Billabong  Case  Study  

Billabong  International  Ltd.,  is  a  leading  surfwear  and  skatewear  company,  and  one  of  Australia’s  iconic  brands.  From  humble  beginnings  on  the  Gold  Coast  in  1973,  it  has  grown  through  international  expansion,  diversification  and  acquisitions  to  become  a  leading  international  surfwear  grown  its  commitment  to  the  global  boardsports  sector  through  athlete  sponsorship,  event  hosting  and  management  and  support  of  industry  bodies.  

But  in  2013  the  company  was  in  serious  trouble.  After  a  couple  of  years  of  poor  results  Billabong  International  lost  $859.5  million  last  financial  year  –  more  than  three  times  its  market  value  –  after  writing  off  the  value  of  brands1  such  as  Billabong  and  Element  by  more  than  $600  million.  It  stock  price  had  tumbled  from  a  once  high  of  about  $18  to  a  mere  40  cents  (see  chart  below).  Billabong  risked  going  bankrupt  before  a  bail  out  by  an  American  investment  group  Centrebridge  and  Oaktree  offering  a  $386  million  debt  and  equity  rescue  package  last  September.    

Under  the  leadership  of  new  CEO  Neil  Fiske,  the  company  is  now  engaging  in  a  bold  turnaround  strategy.  Is  it  too  little,  too  late?  

 

   

                                                                                                                         1  A  brand’s  value  is  an  intangible  asset  listed  on  the  balance  sheet  of  a  company.  Billabong  International  de-­‐valued  their  brands  by  $600m  contributing  to  the  large  financial  loss.  

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Stock  Price  ($AU

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BBG:  Billabong  Interna:onal  Limited  -­‐  Stock  Price  History    

Company  History  

Billabong  was  founded  on  Australia's  Gold  Coast  in  1973  by  surfer  and  surfboard  shaper  Gordon  Merchant  and  his  then  partner,  Rena.  Those  early  days  were  rather  inauspicious,  with  the  pair  designing  boardshorts  at  home,  cutting  them  out  on  the  kitchen  table  and  then  carting  the  finished  product  around  to  the  local  surf  shop  to  sell.  The  business  found  immediate  traction,  with  surfers  drawn  to  the  superior  functionality  of  the  Billabong  boardshorts.  The  next  step  for  the  fledgling  brand  was  to  introduce  the  better  local  surfers  to  Billabong  and  incorporate  them  in  the  marketing  of  the  brand.  Company-­‐sponsored  contests  and  special  events  would  later  follow.  

 By  the  1980s,  Billabong  International  had  firmly  established  its  place  in  Australian  surf  culture  and  was  ready  for  international  expansion.  The  initial  focus  was  on  the  large  North  American  market  and,  again,  the  brand  enjoyed  success.  Sales  began  to  grow  in  other  offshore  markets,  licenses  were  granted  in  a  number  of  territories  including  New  Zealand,  Japan  and  South  Africa,  and  in  the  late  1980s  a  new  beachhead  was  established  in  Europe.    Through  the  1990s  the  surf  industry  grew  exponentially  and  professional  surfing  gained  a  newfound  respectability.  The  company  also  followed  its  core  customers  into  other  boardsports  markets,  including  skate,  snow  and  wake,  where  it  replicated  its  proven  business  model.  By  the  close  of  the  decade,  Billabong  had  been  restructured  to  capitalise  on  the  growing  global  opportunities  in  the  boardsports  sector.  

