15.2 million in revenue for the September quarter, a 19.3% year-over-year decline.
