JOHN BERNARDS : Newport Blue Tests the Waters : Tustin Firm Aims Sportswear at Grown-Up Beachboys

When the raddest kid on the beach grows up and wants to trade in his neon trunks, he probably won’t head to the nearest Brooks Brothers.

But what he may consider is Newport Blue, a sportswear maker that caters to men 25 to 40 years old who still want that casual look but no longer want to parade about in skull-and-crossbones T-shirts or skintight board shorts.

The Tustin-based firm is headed by John Bernards, one of the old-timers in the surf-wear industry.

A California native, Bernards was a self-described beachboy jock when he started working in a J.C. Penney Co. stockroom, then got into sales.

By his mid-20s, Bernards became a swimwear buyer, left Penney’s and started designing sport shirts and T-shirts for other companies. From there, he learned the rag trade from the cutting room up, designing fabrics, making patterns and merchandising.

In the early ‘70s, Bernards signed on as executive vice president of sales, merchandise and design with Hang Ten, a surf-wear industry pioneer. While there, he added lots of bold stripes and Hawaiian print designs to the company’s swim trunks and knit shirts--and helped sales shoot from $8 million to $25 million.

By 1976, Bernards was ready to paddle out on his own.

He started a little company called Off Shore Sportswear with a $48,000 investment. The firm became an industry leader and eventually reached $30 million in worldwide sales, much of that in small, regional surf shops.

In November, Bernards sold Off Shore to Irvine-based Cycle Industries and became president of Newport Blue. The company is part of a group of sportswear firms, including industry giant Ocean Pacific, owned by the same people. It had wholesale sales of $40 million last year.

As its top executive, Bernards runs Newport Blue, travels to trade shows, projects sales, oversees shipping and the product lines and is chief concept designer for the 3-year-old manufacturer.

In a recent interview with Times staff writer Mary Ann Galante, Bernards discussed his company and the changing surf-wear industry, and where both are headed.

Q. Where do you get your design ideas?

A. I hate to tell you this, but I think about them lying in bed. Everybody has a different way of doing it. Everybody sits and reads magazines. I go out and look at different lines, then I keep thinking about it. And then I start. And I don’t know where it comes from after that.

Q. Do you make trips to, say, Hong Kong, looking for ideas?

A. I don’t. Everybody else does. I’m starting to learn how to do that. I have never shopped for concept in my life. I don’t shop stores for ideas. I go to stores to see what prices are and what competitive items are. If I’m making a sweat shirt, I want to see if there’s something similar. Maybe I can get more money for mine. I go to see who has market share. And I go to see how goods are displayed in the stores.

Q. What are Newport Blue’s sales?

A. Newport Blue did $40 million wholesale in 1988. Growth has been phenomenal in this company. In 1986, its first year, Newport Blue did $12 million. That went to $20 million in 1987, which doubled last year. In 1989, we expect sales of $45 million plus.

Q. How does that compare with OP’s sales?

A. OP’s are in excess of $300 million, I understand.

Q. What brought you from Off Shore to Newport Blue?

A. I had always wanted to take Off Shore product out of the young men’s departments and into the more mature, main-floor menswear. I felt that Off Shore was a more mature product--that it had grown away from plain surf wear. But it’s not an easy transition. You’re either a main-floor supplier or you’re not. And Newport Blue is a main-floor supplier. The main-floor men’s customer is 25 to 44 years old. There are 68 million of them today. By 1990, that will increase to 82 million, which will represent 55% of consumer spending.

Q. Did Larry Ornitz approach you about joining Newport Blue? (Ornitz was president and chief executive officer of Tustin-based Ocean Pacific Sunwear Ltd. until his death last September.)

A. Yes. We had been friends since I worked for him at Hang Ten. So we had talked about doing some joint ventures. And when I sold Off Shore, I considered selling to him.

Q. How autonomous is Newport Blue?

A. We’re totally autonomous. Jack Siegman is the chief operating officer for 1200 Valencia, which owns Newport Blue, Jimmy’Z and 180 South, which makes young men’s sportswear. The same people that own 1200 Valencia own OP, but OP is a separate corporation. Newport pays bodies in OP’s accounting department to work for us. We pay their shipping department to ship for us.

