About four years ago, surfers Bobby Knudtson and Casey Wheat were newly minted entrepreneurs about to take the plunge into the competitive surfwear manufacturing business.
Last year their company, Roial Apparel, reached sales of $1.8 million, and it projects 2001 sales to nearly double to $3.3 million.
But now, Knudtson, 33, and Wheat, 30, are looking for a big-company buyer for the brand in order to take it to the next level at a time when Roial is expanding into retail and women’s clothing.
In doing so, they are trying to follow in the footsteps of many other small surf apparel companies that built their brands and then sold.
“I don’t think it’s big guys swallowing little guys,” said Tony Cherback, a retail analyst at Deloitte & Touche LLC in Costa Mesa. “The small guys are wanting to affiliate with companies that have a proven record for developing brands.”
Randy Nello, Roial’s 35-year-old senior director, thinks his firm has what it takes.
“We have a Roial boutique in Shibuya, Japan, and are opening two more next year, one in Daikanyama and a third near the seaside,” said Nello. “We are really, really select, so we don’t distribute to retailers there; we only sell through our own boutiques. It makes the brand appear more mysterious and hard to get, giving it a higher brand image in Japan.”
According to sources close to the deal, suitors include the industry’s top manufacturer, Huntington Beach-based Quiksilver Inc., which knows how to run with a brand. Skateboarder Tony Hawk sold his Hawk Clothing company to Quiksilver last year for an undisclosed sum and its sales have rocketed from roughly $1 million to a projected $30 million by the end of this year, according to sources close to the company.
Over the years, Quiksilver has bought a collection of brands ranging from the swimwear label Raisins to snowboard manufacturer Mervin Manufacturing in 1997. This year, Quiksilver,which reported fiscal 2000 sales of $515.7 million,entered a pact with John Ashworth to develop a golf apparel line Fidra.
Actually, Roial is Knudtsen’s second stab at the apparel business. His first company went bust roughly six months after it started. Wheat previously worked as a salesperson at Huntington Surf & Sport in Huntington Beach. Nello co-founded Jamaican Style in 1988 and sold to partner Gerry Geoden in 1992. He later went on to co-found Paul Frank Industries in Newport Beach in the 1990s, but sold out prior to its success because he wanted to go in a different direction.
“I really like what Roial is doing creatively,” said Ryan Heuser, president and co-founder of Paul Frank Industries. “They’ve been able to fuse influences from their own backyard with an international couture flavor; imagine Stussy meets Prada (an upscale women’s brand).”
Roial Apparel, which has seven employees including Knudtson and Wheat, has developed a strong following in the Japanese market. The young, edgy brand has also been compared to Stussy Inc. in Irvine.
The company’s products sell in specialty retail and surf shops such as Katin, Urban Outfitters, Rollo, Fred Segal and American Rag, as well as Pacific Sunwear and department stores such as Bloomingdales and Nordstrom. n