The  restructure  set  the  foundation  for  an  initial  public  offering  on  the  Australian  stock  exchange  in  mid  2000.  This  gave  the  company  greater  impetus  and  the  financial  capacity  to  grow  the  business.  Some  seven  months  after  the  public  float  the  company  demonstrated  its  growth  plans  with  the  acquisitions  of  the  Von  Zipper  sunglasses  brand.  Four  months  later,  the  company  acquired  the  emerging  Element  Skateboards  brand  and  went  on  the  build  the  brand  using  the  same  business  model  as  the  original  Billabong  brand.  The  successful  integration  of  those  businesses  saw  the  company  add  to  its  stable  of  brands  in  following  years,  with  Honolua  Surf  Company  acquired  in  January  2004,  Kustom  footwear  and  Palmers  Surf  in  September  2004,  a  controlling  interest  in  the  beachculture  airport-­‐retail  business  in  November  2005  (later  converted  to  100%  ownership)  and  Nixon  watches  and  accessories  in  January  2006.  Other  businesses  were  also  established,  including  the  Element  footwear  range  and  various  branded  retail  stores  around  the  world.    

In  2007  the  Group  continued  to  build  its  brand  portfolio  with  the  acquisitions  of  the  specialist  wetsuit  brand  Xcel  and  girls  swimwear  brand  Tigerlily.  This  was  followed  in  2008  with  the  acquisition  of  the  Sector  9  skateboard  brand  and  the  DaKine  premium  boardsport  accessories  brand.  

 In  late  2009  the  Company  formally  entered  the  online  sales  channel  through  the  acquisition  of  US-­‐based  boardsport  retailer  Swell.com  and  the  purchase  of  an  interest  in  Australia's  Surfstitch.com.  In  March  2010  the  Company  enhanced  its  skate  offer  through  the  signing  of  an  agreement  to  license  the  California-­‐based  Plan  B  skateboard  brand.  This  was  followed  in  July  2010  by  the  acquisition  of  the  California-­‐based  RVCA  brand,  the  completion  in  September  of  the  acquisition  of  the  West  49  retail  chain  in  Canada  and  the  completion  of  the  acquisitions  of  Australia's  Jetty  Surf,  Surf  Dive  'n'  Ski  (SDS)  and  Rush  retail  banners  in  November.  

 In  April  2012  Billabong  completed  the  transfer  of  its  Nixon  brand  into  a  new  joint  venture  company.  The  joint  venture  saw  Nixon  become  an  independent  business  owned  by  Billabong  International  and  

Trilantic  Capital  Partners  (each  holding  approximately  48.5%)  and  Nixon  management  holding  the  balance  of  approximately  3%.    

In  July  2013  Billabong  completed  the  sale  of  its  DaKine  brand  to  Altamont  and  West  49  brand  in  February  2014.    

Billabong  on  a  Trail  of  Growth  by  Acquisition  

The  first  decade  of  2000  saw  Billabong  International  acquire  a  portfolio  of  sports  brands.    

Von  Zipper,  an  eyewear  brand,  was  acquired  in  early  2001  and  the  acquisition  of  skateboarding  apparel  and  hard  good  brand  Element  was  announced  in  July  2001.  

The  acquisition  of  the  Kustom  surf  shoe  brand,  as  part  of  Billabong's  purchase  of  the  Australian  Gold  Coast-­‐based  Palmers  Surf  company,  was  disclosed  in  September  2004.  The  following  year  in  December,  an  official  press  release  was  published  to  announce  the  acquisition  of  Nixon  Inc.,  a  watch  and  accessories  brand  in  the  board  sports  market.  

The  acquisition  of  wetsuit  and  technical  watersport  accessories  brand  Xcel  became  effective  on  1  September  2007,  and  Jodhi  Meares's  Tigerlily  brand  (young  female  surfwear)  was  acquired  shortly  thereafter  in  December  of  the  same  year.  The  Tigerlily  decision  represented  the  first  time  that  Billabong  had  acquired  a  brand  focused  exclusively  on  the  'girls'  market,  and  the  intention  of  management  was  to  position  the  new  addition  so  that  it  complemented  the  company's  own  'Billabongs  Girls'  line.  

