A San Clemente-based sock maker is looking to fortify its position in key global markets, backed by a recent investment from a long-standing financial backer.
Stance Inc. received $25.9 million in a fourth round of funding from Salt Lake City-based Mercato Partners, according to a PricewaterhouseCoopers/National Venture Capital Association MoneyTree second-quarter report.
“We are looking to expand internationally; that’s one of our big initiatives for 2014,” John Wilson, Stance’s president and chief operating officer, said during an open house event the company held last month. “We are in over 35 countries right now, but [we’re] really focusing on key countries, like Japan, Brazil, U.K., Germany and Canada, and optimizing existing business within those regions.”
It was in a three-way tie for the No. 35 spot on the Business Journal’s list of the largest apparel companies in June. The list is ranked by Orange County employment.
Stance shipped its first product line in late 2010, a year after it was founded. The private company does not disclose revenue, Wilson said, but sales have “tripled for the last three years in a row,” and are “on track” to do the same for this year.
The growth spurt started around the time of an initial $5.4 million investment from Mercato in the third quarter of 2011, when PricewaterhouseCoopers classified Stance as an early-stage company.
“Mercato doesn’t just cut a check and say, ‘Here’s our money,’ ” Wilson said, according to the firm’s website. “They invest in the business not only financially but they bring energy and ideas to help us think big.”
The support for Stance didn’t come out of the blue—its chief executive and chairman, Jeff Kearl, who founded the company with Rick Alden, sits on Mercato’s investment advisory committee. Alden, who started Skullcandy Inc. in 2003, said Mercato helped “accelerate growth” of the Park City, Utah-based headphone maker.
Stance also got two earlier undisclosed rounds of funding and has grown its staff to 60 people.
Ownership
Each employee owns a stake in the company, according to Vice President of Marketing Ryan Kingman, a business strategy he said has contributed to its progress.
“It creates a sense of ownership from every level in the company,” Kingman said. “I feel like when you just have a [job], and you don’t have that sense of ownership, you probably act differently. But when it’s yours, you’re invested in it, you feel more attached to it, and you operate probably in a more professional level.”
He said design and marketing, “all the fundamental business components,” are done out of the company’s headquarters in San Clemente’s industrial hillside off Avenida Pico, which also is home to apparel and media brands such as Electric, Rainbow Sandals and TEN: Action/Outdoor Group.
Features
The newly remodeled building has a gym, office space, open-floor work stations, an indoor skate bowl and other features.
There’s even enough space to fit a stage, which drew a crowd of about 1,000 during the recent open house with performances by Capital Cities, The Bots and DJ Reflex.
“The vision for the building was to create a space that reflected the brand’s DNA, as well as help reinforce our culture out here at Stance,” Wilson said. “We feel like investing in the place and some of the amenities. Whether it is the skate ramp or the basketball court, it really helps fuel the type of workplace and cultural environment that we want to have and attract the right talent, and give them space where they can be inspired and a spot where they can work hard and create some really unique stuff.”
Stance socks are produced in Israel, China, Korea, Italy and the U.S. Its warehousing operations are handled by a third-party logistics service in Utah.
The company, whose main competitors are Nike Inc. in the athletic market and brands such as Happy Socks AB in the lifestyle segment, has no brand stores and works instead with distributors around the world that sell its product into retail accounts, such as Nordstrom’s and Footlocker, and specialty stores, fashion boutiques, and “surf, skate and snow shops.”
Wilson said opening its own stores is a possibility in the future, “but we are just focused on the wholesale business at this point. We’ll definitely add a few markets this year and going into next year.”
Biggest Challenge
And therein lies the company’s biggest challenge, he said: properly managing the growth.
“It’s obviously a blessing to be in a business that is growing, but at the same time, when you’re adding a lot of new people and going into new markets, it really challenges your ability to execute well, so that’s something that we are very sensitive to and really want to make sure that we are planning properly.”
