Orange Countyโs surf industry is riding into stormy weather.
Liberated Brands, an apparel company with an estimated $1.2 billion in annual retail sales, is losing the licenses to design, sell and distribute top surf and skate brands Billabong, Volcom, RVCA and Spyder.
Authentic Brands Group, a New York based global brand management company that owns legacy lifestyle, sports and consumer brands such as Sports Illustrated, Forever 21 and Reebok, is reducing its licensing partnership with Costa Mesa-based Liberated.
โTo meet [consumer] expectations and set these brands up for long-term success, we made the strategic decision to transition some operations from Liberated Brands to new licensees,โ David Brooks, an executive vice president for Authentic in charge of action and outdoor sports told the Business Journal.
Authentic is assigning new partners to the brands, which are establishing or expanding their presence in OC.
โThe new licensing partners will bring investments in product innovation, impactful marketing, and solid relationships with retailers and specialty shops. Weโre excited about the potential this unlocks and confident that this step will ensure these brands continue to lead and resonate for years to come.โ
Brooks added that Liberated โwill continue to operate the brandsโ e-commerce and retail channels for the foreseeable futureโ after losing control of product management, marketing efforts and wholesale networks.
The loss of the licensing and wholesale business may affect about 500 OC-based employees of Liberated.
Furthermore, the decision questions the importance of Orange County, where entrepreneurs grew the surfing apparel industry to worldwide fame with names like Hurley and Roxy. Authentic has assigned Liberatedโs rights to the brands to three New York-based companies.
โIt remains to be seen if Orange County will continue to be the hub of the surf industry,โ Hurley veteran Seth McKinney, currently chief operating officer at IPD Surf, told the Business Journal.
โWe saw the marketplace changing from independently owned and operated brands to license models,โ McKinney said. โGo back five to 10 years and this wasnโt the case; most, if not all, brands were owned and operated by people who grew up in the industry and were active participants in it.
โThis is how our industry started and how these same brands grew to prominence.โ
The Search for Iconic Brands
The trend towards licenses coincides with the implosion of once famous companies like Quiksilver and the search to capitalize on the more famous brands.
For example, after Quiksilver went bankrupt a decade ago, the Huntington Beach-based company emerged with a new name, Boardriders, which sold brands like Quiksilver, Roxy and DC Shoes.
In 2023, Authentic purchased Boardriders from Oaktree Capital Management. At that time, the Boardriders portfolio, which included RVCA and Billabong, generated $2.9 billion in retail sales annually through its network of more than 500 retail stores, 7,000 wholesale accounts and e-commerce channels across 35 countries, according to an Authentic press release.
The acquisition expanded Authenticโs already vast portfolio, now generating more than $32 billion in global annual retail sales, to include some of the most iconic brands in board sports, including Quiksilver, Billabong, Roxy, RVCA and Honolua.
โThese are iconic brands with deep roots in board sports culture, and their appeal stretches from core enthusiasts to global audiences. It wasnโt just about adding them to our roster โ it was about recognizing their immense potential and stepping in to unlock it,โ Brooks said of the 2023 deal.
Authenticโs relationship with Liberated dates to at least 2019. Thatโs when Authentic acquired Volcom, whose then Chief Executive Todd Hymel and other members of Volcomโs management team started Liberated.
Interestingly, Authentic said in 2019 it invested in a 19.9% ownership stake in Liberated.
Liberated then got the license for the Volcom brand in 2019. It also licensed Spyder, a Colorado-based action sports brands as well as the licensed partner and wholesale distributor in the US and Canada for Billabong, RVCA and Honolua.
Later in September 2023, Authentic entered into a โlong-term agreementโ with Liberated to be the retail and e-commerce operator for its newly acquired Boardriders brands.
โAs evidenced by their focus on the growth of Volcom and Spyder, Liberatedโs unwavering commitment to innovation and community engagement makes them the ideal partner to take on Billabong, RVCA and Honolua, as well as the retail operations for the best lifestyle brands inspired by skate, surf and snow,โ Authentic President and Chief Brand Officer Nick Woodhouse said at that time in a statement.
Such licenses grant companies permission to manufacture the apparel and related products and manage wholesale and retail channels as well as marketing.
โWhether itโs through retail, e-commerce, or unique collaborations, we saw the chance to honor [Boardridersโ] incredible legacy while charting a course for future growth,โ Brooks said. โThe Authentic licensing model has given us the ability to do just that.โ
Authentic has more than 50 brands in its portfolio and approximately 1,700 licensee partners.
โWe are a licensing business and are purely focused on brand identity and marketing,โ Founder and Chief Executive Jamie Salter said in a shareholdersโ letter in 2021. โWe earn long-term and recurring royalties from our licensees.โ
Expansion Footprint up in the Air
The additional business from Authentic prompted Liberated to expand its Costa Mesa footprint by adding 41,055 square feet of sub-lease office space at The Met campus on Anton Boulevard. It kept its headquarters on Monrovia Avenue.
Prior to losing the licenses for Boardriders, Liberated was generating $1.2 billion in annual retail sales with its apparel portfolio, according to Authenticโs website.
Liberated also remains the sole owner of Captain Fin Co., a Costa Mesa-based builder of surfboard fins, clothing and surfing accessories that Liberated acquired in 2022.
New York Operators Look to OC
Authentic is tapping three New York licensees to take over the removed retail operations for the brands once under Liberated in phases.
Billabong will go to O5 Apparel, The Levy Group will take over Volcom and Outdoor Collective will license Spyder. A well-known surf leader will also helm the new entity, Ethos Brands, which will have an OC presence.
O5 already has licenses for Quiksilver and Authentic-owned Champion. The Levy Group counts over 300 retail partners such as Macyโs and Target and was previously operating licenses for Roxy and Nautica, another Authentic-owned brand.
The new licensees, while maintaining their corporate offices, are reportedly looking to add more space in Orange County.
โSome are establishing offices in the area, while others are considering a presence in OC. However, with a licensing model, things can change quickly and unexpectedly,โ Surf Industry Members Association (SIMA) Executive Director Vipe Desai told the Business Journal.
โThe Levy Group will open its second office location for Volcom in the Costa Mesa area in the coming months,โ Brooks said, noting the company has an existing office in the city for Roxy.
O5 counts a Costa Mesa footprint as well, sharing an office for Quiksilver with fellow licensing partners Galaxy Brands and Centric Brands.
โO5 is also investing in a brand-new office nearby in Irvine dedicated to Billabong,โ he added.
โItโs an exciting next step that underscores the commitment our licensees have to the long-term success of these iconic brands,โ Brooks said.
Authentic is aiming to complete the transition of the brand licenses by the end of the first quarter in 2025.
Industry Insights
The decision to remove core licenses from Liberated took the retail and action sports industry by surprise.
โFor ABG, the extended timeline for settling things and the reshuffling of licensees suggests that normal operations will take a little longer to resume but once up and running should be smooth sailing,โ SIMAโs Desai said. โThe heritage brands still have a strong presence, but any additional disruptions could impact sales and create openings for new competitors.โ
IPDโs McKinney spoke of possibly more headcount reductions at Boardriders during its transition to new operators.
Before it was acquired by Authentic, Boardriders reorganized its operations resulting in the elimination of 170 jobs in the U.S. and the Asia Pacific division. More layoffs continued the following year with more than 450 employees let go at the companyโs offices in Orange County and Mira Loma. Of those, 129 employees in Costa Mesa and Huntington Beach were laid off, according to the stateโs WARN layoff notification records.
โMany of the current Liberated Brands employees will have the opportunity to join the new licensees,โ Brooks said.