In  2008  Billabong  continued  with  the  consistent  acquisition  activity  that  occurred  in  2007  and  announced  four  acquisitions  over  four  successive  months.  Following  the  acquisition  of  the  Gold  Coast  store  Kirra  Surf  in  May,  the  company  announced  its  acquisition  of  the  retail  operations  of  Quiet  Flight,  a  retail  company  on  the  east  coast  of  the  US  that  had  already  been  operating  licensed  Billabong  and  Element  retail  outlets  in  Times  Square,  New  York,  US.  The  Quiet  Flight  deal  resulted  in  the  addition  of  14  Quiet  Flight  and  Surf  Warehouse  retail  stores,  most  of  which  were  located  in  Florida,  US.  Then  in  June  2008,  the  founders  of  the  Sector  9  skateboard  company  accepted  an  offer  from  Billabong  that  also  included  the  purchase  of  the  Gullwing  skateboard  truck  brand.  Finally  in  August,  Billabong  confirmed  the  acquisition  of  boardsport  accessories  brand  DaKine,  which  specialises  in  backpacks,  bags,  gloves  and  accessories,  in  a  press  release  that  projected  that  "DaKine  is  expected  to  contribute  approximately  4%  of  Billabong  International  Limited’s  Group  sales  in  the  2008-­‐09  financial  year".  

Billabong's  retail  expansion  continued  into  late  2008  with  the  November  purchase  of  the  United  Kingdom  (UK)-­‐based  13-­‐store  retail  chain  Two  Seasons  for  an  undisclosed  sum.  Billabong  only  announced  a  single  acquisition  in  2009  with  the  purchase  of  Swell,  a  US-­‐based  online  retailer  of  boardsports  brands,  for  an  undisclosed  sum.  

Billabong  commenced  2010  with  the  signing  of  a  ten-­‐year  licensing  deal  with  popular  skateboard  company  Plan  B,  and  Plan  B  subsequently  entered  into  a  partnership  arrangement  with  Element.  In  May  2010,  Billabong's  retail  expansion  continued  with  the  acquisition  of  American  surf  retailer  Becker  Surf  &  Sport  in  May  (the  Becker  deal  included  the  business'  online  operations,  but  not  its  surfboard  operations),  followed  by  the  purchase  of  prominent  Canadian  action  sports  retailer  West  

49  in  late  June.  Further  acquisitions  were  then  announced  in  the  remainder  of  2010:  the  acquisition  of  apparel  brand  RVCA  was  confirmed  in  July  and  the  label's  founder  Pat  Tenore  explained  his  decision  in  the  Billabong  press  release:  "One  of  the  key  things  about  Billabong  is  its  respect  for  the  creative  independence  of  each  of  its  brands  and  that  level  of  flexibility  will  allow  RVCA  to  maintain  its  identity  while  benefiting  from  the  support  of  the  wider  Billabong  group";  after  RVCA,  Billabong  then  returned  to  the  retail  market  and  ended  the  year  with  the  October  acquisition  of  the  Australian  retail  stores  Surf  Dive  'n'  Ski  and  Jetty  Surf—from  vendor  General  Pants  Group—for  an  undisclosed  amount.  

Current  Overview  of  Operations  

Today  Billabong’s  core  business  includes  the  marketing,  distribution,  wholesaling  and  retailing  of  apparel,  accessories,  eyewear,  wetsuits  and  hardgoods  in  the  boardsports  sector  under  the  Billabong,  Element,  Von  Zipper,  Honolua  Surf  Company,  Kustom,  Palmers  Surf,  Xcel,  Tigerlily,  Sector  9  and  RVCA  brands.  The  company  has  approximately  4,000  staff  worldwide  and  its  shares  are  publicly  listed  on  the  Australian  Securities  Exchange.  Billabong’s  products  are  licensed  and  distributed  in  more  than  100  countries  and  are  available  in  approximately  10,000  retail  outlets  worldwide.  Products  are  distributed  through  specialised  boardsports  retailers  and  through  the  Company's  own  branded  retail  outlets.  The  majority  of  revenue  is  generated  through  wholly-­‐owned  operations  in  Australia,  North  America,  Europe,  Japan,  New  Zealand,  South  Africa  and  Brazil.  The  Company's  brands  are  marketed  and  promoted  internationally  through  association  with  high  profile  professional  athletes,  junior  athletes  and  events.    

