DC Shoes made the final cut with its biggest retailer. But that hasn’t stopped it from shopping the brand elsewhere.
The maker of shoes and clothes inspired by skateboarding, part of Huntington Beach-based Quiksilver Inc., is set to be among the few men’s sneaker brands that Anaheim-based Pacific Sunwear of California Inc. will bring back to some of its stores in August.
PacSun, which sells surf and skate garb at its 900-plus stores, made waves in April when it said it planned to quit the sneaker and fashion shoe business, keeping only sandals. Then early this month it said it would start selling shoes again in 200 of its top stores.
The chain has been struggling with weak sales and is reworking its business.
Getting rid of most of its shoes stung several OC companies that sold at PacSun stores, including Cypress-based Vans Inc. and Lake Forest-based Sole Technology Inc., known for its etnies brand.
“As their leading footwear brand, this wasn’t something we wished for,” said Nick Adcock, DC president. “But it was their strategic direction and we respect that. We have worked with them to evolve through it.”
Vista-based DC Shoes and Vans are expected to be among a few handpicked brands that will return to PacSun’s stores for the back to school season, one of the most important times for retailers and clothing makers.
Good news for DC. But the move doesn’t come close to offsetting the business lost by PacSun’s shift. DC has about $350 million of Quiksilver’s $2 billion in yearly sales.
The brand has spent the past few months looking for ways to fill in the PacSun gap.
DC has focused its attention on growing other products, such as clothes and accessories, with PacSun. It’s also seeking to up business with other mall retailers, such as Everett, Wash.-based Zumiez Inc. and Genesco Inc.’s Journeys of Nashville.
They’re picking up the slack, according to Adcock.
“While we might have taken a slight overall hit in the first half on overall sales, I think that we will actually be in a stronger position in the back half and going into next year,” Adcock said.
There’s been a pickup in orders with other chains, including Zumiez, said Marty Samuels, president of Quiksilver Americas, in a recent earnings call.
Brand Tweaks
DC has worked the past two years to reinvigorate its brand and regain some shelf space.
It’s paying off.
The unit “continues to perform extremely well in a difficult environment,” said Jeff Van Sinderen, analyst at B. Riley & Co.
Retailers have been hit hard as shoppers have tightened spending to cope with a weak economy.
Teen apparel chains that sell DC have seen mixed results. PacSun’s same-store sales were down 3% in May, while Zumiez’s same-stores sales inched up 0.2%.
Kearney, Neb.-based Buckle Inc., which sells clothes and shoes to young men and women, grew same-store sales 35% in May.
Quiksilver Chief Executive Bob McKnight likened DC to Buckle in a recent earnings call.
DC helped drive growth at Quiksilver in the three months ended April 30.
Clothing and shoes grew 15% to $596 million, with DC doing better than Quiksilver’s other core brands,Quiksilver and Roxy,a first for the company.
The company took a $240 million charge during the period, stemming from a write-down in the value of struggling Rossignol, a French maker of skis and related gear that Quiksilver bought in 2005. Quiksilver has mounted an unsuccessful turnaround for the brand, which it is trying to sell.
On a Tear
Unlike Rossignol, DC’s on a tear.
Quiksilver bought the brand for $100 million in 2004 and has spent the past few years pumping it up.
Adcock has led the charge.
He was tapped for the job in 2006 and replaced cofounder Ken Block, who’s now chief brand manager for DC.
He reworked management, grew the brand globally and refocused on building skate shoes with better grip, cushioning and durability.
The move has helped it gain an edge, particularly with “major athletic companies coming into our world,” Adcock said.
In 2007, DC hired about 38 people, mostly in its clothing department.
So far this year, the brand has brought on 32 workers and is scouting for an additional 40.
By the end of the year, DC should count about 300 workers, doubling its size from 2006. The company also expects to hire an additional 40 to 50 people in 2009.
DC has expanded its clothing for men, girls and kids and added more snow gear: jackets, pants and snowboarding boots.
This year, DC also launched snowboards after retailers around the globe kept asking for it, Adcock said.
“The retailers certainly put their money where their mouth was,” Adcock said. “We were just about sold out of boards before we hit” tradeshows to promote them to potential buyers.
DC is also getting ready to open a company store, which is slated to open in late July in the Irvine Spectrum Center.
It has other shops in New York,
Los Angeles and Park City, Utah, and two in France. The company is looking to open more stores in Europe and Asia, but not in the U.S., Adcock said.
