Billabong USA President to Start Own Line

In a move likely to hit Southern California’s booming surf wear industry like a monster wave, Billabong USA President Bob Hurley is severing ties with the company’s Australian licensor to distribute a line of beachwear bearing his own name.

Hurley’s high-level team of designers and other executives are abandoning the franchise--one of the most popular names on the beach--because of a long-simmering feud between Hurley and Billabong Australia founder Gordon Merchant, industry sources said Monday.

“It’s shocking to everybody,” said Bob McKnight, chief executive of Quiksilver in Costa Mesa, Billabong’s main competitor. “One of the true-blue, hard-core giants is sort of imploding and changing their whole strategy of what they’re going to be doing.”

Indeed, Hurley’s departure is likely to shake up the tightly knit and hotly competitive surf wear industry, much of which is based in Orange County.

“I don’t need another competitor, particularly a good one,” said Peter Townend, marketing director for Rusty Apparel, widely considered the No. 3 surf wear company by surf aficionados. “It’s going to confuse the marketplace. It doesn’t confuse the consumer; they don’t know who Bob Hurley is, but all the retailers do.”

Hurley declined to comment on the breakup, but late Monday, Billabong Australia said Hurley would not renew his licensing agreement, which expires in June 1999. Billabong officials declined to comment beyond a three-paragraph statement.

Among the names mentioned Monday as potential successors was Irvine-based Gotcha International, whose owner, Marvin Winkler, is known to be looking to buy more brand names. Winkler declined to comment Monday.

As head of Billabong USA in Costa Mesa, Hurley is credited with transforming the company into one of the nation’s top surf wear brands, especially the among hard-core surf crowd. The line is a staple at hundreds of Southland surf shops. It also is sold in major department stores such as Nordstrom Inc.

The departure of Hurley and his staff could prove to be a major setback for Billabong Australia, which said it plans to find a new U.S. licensee as quickly as possible.

Despite Hurley’s standing in the industry, some industry observers said it is unlikely that large retailers will immediately welcome his new brand--known simply as Hurley--to store shelves.

And small surf shops are wondering what Hurley’s split from Billabong will mean to their businesses. Jack’s Surfboards in Huntington Beach sells about $10,000 worth of Billabong apparel a week, making the line one of its best sellers.

Hurley and Merchant’s latest clash occurred over Billabong Australia’s push to expand into a line of women’s apparel. McKnight said Merchant also wanted Billabong USA to take on sunglasses and watches, another idea that Hurley rejected.

Today San Francisco licensee Burleigh Point Ltd. is producing the Billabong Girls line and expects to present its first designs at Action Sport Retailer trade show in San Diego in September and flood selected markets with the line in January.

Hurley also is hoping to present his new line at the same trade show, if he can break free of his licensing contract before it is due to expire.