Latest  Financial  Results  

Billabong’s  financial  results  (June,  2014)  for  the  continuing  operations  show  a  profitable  business.  

 

A  full  description  of  current  operations  is  available  in  the  annual  report  available  on  Blackboard.  

Corporate  Structure  

 

 

Turnaround  Strategy  

The  new  company  mantra  under  the  new  CEO  Neil  Fiske  is  Fewer,  Bigger,  Better.  

“Fewer,  bigger,  better  businesses.  Fewer,  bigger,  better  brands.  Fewer,  bigger,  better  styles….  suppliers…  marketing  programs…IT  systems…capital  investments.  

This  philosophy  will  pervade  everything  we  do.  The  easiest  way  to  make  money  is  to  make  the  big  ideas  bigger.  

Make  no  mistake.  This  is  a  turnaround.”    

“This  is  a  complex,  difficult  turnaround.  We  are  not  daunted  by  challenges  we  face,  but  neither  do  we  underestimate  them.”  

 “Quite  simply,  the  business  over  the  last  several  years  has  become  enormously  complex  and  diversified.  We  have  been  trying  to  do  too  many  things  –  and  none  of  them  particularly  well.  Building  global  brands  takes  one  skill  set.  Running  regional  multi-­‐brand  retail  is  something  totally  different.  And  being  a  pure  play  multi-­‐brand  e-­‐commerce  business  is  another  thing  altogether.  Then  multiply  

that  complexity  by  a  regionalized  organization  structure  with  independent  decision  making  and  different  operating  infrastructures.  As  complexity  grew,  we  lost  focus.  We  confused  the  organization.”  

“As  someone  said  to  me  on  my  first  global  tour  of  the  Company:  “We  need  clarity.  Are  we  a  retail  company  with  brands…  or  are  we  brands  with  retail?”    I  believe  the  greatness  of  Billabong  lies  in  the  authenticity,  heritage  and  aspiration  of  our  brands.  Period.  That’s  what  we  do  best.  That’s  what  we  need  to  build  upon.  The  core  of  this  business  is  good.  It’s  profitable  and  can  be  even  more  profitable.  It  has  real  growth  potential.  Our  direction  will  put  the  focus  back  on  that  core.  I  know  that  Billabong,  globally,  in  Australia  and  especially  here  on  the  Gold  Coast,  has  an  iconic  status.  That  means  when  you  hit  turbulent  times  there  will  be  no  shortage  of  opinions  and  speculation.  So  let’s  not  lose  sight  of  the  facts.  The  Billabong  brand  is  still  the  number  one  brand  in  specialty  surf  shops  in  both  Australia  and  the  US.  It  has  over  90%  awareness  and  high  regard  in  the  target  demographic.  And  by  the  way  the  current  world  champion,  Joel  Parkinson.”    

New  Strategy  Overview  

New  CEO  Neil  Fiske  outlined  a  7  part  turn-­‐around  strategy:  

I. Brand:  Building  powerful  global  brands  is  seen  as  the  core  of  what  Billabong  does  well.  “I  believe  the  greatness  of  Billabong  lies  in  the  authenticity,  heritage  and  aspiration  of  our  brands.  Period.  That’s  what  we  do  best.  That’s  what  we  need  to  build  upon.”  Strategic  focus  on  the  big  three  brands  (Billabong,  Element,  RVCA)  and  emerging  brands  that  have  global  scale,  but  are  locally  responsive.  

II. Product:  Build  a  strong  merchandise  planning  and  buying.  Develop  clear  assortment  strategies  with  a  balance  of  global  versus  regional  mix,  and  fewer,  larger  style  to  reduce  product  lines  by  25%.  

