New Hurley International LLC parent Blue Star Alliance LLC has moved swiftly since closing in December on its purchase of the heritage surfwear label in Costa Mesa.
Moves from the new owner based in New York include a slimming down of Hurley’s athlete roster, as well as a round of cross-divisional cuts at its home office.
The apparent retrenching moves come ahead of what’s expected to be a big year for the action sports industry with the upcoming Tokyo Olympic Games.
Sources close to the company confirmed to the Business Journal a recent round of layoffs at Hurley, with cuts in the range of 60-75 people and the possibility of more in the future.
The cuts leave under 100 workers left in Costa Mesa for the firm, which ranked No. 19 among Orange County apparel companies last year by the number of local employees.
A newly installed general manager from one of Bluestar’s other portfolio brands has taken up an office at headquarters along Placentia Avenue, sources said. It’s unknown if the individual is there permanently or temporarily.
Bebe, Brookstone Blueprint?
Hurley is the first label from the action sports industry to be added to the Bluestar Alliance stable of brands. The New York brand management company in recent years has grown its portfolio by nabbing troubled companies.
Examples include Brisbane-based fashion retailer Bebe—which managed to steer clear of a Chapter 11 bankruptcy or outright sale in favor of an arrangement that established a joint venture with Bluestar, where Bebe supplied its intellectual property and Bluestar paid $35 million to the joint venture.
There was also the intellectual property of techie-gadget retailer Brookstone, which Bluestar bought out of bankruptcy for $80 million.
Bluestar announced plans in October to acquire Hurley from Beaverton, Ore.-based Nike Inc. on undisclosed terms as the sportswear giant said it continues to focus on its direct-to-consumer strategy.
“Hurley will benefit from new ownership’s focus on the surf category,” Nike Chief Financial Officer Andy Campion said last month; the company said the divestiture was “not material” to its latest quarterly earnings.
The specifics of Bluestar’s plans for Hurley have yet to be made public. Bluestar and Hurley did not respond to multiple requests for comment for this story.
‘Capacity to Grow’
A statement at the time of the deal’s close quoted Bluestar co-founder Ralph Gindi saying the Hurley brand “has the capacity to grow, particularly in skateboarding and snowboarding.”
Gindi noted the company was in talks with property owners about growing the Hurley presence at surf and skate parks. Additionally, the company said it planned to expand the women’s line.
Hurley started as a surf-inspired brand by Bob Hurley in 1998. Hurley then sold the business to Nike in 2002 for what some reports estimated to be in the range of $100 million to $140 million.
Last year’s sale is believed to be for considerably less.
Bob Hurley and his family members are no longer affiliated with the company.
Questions
Sources said little communication has been offered to the broader staff on retention packages, succession planning or insights on what the go-forward strategy is. The same sources said it appeared the brand’s new owners had inquired about distribution and why the label was not sold in discounters such as Costco or Marshalls.
Brands walk a fine line in the wholesale channel, seeking a balance between brand equity and expanding distribution to more retailers.
The Hurley cuts come as marketers ramp for the upcoming Olympic Games in Tokyo, which will see skateboarding and surfing mark their debuts.
“The business itself was gaining momentum,” a source close to the company said.
“We had a few down years, but I think we were making big strides from a brand perspective and product perspective. This was going to be a banner year for us with the Olympics.”
Bourez, Machado Out
Hurley, at one point, had five Olympians on its roster. Michel Bourez, who is representing France in the Olympic Games, confirmed on Instagram the end of his 11-year contract with Nike and Hurley on Jan. 2.
A source said the remaining four contracts with Olympians are in a state of flux.
The company’s roster of other sponsored surfers has also been impacted, with some athletes breaking the news on Instagram.
Surfer Rob Machado confirmed the end of his contract on the final day of last year, writing “All good things must come to an end.”
“It truly has been an honor to work for the brand for such a long period of my life,” he wrote.
Jesse Billauer said on social media he had been cut in early January, calling out founder Bob Hurley as a mentor to him over the past 23 years and wrote he was “devastated and crushed” to receive a letter indicating the new company “no longer needed my services.”
It appears that decision was later reversed with Billauer reporting last week his contract was reinstated and now good through June 1.
Hurley Olympic product under an original licensing deal with Nike pre-acquisition is thought to still be in the works for release, but what the rest of the plans are for the games remains unclear.
One source noted: “The lack of clarity we’ve been given is stunning.”