Q. What sort of things do you plan for Newport Blue?

A. I’m already doing it. I’m making a higher quality garment than has been made in the past. We always made nice garments out of real good fabrics, pretty colorings and all that kind of thing. Now I’m going inside the garment and doing little finishing touches. Binding seams and doing things that make it just one step above. Things like proper, careful stitching. Three things I’m after are quality, small-store business and manufacturing in the United States.

Q. Why do you want to manufacture more in the United States?

A. Certain products now are competitive with the Orient because of currency fluctuations.

Q. Could you make super-high quality clothing in young men’s styles?

A. You could do it. But young men’s styles change so fast, they’re in and out and gone. It’s almost a waste of time. In stores, Newport Blue sells just as fast as young men’s. But the difference is a man our age doesn’t buy three pairs or five pairs of shorts. He buys one or two. The young kids have got to have three pairs of shorts to get along. In other words, a man won’t buy as much as a young man. He’s not into changing his fashion every week.

Q. Is surf-wear fashion that cyclical?

A. There’s styling within the industry that is cyclical. For instance, knit shirts at one time were so important, you couldn’t sell or make enough. Then they went away for about 6 years. That’s all I made at one time--I made 2,000 units a day in my own factory. Knit shirts go down. Hawaiian shirts come up, they go down. Rigid waistband trunks come in. Then they go down. And rigid waistband trunks are out now. That’s what’s cyclical about our industry--the styling, the changes. That’s the tough part--to be at that point when the cycle changes to go up. The cutting edge of it is, you have to be there and know when boxer trunks are going to become important. You have to be well-capitalized to be able to say, “I believe this is going to happen.” And to get it sold, get it produced and get it in the stores.

Q. Surf wear also has a reputation of being a cyclical industry economically. After phenomenal growth, there recently seems to have been signs of a shakeout, with the bankruptcy of Maui & Sons, then Daystar’s financial problems when it was an Off Shore licensee. More recently, Tustin-based Catchit was sold and Merrill Lynch bought a big chunk of Cycle Industries. What does it all mean?

A. I think it says the industry is growing. Cycle does Hobie T-shirts, you know. So they’re part of the Hobie $100 million. I think the whole industry is going to continue to grow.

Q. Has the industry become more competitive?

A. Sure. It’s been that way. I think in the last 6 years it’s been tough--the types of sales reps, the sales tactics they use, the things said in the paper.

Q. And where is the industry headed?

A. I think it’s going to go in a different direction. I think it’s going to go back to a basic kind of thing in terms of style. In terms of growth, I think it’s going to grow. I don’t think it’s going to stop. The industry is growing. Not at the small retail stores, but at the department stores. And the big manufacturers are getting all the business, that’s all. What’s happened is all these little guys have come in and gone out. I don’t think there’s anything innovative with the new guys. All they’re doing is a little better job of what Quiksilver and Gotcha are doing.

Q. Would you agree that for 1987--at least the first half--that the industry was in a downturn?

A. No, I think it was in a leveling-out phase. That means that some of the big guys got more business and some of the little guys went out of business.

Q. How big is the surf-wear industry worldwide?

A. I’d estimate $1.5 billion wholesale worldwide, including apparel, surfboards, surfing contests and related paraphernalia.

Q. Do you see a trend within the industry of bigger companies buying more of the smaller surf-wear companies?

A. Yes, I do. I think you’ll see each one of them go to a bigger company. The big guys deliver all the time, and they’re in business. What happens is suddenly, one of these little guys doesn’t deliver. He doesn’t have the capital to get it made, he doesn’t have the pull with the contractors, he doesn’t have the experience. So he misses his delivery. And department stores cancel. Goodby little guy. Smaller manufacturers have a problem buying fabric, getting credit lines. And as it gets tougher and tougher, the owner will go and try to sell it. And as soon as they do that, the big companies will buy them because they’ve got somebody that’s been in business for so long, who knows business, knows manufacturing and knows financing. Jimmy’Z is a good example. They had some financial difficulties, and so OP bought them. Jimmy’Z did not have any management at all. They built a $20-million business overnight. Not many guys who are artists can just step in and manage that. OP put garment people in there. Apparel management people.