III. Marketing.  Develop  an  integrated  marketing  plan  12  month  calendar  by  region.  Develop  customer  database,  with  emphasis  on  digital  to  target  the  15-­‐18  year  target  consumer,  customer  relationship  management.  

IV. Omni-­‐Channel.  Mix  of  online,  own  stores  and  wholesale  to  other  retailers.  The  best  customers  shop  in  all  channels.  Drive  retail  profitability  through  closures,  productivity,  rent  negotiations  and  inventory  management.  Unify  three  channels  to  build  scale.  Invest  to  build  key  wholesale  accounts.  

V. Supply-­‐Chain.  Large  cost  reductions  possible  through  productivity  improvements.  Currently  logistics  costs  are  50-­‐100%  higher  than  industry  benchmarks.  Aim  to  improve  productivity  stock  turnover  from  2.4X  to  4X  over  next  few  years.  Diversify  out  of  China  for  cost  and  capability.  Move  to  fewer,  bigger  suppliers.    

VI. Organization.  Alignment  of  organizational  structure  with  new  strategy.  Develop  global  brand  structure  for  the  big  three  brands.  Strengthen  the  merchandizing,  design  and  marketing  teams  through  new  talent.  Build  global  scale  and  capability  in  four  critical  areas:  finance,  the  supply  chain,  IT  and  direct  to  customer  platform  (online  sales).  Recruiting  talent  for  key  positions  in  the  leadership  team.  Rationalizing  the  administration  by  eliminating  low  priority  work  and  streamlining  layers  and  diversity  (doing  fewer  things  bigger  and  better).  

VII. Financial  Discipline.  Key  cost  reductions  (inventory  management,  logistics,  administrative  streamlining)  to  fund  the  “marketing  war  chest”.    

 

 

 

Turnaround  Status  (December  2015)  

 

Early  indicators  of  success  

 

 

 

 

 

 

 

Key  Actions  to  Date  

Brand  

• Re-­‐signed  founders  of  Element,  RVCA  and  VonZipper  • Re-­‐signed  2012  ASP  World  Champ  Joel  Parkinson  • Signed  marquee  next  generation  athlete  Jack  Robinson  

Portfolio  actions  

• Sold  West  49  • Strategic  review  of  SurfStitch  and  Swell  

Distribution  changes  

• Country  tiering  • Chile,  Peru  to  distributor  model  (Forus)  • Smaller  brands  to  distributors  outside  of  Tier  1  countries  

Restructuring  

• Organisational  re-­‐alignment  • Europe  downsizing  • South  Africa  restructuring  

Talent  

• Executive  team:  Ed  Leasure,  Jean-­‐Louis  Rodrigues,  Mara  Pagotto,  Bennett  Nussbaum  • Global  Billabong  Brand  President:  Shannan  North  • Billabong  Womens  team  (Global  GM  Susan  Branch,  Global  Design  Lisa  Stemmler,  Global  

Merchandising,  Global  Marketing)  • Billabong  Mens  Design:  Brad  Lancaster  • Billabong  Sales:  Jason  Shelton  (US)  Justin  Cook  (Australia)  • Billabong  Creative  Marketing:  Michael  Minter  • Acting  General  Manager  Asia  Pacific:  Paul  Burdekin  • Latin  America  Vice  President:  Felipe  Motta  • Merchant  and  Design  bench  strength  

Financial  /  Corporate  

• $135  Million  placement  (shares  issued)  • $50  Million  rights  offering  • Asset-­‐based  lending  completed  • Board  renewal  complete  

 

 The  Surfwear  Market  

Here  is  one  commentator’s  view  about  Billabong’s  brand  prospects.  

