Variflex Gets New Credit Line to Maintain Expansion Pace

Variflex Inc., a fast-growing Moorpark producer of in-line skates and other products for the younger end of the sporting goods market, has launched a two-pronged campaign aimed at maintaining its expansion pace.

Last week, the company negotiated a $20-million line of credit to help finance future growth. The new line, with First Interstate Bank, replaces a $16-million commitment with another lender. Future borrowings will be below the prime rate and cost at least two points less than the former arrangement, reports Brad Ogden, Variflex’s chief financial officer.

“The First Interstate line is unsecured, whereas we formerly worked with a so-called asset lender,” Ogden said. “We’re gratified about that. A lot of companies in our industry can’t make such arrangements.”

Ogden said the new credit line will be used mainly to finance retailers’ inventories toward the end of the year. “Normally, we’re able to pay our production and other costs out of cash flow.”

In another move, Variflex earlier this month introduced STATIC, a new brand of in-line skates and snowboards that will be made for a higher-priced market than the company previously targeted.

Variflex claims to be the nation’s largest producer of in-line skates that are sold through discount stores and other mass retailers. Thus far, however, it hasn’t invaded the so-called quality market that’s served by sporting goods and specialty stores. STATIC marks the firm’s entry into that arena. The new skates will retail between $89 and $170 a pair.

The new snowboards will retail at about $300 versus $500 to $600 for comparable units, Ogden said. Snowboards are fast becoming mainstream sporting goods items, he added.

Variflex expects to have its new skates on the market starting this summer. The snowboards are scheduled to be in stores by early fall. Both lines were well received at a major sporting goods show in Atlanta earlier this month, Ogden reported.

In the fiscal year that ended July 31, Variflex’s sales increased more than 30%, rising to $80 million from $61.1 million the previous year. Profits more than doubled, increasing to $6.6 million from the previous year’s $2.8 million.

The company employs 135 administrative and marketing personnel at its headquarters in Moorpark. All manufacturing is done overseas, Ogden said.