Incipio is a Latin word that means “to begin.”
Incipio Group in Irvine has gone a good deal further since it began in 1999, growing steadily for more than a decade before doubling to $500 million in annual sales in the past several years.
The recent spurt came in a mix of organic growth and a series of acquisitions that diversified the mobile device accessories maker’s product lineup of cellphone and laptop cases to include audio equipment, bags and luggage.
Incipio, which now has more than 500 employees, bought Nashville-based competitor Griffin Technology in August; Incase Designs Corp., and ClamCase LLC in 2015; speakers maker Braven LC in 2013; and Tavik Industries LLC in 2012. It also manufactures and sells products under license for 14 brands, including TUMI, Trina Turk, BURTON and Kate Spade New York.
And all of that action means it now has even further to go.
The company’s local operations cover 160,000 square feet in the Irvine Spectrum, and Chief Executive Andy Fathollahi is on the hunt for more. He plans to keep the current spot for distribution and find another 80,000 or so square feet for a new headquarters.
“We are making a pretty significant investment in the near future in a new global headquarters, which will remain in Orange County,” he said. “We’ll probably double our office space,” which currently takes up about 43,000 square feet.
Fathollahi’s already taken a new approach with his executive ranks, starting with Ann Fong, who served as chief financial officer since 2013 and was promoted this month to chief operating officer—a new position.
“As we continue to grow, we are just a different business than we were a couple years ago,” said Fathollahi, who founded the company with a $500 loan from his parents. “We have 10 offices, eight distribution centers, and … we really needed a leader in that COO position. Ann’s been a great partner and a great asset here for us, and the institutional knowledge that she has is tremendously important for our continued success.”
Fathollahi was also looking for a CFO “with a slightly different skill set” for “this next chapter of life as a business. He found “an absolute rock star” in Rob Hagen, who served in a similar role since 2014 at BRB/SHERLINE Inc., an environmental services technology company in Rancho Santa Margarita, and at the Hill Corp. Inc. in Anaheim from 2008 to 2013.
“I got a vision for growth for us, and he 100% aligns with that,” Fathollahi said, adding that Incipio’s strategy includes more acquisitions, preceded by two “significant” licensing deals the company plans to announce this year. “He loves our concept of brand and product segmentation to keep channels clean and grow all brands.”
Evolution
Incipio secured $55 million in financing from Chicago-based Monroe Capital LLC in 2015. Last January it sold a minority stake to investor Goode Partners LLC on undisclosed terms. Fathollahi at the time described New York-based private equity firm as having “extensive experience in high growth consumer strategies and will be a great asset in helping us carry out our core business objectives, including support in identifying and executing future acquisitions.”
There have been some speed bumps—Incipio bid about $170 million to acquire Park City, Utah-based headphones maker Skullcandy Inc. last year, ultimately losing out to Mill Road Capital Management in Greenwich, Conn.
Skullcandy had $266 million in sales and $5.8 million in profits.
Incipio came out all right on the deal, getting a $6 million breakup fee before turning its attention back to its Braven unit, which recently launched a set of high-end headphones of its own.
“We are very excited about our audio story that we are telling with [Braven’s] in-ear and over-the-ear product lineup that we just announced at CES,” Fathollahi said.
The Flye Sport headphones, which will range in price from $50 to $249, are a first for the brand, which specializes in portable speakers. The group also showcased its “Wireless Smart Power Strip,” which has four outlets that can be wirelessly controlled from the Incipio CommandKit app or Apple’s Siri.
Incipio sells its products at about 40,000 retailers globally, including Best Buy and Walmart. The e-commerce business represents about 10% of sales. Fathollahi expects it to “grow dramatically” with a free, two-day shipping offer it will roll out this quarter. Last year’s addition of smaller competitor, Griffin in Nashville, made the move possible.
“We now have a 500,000-square-foot distribution center in La Vergne, Tenn., and [the] 160,000-square-foot facility in Irvine … and we are able to hit the entire (continental) U.S. in two days,” he said, adding that Incipio is also investing in better warehouse automation and upgrading its customer relationship management and enterprise resource planning software.
The direct-to-consumer push will also include a retail debut.
Incipio plans to open the “first global flagship store for its Incase brand” in downtown Los Angeles, across from the Ace Hotel on Broadway at the edge of the Fashion District.
Incase was founded in Chino in 1997 and sells laptop backpacks, camera bags, backpacks and luggage. The store, the first U.S. location for any Incipio unit, will have a coffee bar and is “going to be a really cool experience,” Fathollahi said.
