In the latest sign of a shakeout in the volatile Southern California surfwear industry, Maui & Sons has filed for protection from its creditors under federal bankruptcy laws.
The Irvine-based company--best known for its sharks-with-sunglasses design on its shirts and shorts--listed liabilities of $7.1 million and assets of $2.5 million. Documents filed this week in U.S. Bankruptcy Court in Santa Ana list more than 200 creditors.
Maui is the latest company to have trouble staying afloat in the $1-billion-a-year surfwear industry. An estimated 300 to 400 companies have been battling intensely for a share of the lucrative market for shorts, T-shirts, trunks and tops.
Late last year, Vernon-based Jimmy'Z, still a fashion leader, was acquired by Ocean Pacific--the West's reigning clothier of the casual beachwear set for the past decade. And Irvine-based Off Shore Sportswear was sold at the same time one its licensees, Daystar, filed for protection from creditors.
Maui has experienced problems with cash flow, resistance to its new merchandise line and its diversification into denims, sneakers and watches, according to Maui's attorney and industry observers. Word first surfaced of a cash-flow problem at Maui late last year.
When asked about it in November, Jeff Yokoyama--who owns 95% of Maui with his partner Steve Prested--complained about "the over-saturation of companies coming into the industry." In an interview with The Times, Yokoyama predicted, "There definitely will be a shakedown."
Maui & Sons began in 1981 when Yokoyama and Prested pulled together $3,500 and bought enough madras plaid to make 1,000 pairs of boxer-style drawstring shorts. Since then, sales of the company's shorts, pants, dresses and jackets swelled to about $12 million last year.
Yokoyama and Prested could not be reached for comment Thursday about Maui filing for protection under Chapter 11 of the U.S. bankruptcy code. Their attorney, William Lobel of Irvine, was optimistic about Maui's chances for staying afloat and said its owners do not plan to sell or leave the company.
Maui's rapid growth--combined with the general slowdown in retail sales--may have been too fast for the company. "They've got more orders now than they can possibly ever fill," Lobel said. "The problem is not orders. . . . It's coming up with the cash to buy T-shirts (and other ready-to-wear items) to fill the orders."
Maui designs its merchandise, explained Lobel, but the garments are manufactured by subcontractors.
Lobel traced much of Maui's problems to the company's decision to start selling merchandise that is not surfwear. "They went into denim coats, sneakers, watches and things they'd never done before," he said. "They tried to appeal to a market that wasn't there and it didn't work for them."
At the same time, Maui changed the look of its clothes. In last fall's interview, Yokoyama talked about the company's "need to come out with different things" including solids and a lot of basic colors--black and white, navy blue and gray.
Name 'Still Hot'
But some competitors and retailers said Thursday that Maui's attempt to change from a surfwear company to what one competitor described as a "European" look has been a stunning flop.
"Their name is still hot, but they lost touch with their grass roots," said Denny Kwock, marketing director with Quiksilver, a Costa Mesa-based surfwear manufacturer. "They ambled into what they thought would be a successful line that was too designer-ish, too fashion-y. They were doing ads like a mini-Ralph Lauren and they're beach market, not Benetton."
"Maui used to be a lot better," added Palema Peters, a salesperson and part-time buyer with Newport Surf & Sport, one of Orange County's trendiest small retailers, which no longer carries Maui & Sons. "People kept asking for the sharks and they haven't been making that."