Q. Why has OP done so well overall?

A. The principals of that company worked hard all the time. I used to own my company, and I would be one of the last guys out at a trade show, or one of the first guys in the morning. And I’d see that OP already had two or three or four people working when I would leave. And they’d be there when I got there in the morning. So they worked hard and they had some good designing. Jim Jenks and Chuck Buttner started it. And then Larry (Ornitz) bought into it when Buttner sold his stock. Larry’s the one that made the company grow to $300 million. And OP wasn’t ever competitive pricewise. They were always higher priced.

Q. How did he do it?

A. Strictly management. He put together a management team that said surf wear is a business. You can all surf and be surfers, but it is a business, and we’re going to capitalize on it. And he worked night and day. That’s probably why he died. OP also sold to everybody. They went after every piece of business available, and I would hear all the small stores say, ‘I’m never buying OP again. They’re in the Broadway, they’re in the May Co.,’ and yet they’d buy it.

Q. Who’s running OP now?

A. Jack Siegman, who was a chief financial officer and Larry’s right-hand man. He’s working side-by-side with Jim Jenks.

Q. Some industry insiders say OP sells well in the Midwest and on the East Coast but just isn’t a happening name among the hard-core, trend-setting surfers in California. Is OP’s name mud in California?

A. I don’t think the name is mud in California. I just think they’re not in the right stores. OP continues to grow in the East. The only place they have a hard time is in California, in the small West Coast surf shops, because it’s a little clique of buyers. Some, for example, won’t admit they carry a corduroy short. That was OP’s first thing. And that customer’s still in California, and would start wearing OP again if they could find it in the stores they go to.

Q. Newport Blue is smaller than OP. How much leverage does it have in the retailing industry?

A. We have a lot of leverage with the retailers we do business with. R.H. Macy & Co. in New York is our biggest account. We sell Bloomingdale’s. We sell Dillards in the Southwest. We sell Belk in the Southeast. We sell Lazarus in the Northeast. We’re in Maas Brothers and Burdines in Florida. In California, we’re in Bullock’s, Macy’s, Emporium/Capwell and the Broadway. In fact, it was decided 3 months ago with the management of Broadway that we would have 25 full Newport Blue shops in their stores. That’s a big step up--we used to have four stores.

Q. How much space will you have at the Broadway?

A. It’s as much as a small men’s store. We have five racks per store, and each rack is about 6 feet big. We’re also going to do a big job with Bullock’s this year.

Q. Where else is your clothing found?

A. Well, we don’t sell Nordstrom. And I don’t know why. The problem is that our clothing is updated, main-floor menswear. There’s not a real spot for us in Nordstrom, so we’ve had a hard time getting an appointment with the buyer. But sooner or later, we’ll get them. But one of the things I’ve done since I got here was to begin selling to smaller, better men’s stores. In Laguna, we’re selling to J.E. Dawson Ltd. for Men. We’re selling to J.P. Maxwell on Balboa Island. None of the small guys had ever seen our line when I came here. None. Newport Blue was perceived as a department store line. We’ve hired sales reps just to sell to the better small stores. That has been a big jump in our sales. Our Eastern guys are just going bananas with the better stores.

Q. How much of Newport Blue’s merchandise is manufactured by others who just license your name?

A. Eventually, we’re going to license everything. Right now, we license T-shirts, accessories, young women’s sportswear and outer wear--jackets, ski parkas and casual jackets.

Q. What else does Newport Blue’s line include?

A. Knit shirts, Hawaiian print shirts, walk shorts, pants and swimwear.

Q. What part of the line sells the best?

A. Actually, it’s fairly even if you look at it. At one time of the year, swimwear’s the biggest. At another time of the year, pants are the biggest. Usually shirts are always in there, one way or another. Hawaiian shirts are not popular in the winter, but they’re big during summer.

Q. How much do you sell in the women’s line?

A. That line is going to do about $3.5 (million)-$4 million wholesale this year.

Q. What age group are you aiming at with your women’s line?

A. The 25- to 40-year-old woman. We don’t do bikinis. We just do sportswear.

Q. How about selling Newport Blue at the smaller surf-wear shops?

A. Customers at the surf-wear stores are too young. We don’t even try.