Regaining  their  ‘cool’:  can  the  big  three  surf  brands  recover?  

by  Marketing  ON  2  October  2013  

By  Andrew  Warren  

Australia’s  ‘big  three’  surf  brands  have  found  themselves  in  choppy  financial  waters.  Last  week,  Billabong,  one  of  Australia’s  most  iconic  surf  brands,  confirmed  a  $386  million  refinancing  agreement  with  US  consortium  Centerbridge-­‐Oaktree  Capital  Management  acquiring  a  40%  share,  guaranteeing  the  struggling  brand’s  short-­‐term  future  after  it  posted  an  $859  million  loss  last  financial  year.  

Like  Billabong,  public  surf  company  Quiksilver  has  reported  declining  revenues,  asset  write-­‐downs  and  growing  losses,  recently  announcing  third-­‐quarterly  earnings  had  declined  84%.  Privately-­‐owned  Rip  Curl  has  also  been  in  profit  free-­‐fall.  In  mid-­‐2012  Rip  Curl  founders  Brian  Singer  and  Doug  Warbrick  engaged  Bank  of  America  Merrill  Lynch  to  help  source  a  prospective  buyer  for  the  brand.  The  planned  sale  was  abandoned  in  March  with  a  lack  of  interest  at  the  asking  price  of  $400  million.  

The  current  woes  are  a  long  way  from  the  heady  days  of  the  1990s  and  2000s,  which  saw  each  of  the  big  three  surf  brands  aggressively  pursue  international  expansion  and  high-­‐profile  sports  sponsorship  deals.  

So,  why  have  the  Big  Three  surf  brands  found  themselves  struggling?  And  what  is  the  way  to  calmer  waters?  

Heady  ride,  then  dumped  Each  of  the  big  three  had  grown  embryonically  in  the  1970s  alongside  the  rising  popularity  of  the  beach  and  surfing  in  Australia  and  California.  The  people  running  each  business  were  avid  surfers  themselves  and  brands  established  strong  credibility  within  surfing  subculture.  Billabong,  Quiksilver  and  Rip  Curl  clothing  came  to  symbolise  surfing’s  laid-­‐back,  counter-­‐cultural  values,  equally  consumable  by  non-­‐surfers  that  identified  with  the  lifestyle.  

The  1990s  and  2000s  saw  Quiksilver  and  Billabong  aggressively  acquire  emerging  youth  labels  (DC  Shoes,  Rossignol  Skis,  Element,  RVCA,  Dakine,  Mrs  Palmers  surf  gear,  Nixon  watches)  to  consolidate  market  share.  The  brands’  integrated  business  operations  by  funding  new  retail  stores,  buying-­‐up  existing  chains  and  standardising  design.  Between  2005  and  2011  Billabong  purchased  some  600  retail  outlets;  150  of  which  have  closed  in  the  last  12  months.  Large  department  chains  have  also  featured  prominently  and  agreements  with  surf  brands  were  intended  to  facilitate  greater  access  to  non-­‐surfing  consumers.  

The  companies’  fortunes  further  rode  on  a  re-­‐organised  World  Championship  Tour  which  included  highly  publicised  surfing  events  on  every  inhabited  continent.  Snowboarding  and  skateboarding  rose  to  greater  prominence  and  complemented  the  values  already  imbued  in  the  surf  brands.  New  and  highly  profitable  markets  emerged  in  Europe  and  Asia.  

Regaining  their  ‘cool’  Yet,  as  the  big  three  surf  brands  grew  so  did  a  disconnect  between  global  commercial  ambitions  on  the  one  hand,  and  maintaining  local  subcultural  credibility  on  the  other  hand.  Ironically  commercial  success  has  also  been  the  source  of  their  troubles.  

The  big  three  have  lost  their  ‘cool’  with  young  people  –  their  core  demographic.  Exposed  to  increasingly  fast  fashion  cycles  the  Big  Three  have  been  unable  to  move  expensive,  out-­‐of-­‐fashion  clothing.  

What  then  does  the  future  hold  for  the  surf  business?  The  big  three  are  now  attempting  to  reconnect  with  this  ‘core’  by  creatively  refocusing  their  brands.  You  can  now  order  ‘custom’  designed  clothing  from  Quiksilver.  Rip  Curl  has  begun  playing-­‐up  a  ‘craft’  association  and  the  ‘authentic’  nature  of  their  surf  products  –  tracing  back  to  the  company’s  custom  surfboard  manufacturing  roots.  

