Costa Mesa-based clothing maker Volcom Inc. is looking to double yearly sales to $550 million by 2014, the company told analysts this week.
The revenue goal is part of a five-year plan to boost sales and profits at the maker of clothes inspired by surfing, skateboarding, music and art.
Volcom, which had $280 million in 2009 sales and is projected to see revenue of $317 million this year, calls its five-year plan “550/50/15.”
That stands for $550 million revenue, a gross profit margin of 50% and an operating margin of at least 15% by 2014.
In the second quarter, Volcom had a gross margin of 48%. Its operating margin was less than 1% of sales.
Parts of Volcom’s plan are aggressive but doable, said analyst Mitch Kummetz of Milwaukee-based investment bank Robert W. Baird & Co.
Volcom, which makes clothes for men, teen girls and young women, shoes and sunglasses, could see growth “come from a number of areas,” Kummetz said.
Those include market share gains in the company’s dominant men’s clothing segment, a rebound in female clothing sales and niches such as shoes and clothes for kids and snow sports.
Volcom’s gross margin goal is attainable since the company is nearly there and forecasts a 50% gross margin for all of 2010, according to Kummetz.
A 15% operating margin is more “aggressive,” he said. The company will need to manage its selling, general and administrative expenses between now and 2014, though it doesn’t necessarily have to cut spending, Kummetz said.
The five-year plan “gives the company plenty of room to invest in the future growth of its business,” he said.
Volcom has weathered a prolonged downturn for action sports clothing companies better than most.
The company and others are starting to see sales rebound from the depths of the downturn and a shift in tastes away from surf-inspired clothes.
Volcom, whose clothes are edgier than other action sports clothing labels, has managed to hold favor with young people as competing urban, fast fashion and other styles have ruled during the downturn.
“Overall, the feeling out there is that the worst is probably behind us and we are now in a build-back mode,” Chief Executive Richard “Wooly” Woolcott said earlier this year.
Solid market share numbers are hard to come by, but Volcom likely is the No. 3 company in its segment after Huntington Beach-based Quiksilver Inc. and Irvine’s Billabong USA, part of Australia’s Billabong International Ltd.
Other rivals include Nike Inc.’s Hurley International LLC.
