Waves of Surfwear Makers Back-Paddling to Avoid Wiping Out

After riding the crest of a sales wave for years, a number of companies battling for position in Southern California’s surfwear industry appear to be heading for a wipeout.

Within the past month, two leaders in the $1 billion-a-year industry have been frantically back-paddling to avoid being swept away.

Vernon-based Jimmy’Z, last year one of the hottest of the pack, is about to close a deal to be acquired by Ocean Pacific--the West’s reigning clothier of the casual beach set for the past decade.

And Off Shore Sportswear has filed for protection from creditors under federal bankruptcy laws. The company has changed its name to Off Shore of California and has sold a 50% interest to a silk-screening business in Irvine.

Industry insiders say that as many as five other Orange County-based surfwear companies--including the trend-setting Maui and Sons--have been struggling in the intense competition.

“The market is way over-saturated,” said John Bernards, president of Santa Ana-based Off Shore. “It’s been going on for six months and will go on for another year.”

Surfwear--as opposed to swimwear--generally means sturdier trunks designed for surfing, as well as the casual wear that goes with the surfer look.

Surfwear left the cottage industry stage 20 years ago when surfers began starting their own shoestring companies, often in Orange County’s beach towns--the Silicon Valley of “rad” threads.

And as kids in the Midwest and East began buying up baggy, below-the-knee shorts decorated with wildly colored, sunglass-wearing sharks and windsurfing lizards, the industry traveled far beyond the handful of pioneers that included Ocean Pacific and Off Shore.

These days, there’s nothing laid-back about the surfwear industry.

While the surf may be better in Hawaii, the surfwear companies have taken root in Southern California--more specifically Orange County, where nearly one-third of the estimated 300 to 400 intensely competitive companies are battling for a share of the market.

The Action Sports Trade Show in Long Beach--one of the leading surfwear shows in the nation--had 780 retailers in September and a waiting list with 115 more. “It’s unreal . . . like a runaway locomotive,” said Jeff Wetmore, publisher of Action Sports Retailer, which puts on the shows. “Eight years ago, we had 185 booths and now our biggest problem is taking care of the incredible growth within the industry.”

But growth like that has also brought predictions over the past year that a shakeout was inevitable, that too many trendy companies were vying for a share of the market for board shorts, walk shorts, trunks, tops and T-shirts.

Three-year-old Jimmy’Z, apparently, began floundering in choppy waters simply because of its popularity.

According to industry sources, Jimmy’Z products sell well in surf shops and at bigger retailers--but distribution channels have clogged and the company reportedly has been able to ship only about 30% of its orders.

But with Tustin-based OP stepping in, Jimmy’Z could gain “the operational skills they didn’t have,” said Joel Cooper, chief executive of Gotcha, one of the most successful competitors in the business.

Jimmy’Z founder, Jimmy Gonzer, could not be reached for comment Tuesday. A secretary at the company said he was out surfing.

But an OP executive, Jerry Crosby, confirmed that discussions are going on for a cash buyout of Jimmy’Z and said the deal should be concluded within a week.

While OP is the giant in surfwear sales--expected to post revenue of $285 million this year--it has slipped as a trend-setter in recent years. If the acquisition of Jimmy’Z is completed, it could help OP regain the status it tried to recapture with the introduction earlier this year of its K-38 line of surfwear designed specifically for the hard-core surfer.

Off Shore, too, has been slipping in influence for the past few years, industry sources said. The 15-year-old company was a leader in the late 1970s and became known for its boldly striped knit shirts.

Two weeks ago, the company--owned by Bernards and a silent partner--filed for Chapter 11 protection under federal bankruptcy laws.

At the same time, Steve MacBaisey--who silk-screens T-shirts for Catch It and Hobie Apparel--bought out Bernards’ silent partner. The newly formed Off Shore of California will continue making men’s and women’s surfwear and sportswear, Bernards said.

Bernards, who calls himself “a former surfer,” said that while Off Shore’s retail base has shrunk in recent years, he expects the company to post domestic sales of $8 million this year--about the same as reported in 1986.

A number of industry sources--all of whom asked not to be identified--said Maui and Sons, which is headquartered in Irvine--has had significant cash-flow problems in recent weeks. Co-founder Jeffrey Yokoyama disagrees but said that “there’s definitely a shakedown going on” in the industry. “And I’m stoked that there is.”

Yokoyama said the weeding out of smaller companies “will eliminate a lot of people working out of their garages.” In the past year alone, he said, half a dozen companies have sprung up using some form of the name “Maui.”

Yokoyama conceded that Maui and Sons faced tough times last year--like the rest of the industry. “Anyone who says he didn’t have a rough year is pulling your leg.”