Sanuk got the comfort thing down 17 years ago with its Fur Real sandal, constructed of indoor-outdoor carpet.
Goleta-based Deckers Outdoor Corp. saw big potential in the quirky brand when it paid $120 million for Sanuk and its licensee, C&C Partners Ltd., in 2011 and began building an internal infrastructure that’s expected to support some hefty strides being made this year.
Net sales grew 8.2% last year to $101.7 million. The company employs 55 in Irvine, up from 18 when Deckers took over.
Sanuk entered this year with a push into casual footwear and the addition of Tilly’s Inc. and Zumiez Inc. to its growing roster of retailers. It also has started to shift to more female and fashion-conscious consumers.
Company founder Jeff Kelley, who’s still involved with product development, carved a niche in the market for Sanuk, which gets its name from the Thai word for fun, with a brand that touts the tag line “Smile … Pass it On!” Its executives carry business cards with smiley face punch-outs.
“I always say it’s about how the product feels, and being on trend—we were always aware of that, but we always put that in second place,” said Sanuk President Jake Brandman. “It’s now about being more aware of trends and being more on trend in material and color.”
The shift in focus set the scene for the spring 2014 collection in stores now, evolving “to tell a phenomenal merchandising story that [is] on trend and on color,” Deckers Chief Executive Angel Martinez told analysts on an earnings call late last month.
“Importantly, we think the spring line will resonate with more style-conscious consumers who are in the early stages of discovering the Sanuk brand,” Martinez said.
Building Its Bench
Spring is also the first time the market is seeing the impact of Sanuk Global Product Director Trisha Hegg, who joined the company in March 2012 and is part of a team of new blood that has helped build what Brandman called the necessary “bench strength” to propel it forward.
Hegg, a former executive at a number of Sanuk competitors, including Foothill Ranch-based Oakley Inc., Reef in Carlsbad and Aliso Viejo-based OluKai Inc., said she hit the ground focused on “building a foundation into the line” that transitioned it out of an “item-driven” approach to product development.
“I was a competitor, and so I watched [Sanuk] go from nothing to something, and so it’s been about making sense of it,” she said.
Brandman credits Hegg and her team with building on the Yoga Sling sandal—whose footbed is made from yoga mat material. The sandal debuted last spring and had follow-ups such as the Yoga Slingshot and Yoga Slinger, both of which helped tell a fuller women’s merchandising story in stores.
Hegg’s appointment was followed by the May hiring of Vice President of Sales for North America Jeff Fitzhugh and the February hiring of Ethan Anderson as global vice president of marketing, a new position.
Anderson is a former executive of Costa Mesa-based Volcom Inc. and had been with the company since 1993, when he was brought on to create an in-house art department. He departed Volcom in December as global creative director.
Brandman said Sanuk’s broadening of its customer base, its upcoming entrance into Japan, and plans to expand into Brazil and Mexico this year moved it to look for someone with experience working for a larger company.
“It takes a more sophisticated approach to [drive] marketing for a brand like this, so we needed to bring in someone who has seen this before and who has been with a highly nuanced, core-grounded brand and pulled it through to a larger audience,” he said. “He has seen the type of growth that we’re about to embark on over the course of the next three to five years.”
Stepping Out
Sanuk has also seen growth of company-owned stores and new deals with other retailers.
Zumiez and Tilly’s began selling Sanuk this year. The new accounts represented the footwear maker’s first foray into the action-sports youth lifestyle segment.
The company got its start in specialty surf and skate shops and was lumped into the “hanging footwear” category for items outside of the traditional shoe segment.
Nabbing Tilly’s and Zumiez as retail customers puts it in front of a slightly younger customer base, Brandman said.
The expansion into casual and the offering of more stylish options also have existing accounts such as Journey’s and Nordstrom ordering more Sanuk product in what Brandman characterized as “meaningful acceleration.”
Executives continue to look for locations for more company-owned stores in tourist destinations and warm-weather markets, although they said nothing specific is in the works.
There are three company-owned stores in Santa Monica, Waikiki, and an outlet in Cabazon that opened in September.
“With our own stores, we’re able to put more of an assortment of our new product in front of new female consumers, and the more we put into the stores and the more we showcase, the more we tell the story,” Brandman said.
Sanuk isn’t entirely new to the branded-store concept. It has about 50 licensed retailers in the Asia Pacific region—deals that preceded its sale to Deckers.
“We had proof of concept that Sanuk retail connected with the consumer and was going to be important to the brand’s future,” Brandman said. “The beauty of the Deckers and Sanuk alignment is that Deckers has made significant investments into [direct-to-consumer] … and we were able to activate that infrastructure and tap into that.”
There had been much talk of pushing into more Sanuk-branded apparel and accessories following the Deckers acquisition, but those discussions are now a bit more tempered.
Brandman pointed out that the company recently emerged from a focus in the past 18 months on building a strong backbone.
“The foundation of this brand is footwear, and now that that [infrastructure] is in place, it gives us the opportunity to start looking at new categories. So naturally this brand’s going to start looking at an above-the-ankle strategy that is right for the brand and where we are in our development.”
