DC Shoes Inc. was Huntington Beach-based Quiksilver Inc.’s big buy before last year’s epic deal for France’s Skis Rossignol SA.
Quiksilver paid about $100 million for Vista-based DC Shoes in 2004. The deal doubled Quiksilver’s own fledgling shoe business and made the surfwear maker a contender in skateboarding shoes along with VF Corp.’s Vans Inc. in Santa Fe Springs, Sole Tech-nology Inc. of Lake Forest and Torrance-based DVS Shoe Co.
Then something happened on the way to the vert ramp.
DC Shoes lost some footing when fads changed during the past few years. Once hot skate shoes fell out of favor for retro-style sneakers. Think Adidas and Puma.
Vans and DVS preyed on the trend and brought back older styles. But DC Shoes had no luck, according to Mitch Kummetz, an analyst at D.A. Davidson & Co.
“They’re known more for technical skate shoes,” he said of DC. “They were in a tough spot. They may have lost some shelf space.”
Now Quiksilver has plans to revive DC. Granted, the challenge isn’t anything like Skis Rossignol, which was losing money and market share before Quiksilver paid $320 million for the snow gear maker.
Expectations are high.
DC, which runs at an arm’s length from Quiksilver, is looking to double in size and add about 100 workers across the board in three years, new leader Nick Adcock said.
The shoemaker now has $125 million in yearly sales and about 150 workers in Vista, he said.
Adcock, who reports to Quiksilver President Bernard Mariette, has led changes since he was tapped in May to replace founder Ken Block, who’s now chief brand manager for DC.
Adcock said he’s reworked DC’s management to get more input from managers in Europe and Asia. About half of DC’s yearly sales come from outside the U.S. Adcock himself previously was DC’s general manager for Asia Pacific and Australia, where he set up the company’s first global subsidiary.
Adcock said he looks to Quiksilver for guidance.
“We’ve got such amazing resources at Quiksilver,” he said. “It’s like having a brain trust and a business mentor and brand mentor. Having been around for 30 years they’ve had the opportunity to live through the growing pains we’ll see in future years.”
DC has been revamping its clothes and shoes.
The timing is good, according to analyst Kummetz.
“The skate shoe market in general has bounced back a bit,” he said.
A pair of skateboarding shoes sold for about $80 five years ago and dropped to around $50 a pair two years ago when the style fell out of favor, Kummetz said. They’re now edging back up, going for about $60 a pair, he said.
DC’s shoe business makes up nearly two-thirds of its yearly sales.
The company has refocused on what it does best, according to Adcock: developing technically advanced skater shoes with better cushioning and outsoles.
“We took our eye off developing technologies,” he said. “At the end of the day, our goal is to make sure we make the best shoes we can.”
Technology could be what brings higher prices for shoes, according to Adcock.
“With skate, it’s exciting times,” he said. “There’s a lot of technology in the athletic side and that’s put in higher prices. The skaters’ demand for product is getting exceptionally high.”
Older skaters are realizing that better shoes may give them longer careers, according to Adcock.
“We’ve got to make sure we have the product,” he said.
DC plans to build on its clothes and accessories, which make up about a quarter of sales.
The company started making clothes eight years ago and now has lines for men, girls and kids that include sweatshirts, pants, skirts and jackets.
Clothes are a natural under Quiksilver, which has built a surfwear powerhouse with clothes under the Roxy girls and Quiksilver men’s brands, said Jeff Van Sinderen, an analyst at B. Riley & Co.
DC “has a real opportunity there,” he said.
Clothes boost DC’s profile, Adcock said.
In lockstep with Quiksilver, DC is investing more in snow gear,jackets, pants and snowboarding boots for men, girls and kids. It’s the smallest chunk of DC, at less than 10% of sales.
“What works to DC’s advantage is they’re not known for any one particular style of shoe or real look,” Kummetz said. “DC has historically had a lot of good different styles.”
Block and Damon Way, older brother of professional skateboarder Danny Way, started DC in 1993.
They already were known in skate circles by clothes under another name, Droors Clothing, which launched a year earlier. Hip-hop groups Cypress Hill and The Beastie Boys sported the garb.
Droors Clothing was sold in 1997 and the company remained as DC Shoes.
The shoe business grew fast: $40 million in sales by 1997 and $100 million in 2003.
DC eventually branched out to skate and snowboarding clothes, accessories and boots. It also makes garb for BMX and motocross.
Block and Way “did an amazing job getting this company over $100 million,” Adcock said. “It was done by taking a leadership position. We want to reclaim that.”