More  sustained  efforts  to  reconnect  with  core  consumers  might  involve  re-­‐focusing  on  design  and  clothing  styles  distinctive  to  local  markets.  Such  an  approach  worked  well  for  Billabong  in  South  Africa  during  the  early  2000s  when  surf  shop  owner  Cheron  Kraak  received  a  licence  from  Billabong  founder  Gordon  Merchant  to  design  and  manufacture  clothing  locally.  

In  2005  Kraak  helped  Billabong  win  a  fashion  award  as  the  most  popular  female  youth  brand  in  South  Africa.  Billabong  bought  back  the  licence  in  2007,  started  supplying  stores  with  generic  designs  and  sales  in  the  country  have  since  tanked.  Opportunities  also  exist  to  grow  online  retail,  which  currently  makes  up  around  10%  of  the  big  three’s  overall  sales.  

But  what  appears  increasingly  probable  is  that  at  some  point  in  the  future  the  big  three  will  themselves  be  acquired  by  larger  retail  corporations.  The  case  of  Volcom  is  instructive.  

Volcom  began  life  from  Southern  California’s  surf/skate  subcultures  in  1991  and  grew  rapidly  in  the  early  2000s  using  the  slogan  “Youth  Against  Establishment”.  In  2005  the  brand  floated  on  the  New  York  Stock  Exchange.  However,  by  2011  Volcom  had  seemingly  reached  growth  limits  and  was  acquired  for  $607  million  by  French  luxury  fashion  conglomerate  Kering  (formerly  PPR).  After  delisting  Volcom,  Kering  re-­‐energised  the  brand  by  increasing  funding  to  select  action  sports  events  and  athletes.  Volcom  is  now  outperforming  the  big  three,  with  sales  growth  for  the  first  half  of  2013  increasing  19%.  

Space  to  grow  Despite  the  wobbles  in  the  Australian  market,  the  global  demand  for  surf-­‐styled  apparel  is  expected  to  remain  strong  and  there  are  some  useful  lessons  among  some  of  the  newer  entrants.  

Hollister,  a  spin-­‐off  of  US  retailer  Abercrombie  &  Fitch  has  successfully  moved  into  surf  clothing  and  retail  in  the  last  decade.  And  smaller,  culturally  engaged  brands  are  also  emerging.  One  example  is  the  Byron  Bay  label,  Afends.  Afends  has  experienced  dramatic  growth  in  the  last  three  years,  trading  in  loud,  edgy  apparel  sold  through  independent  stores  supplemented  by  a  strong  online  presence.  The  brand  has  a  growing  following  amongst  young  surfers  and  skaters  in  Australia  and  California  and  shuns  advertising  in  the  usual  surf  media  outlets.  The  problems  being  experienced  by  the  Big  Three  has  actually  created  space  for  the  growth  of  creative,  independent  surf  brands,  thanks  to  the  reduced  threat  of  acquisition.  

Problems  facing  the  large  surf  brands  such  as  Billabong  are  a  reminder  that  doing  business  in  surfing  is  volatile  and  inherently  risky.  But  the  big  three  will  survive  in  one  form  or  another.  The  challenge  for  them  and  other  emerging  brands  is  to  maintain  subcultural  credibility.  

 

This  article  was  originally  published  at  The  Conversation.  

 Read  the  original  article.  http://theconversation.com/regaining-­‐their-­‐cool-­‐can-­‐the-­‐big-­‐three-­‐surf-­‐brands-­‐recover-­‐18406    

 Andrew  Warren  does  not  work  for,  consult  to,  own  shares  in  or  receive  funding  from  any  company  or  organisation  that  would  benefit  from  this  article,  and  has  no  relevant  affiliations.