It took Irvine-based Tilly’s Inc. quite a few years longer to reach Wall Street than Costa Mesa-based Volcom Inc., the last Orange County-based apparel and retail company to make an initial public offering.
Tilly’s has been around for 30 years, in one form or another, and has operated under its current nameplate since 1984.
Volcom was just 14 years old at the time of its 2005 IPO, which raised $89 million.
Tilly’s co-founder Hezy Shaked also took longer to cash out some shares in the company through an IPO compared with Volcom founder Richard “Wooly” Woolcott, who was just 39 when his company went public.
But for Shaked, who is one of nine new entries in this week’s OC 50, the Business Journal’s annual profile of OC’s most influential business people, the wait may well be worth it (see OC 50 profiles for Shaked, Woolcott in Special Report, starting on page 21).
Recent IPO
The structure of Tilly’s, an action sports retailer whose $124 million IPO began trading on May 4, leaves Shaked and his family members in firm control of the company even with the recent addition of outside shareholders.
Family trusts tied to Shaked and his co-founder (and ex-wife) Tilly Levine got $84 million of the $107.6 million in proceeds from this month’s IPO. Those entities still control close to 96% of the total voting power of the company, according to regulatory filings.
Shaked’s close control can also be seen in terms of real estate. Affiliates tied to Shaked own Tilly’s headquarters, warehouses, distribution space and e-commerce-related buildings in Irvine—good for nearly 300,000 square feet of space.
A reading of Tilly’s financial documents makes it clear that any eventual decision to sell part or all of the company will ultimately rest on the decision of one person: Shaked, who has given no prior indications that he’s eyeing an exit from the growing retailer. He remains chairman and chief strategy officer for the company, having turned over chief executive duties to apparel industry veteran Daniel Griesemer earlier this year.
• Headquarters: Irvine
• Business: Action sports apparel retailer
• Founded: 1982
• Ticker symbol: TLYS (NYSE)
• Market value: About $337 million
• Notable: Went public earlier this month; shares finished first day of trading about 10% above range
Volcom
Volcom, on the other hand, had a much more varied ownership structure from its outset, which last year led to a blockbuster sale.
Woolcott—who was added to the OC 50 in 2010—and friend Tucker Hall started Volcom in Woolcott’s Newport Beach bedroom in 1991. Woolcott held a 26% stake in the company, while Hall owned 5.6% when the company went public 14 years later.
Executive officers and directors at Vol-com—including Woolcott’s father, René, a former Volcom chairman and key adviser to his son—owned about 46% of the company immediately following the 2005 IPO. That ownership stake fell to about 17% by 2010.
Volcom, a maker of clothes inspired by surfing, skateboarding, snowboarding, music and art, was acquired last year by Paris-based PPR SA in a $608 million sale, a deal driven in part by outside investors looking to cash out their stakes.
Family Trust
Big stakeholders in Volcom at the time of the sale included a family trust controlled by Stephanie and Daniel Kwock—president of the entertainment unit at Quiksilver Inc., where Woolcott worked before starting Volcom—BlackRock Inc. and TCW Group Inc.
Woolcott made out well in the buyout. His 2.5 million shares in the company were valued at about $60 million at the time of the PPR deal. He remains in charge of Volcom under the umbrella of luxury house PPR, whose other brands include Balenciaga, Gucci and Yves Saint Laurent.
Volcom is now part of PPR’s sport and lifestyle group along with Puma AG, a sports shoes and apparel label.
The timeline of the two companies’ moves to the public markets, and their ownership structures, have key differences, but Tilly’s and Volcom share one clear similarity: Their respective IPOs, seven years apart, were big hits on Wall Street.
Shares of Tilly’s were priced well above their expected range and ended their first trading day up about 10% after rising as much as 23% higher during the opening hours.
The company counted a market value of about $350 million as of last week.
Volcom saw an even bigger IPO bump. Shares in its 2005 offering jumped nearly 40% on its first day of trading and rose nearly another 25% over the course of the year, giving Volcom a year-end market value of $825 million.
Profit, Sales
Tilly’s posted a net profit of $34.3 million on revenue of $400.6 million in 2011 and this month reported quarterly sales of about $96.5 million, up nearly 16% from year-ago levels.
Volcom had sales of $113 million in the year prior to its IPO, which was up 49% from 2003. It reported net income of $24.6 million in 2004, up 72% from the year before.
The company’s sales had increased to $323 million and the company posted net income of $22.3 million in 2010, its last year of reporting full-year earnings prior to the sale to PPR.
