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Quiksilver Tracking Billion-Dollar Year

Quiksilver Tracking Billion-Dollar Year

By JENNIFER BELLANTONIO

Huntington Beach-based surfwear maker Quiksilver Inc. is tracking to hit $1 billion in sales this year.

Its competitors hope to get caught up in the swell.

The expected milestone would mark a first for a surf apparel maker and move it outside the “private party”,Orange County’s surfwear circle.

“It represents a whole new platform that the surf industry is on,” said Dick Baker, chief executive of Irvine-based Ocean Pacific Apparel Corp. “As a publicly traded company and a global brand, Quiksilver’s really taken the surf industry along with it.”

The billion-dollar sales mark mainly is the providence of the biggest names in fashion and sports, including Oregon-based Nike Inc. ($9.9 billion in 2002 sales) and San Francisco-based Levi Strauss & Co. ($4.1 billion), among others.

“The fact that a surf company can be a ‘real’ company is kind of cool,” said Bob Hurley, founder of Costa Mesa-based Hurley International, a unit of Nike.

Quiksilver had 2002 sales of $704.5 million, up from $300 million in 1998.

In the first quarter this year, the company posted a 31% sales increase to $192.1 million. Second-quarter sales are expected to be $257 million to $259 million, versus $187 million a year ago. The company is set to release its second-quarter results this week.

Billabong International Inc., which has its U.S. unit based in Irvine, had about $280 million in sales last year. Foothill Ranch-based Oakley Inc. had 2002 sales of some $489.5 million.

Surfwear makers, with Quiksilver leading the way, have capitalized on the world’s fascination with beach culture. They realize that going mainstream isn’t necessarily a bad thing.

“Today surfing is out of the box,” said Harry Hodge, senior vice president of Quiksilver, at a recent industry confab in Cabo San Lucas. “It has a huge cross section of people involved from all walks of life.”

While still targeting the hardcore enthusiasts, Quiksilver has made it OK to appeal to the wannabes,and bring in the dollars.

“There isn’t a billion dollars of business out there (just) from people surfing,” said Peter “P.T.” Townend, marketing and events director of Primedia Inc.’s Action Sports Group in San Clemente. “If there was, there sure wouldn’t be that many waves left in Southern California.”

Initially based in Australia, Quiksilver launched in the U.S. in 1976, when current Chief Executive Bob McKnight and surf legend Jeff Hakman started selling board shorts from the front room of their house on 56th Street in Newport Beach.

They spent the next decades building a brand that put the surf lifestyle on the map,and eventually New York fashion runways.

“They have paved the way for all of us manufacturers,” said Kelly Gibson, president of O’Neill Clothing in Irvine.

“When you have one of our brands approaching a billion dollars, we’re a player,” Townend said. “That’s why you see such attention to the lifestyle right now. I was in Culver City and there was a ‘Charlie’s Angels’ billboard with one of the Angels surfing. And I’m going, ‘Oh, my god. It hasn’t been like this since Gidget and the Beach Boys.'”

But Townend said: “We shouldn’t run and hide from that.”

Quiksilver is credited with giving the world its initial glimpse of surfwear.

“Quiksilver has a ton of history to fuel its engine,” said Colin Baden, president of Oakley. “That fuel has created a positive environment for the category.”

The company has grown via acquisitions and diversification. It widened its surfwear line to include women’s surf apparel, such as Roxy, which saw sales of $252.8 million in 2002, smaller than men’s but gaining on it.

The company also runs retail and entertainment units and has bought smaller brands, such as Mervin, a snowboard and bindings maker, and its licensees in various territories.

“Ten years ago, we’d say, ‘We surf. We’re super cool. Buy our stuff,'” Hurley said. “But that’s not really the case anymore. It’s about the quality of the product and the innovation.”

Still, the flip side of Quiksilver’s growth is that it risks becoming less “core” among surf and skate enthusiasts.

In the past, other brands, such as Ocean Pacific and Gotcha, tried to popularize their gear and fell out of favor.

But Hodge said that’s not the case with Quiksilver.

“Quiksilver has taken flak for decades now about our distribution,” Hodge said. “We apparently sold out some time back in the ’80s. In reality, it’s only because we are one of the first brands to explore a broader distribution network.

“Today the surf industry has proven you can have a large distribution network without compromising your brand,” he added.

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