Costa Mesa-based Volcom Inc. continues to boost control over its international distribution operations in a bid to grow sales.
The apparel maker recently bought Welcom Distribution SARL, which handled Volcom’s distribution in Switzerland, said Chief Executive Richard Woolcott during its third quarter earnings conference call.
Volcom, which sells surf, skate and other garb, paid $1.5 million for Welcom.
Volcom executives were unavailable to comment for this story due to its pending stock sale registration with the Securities Exchange Commission.
All of Woolcott’s comments were taken from the conference call with analysts and investors.
As part of the Welcom buy, Volcom hired a new chief executive, Bruno Gujer, and an undisclosed chief financial officer to oversee its European operations. Gujer previously owned and ran Welcom.
“We continue to take steps to ensure that taking direct control of our operations in Europe will be effective,” Woolcott said. “Both of these individuals have significant experience in the European action sports industry.”
Volcom is following in the footsteps of other surfwear makers, such as Huntington Beach-based Quiksilver Inc., which have cut back their international licensing agreements in past years to build their own overseas operations.
They say the move gives them more control over their brands, particularly with how they’re marketed and where the clothing is sold.
Woolcott said Volcom plans to keep intact “the vast majority of the network” already established in Europe, including its retailers and surf, skate and snowboard riders.
The company plans to move its European headquarters in France from Marseilles to the Biarritz area, where a slew of action sports companies already have roots, including Quiksilver and Irvine-based Ocean Pacific Apparel Corp.
“Our European strategy is really about taking control of the Volcom brand,” Woolcott said.
Volcom, which went public earlier this year, also is looking to boost sales. It earned $1.4 million in 2004 from its European licensing deals. This year the company took in $1.5 million through the first nine months of the year.
The company has sold its gear internationally through several licensing agreements, which are set to expire during the next four years.
Volcom’s agreement in Europe expires on Dec. 31, 2006.
“We believe assuming direct control over our operations in Europe will result in increased European revenues beginning in the second half of 2007,” the company said in a recent regulatory filing.
The transition will have some challenges.
“We expect to experience a decrease in our overall licensing revenues and an increase in our selling, general and administrative expenses while we build the necessary infrastructure and hire employees to establish our own operations in Europe,” the company said in the filing.
Volcom clothing is sold in more than 2,200 stores, including 1,000 in Europe and about 600 in Australia. The company posted sales of $51.2 million in the third quarter.
The company has said that one of the reasons it went public earlier this year was to raise money to grow its European operations.
“I’m enthusiastic about our future vision and our ability to maximize the strength of the brand,” Woolcott said. “There are many opportunities for Volcom and I feel confident that we can continue to grow while maintaining integrity and brand quality.”
