Think of Volcom’s new investor as an in-house ad agency, eager to propel the Costa Mesa-based skate brand to what they assert will be “new heights.”
Authentic Brands Group LLC in New York last week acquired Volcom’s intellectual property rights on undisclosed terms from its Paris-based parent, Kering S.A.
The deal essentially splits Volcom into two entities.
ABG owns the Volcom brand and intellectual property, and oversees marketing and business development.
Volcom’s current management team—including Chief Executive Todd Hymel, Chief Operating Officer Brad Holman, Chief Financial Officer Desiree Swanson and Chief Marketing Officer Ryan Immegart—has taken a majority stake in a new company, Liberated Brands, which will run the company’s operations in the U.S., France, Australia and Japan with continued oversight of Volcom-related product development and its retail and wholesale businesses worldwide. ABG has an undisclosed minority stake in Liberated.
ABC said it “will focus on amplifying brand awareness and business development for Volcom while leveraging Liberated Brands’ specialized retail and wholesale operations as a platform for international expansion of complementary ABG-owned brands.”
It’s the latest acquisition for ABG, a marketing and entertainment company that reports owning more than 50 brands. Its portfolio also includes Aéropostale, Juicy Couture, Nine West, Frye, and Jones New York, and generates $9.3 billion in retail sales annually.
Volcom—Orange County’s ninth-largest apparel company with about 300 area employees—does about $260 million in sales. It makes a variety of skate, surf and snow-oriented shirts, shorts, and swimwear, among other products.
Volcom officials welcome the new investors and the tools they bring the table.
It’s “a lot of expertise, especially within the digital space,” said Immegart.
One proprietary tool he cites is Winston, an influencer platform developed in-house that allows its brands to quickly scale a campaign or an activation.
“There are a lot of those things they have in the pipeline,” related to digital and events, he said.
“The combined expertise and the collaboration are really just going to make us both better.”
Liberated Brands’ structure somewhat resembles the model the Los Angeles-based private equity firm Oaktree Capital Management LP created when it folded Huntington Beach-based Quiksilver, DC Shoes, and Roxy under Boardriders Inc., an umbrella organization that last year also added Billabong, RVCA, Element, and Von Zipper to the roost.
Boardriders remains based in Surf City as OC’s seventh-largest apparel firm, Business Journal research shows.
Liberated Brands can “be a platform that has a billion dollars in revenue,” said Hymel, a figure also cited by Jamie Salter, ABG’s chairman and chief executive.
“I think that’s a great target,” Hymel said.
Volcom alone could take a while to reach that figure―the brand reported $323 million in revenue in 2010 before Kering, then known as PPR S.A., bought it in 2011 for $607.5 million.
The brand’s sales slid to $258 million in 2017, the last publicly available figure after Kering classified Volcom as “discontinued operations” last April and put it up for sale to focus solely on luxury offerings.
The investment in the Costa Mesa firm appears to have been a money-loser for the French parent company; while the financial terms of the sale to ABG and the management team weren’t disclosed, Kering noted it recognized a nearly $65 million “impairment loss against the Volcom brand” in a recent regulatory filing.
Growth Plans
Near-term plans for Volcom include expansion into China and South Korea. Competitor Vans Inc. in Costa Mesa has made sizeable inroads in those markets recently and ABG has “strong partners” there, Hymel said.
Hymel also plans to leverage ABG’s “marketing platform, expertise and influencers to continue to grow the brand” in markets where Volcom already operates, to make sure “we’re plugging into their programs to … get eyes on us that can convert into more revenue.”
Hymel, a U.S.-French national, took over as Volcom chief executive in 2015, replacing Jason Steris. He joined Kering in 2008 as deputy director of mergers and acquisitions and was appointed chief operating officer of its now-defunct Sport and Lifestyle Division in 2012. He met Salter when ABG bought outdoor lifestyle brand Tretorn from Kering’s Puma.
When Kering said they sought to sell “all the sport and lifestyle assets—us and Puma—Jamie reached out,” to them, Hymel said.
“Things started to heat up about eight months ago and it went from there to where we are today. It’s great to have a good partner … someone that loves the brand and is excited about the opportunities.”
ABG’s investors include Leonard Green & Partners L.P., Lion Capital and General Atlantic, an equity firm that in 2015 bought a majority stake in Irvine-based Too Faced Cosmetics, which was sold 18 months later to Estee Lauder Cos. Inc. in New York for $1.5 billion.
“Volcom is one of the world’s most sought-after lifestyle brands by board sports enthusiasts,” Nick Woodhouse, ABG’s president and CMO, said in a statement. “Liberated Brands’ operational expertise combined with ABG’s brand building know-how and a global network of best-in-class partners, make an unstoppable combination. We look forward to joining forces to take this brand to new heights.”
Richard Woolcott and his friend Tucker Hall started Volcom in 1991, taking it public in 2005. They added San Clemente-based eyewear maker Electric to the lineup in 2008 for $25.3 million. Kering sold Electric in 2016 to the brand’s management, a group led by Chief Executive Eric Crane.
Volcom enters its new phase with about 900 employees worldwide and some 100 stores—120 if shop-in-shops and partner stores are included.
Hymel, who went from Volcom employee to shareholder, does not anticipate much will change.
“I kind of always ran things like it was mine,” he said. “We are definitely excited, energized and ready for the next chapter.”
