Billabong USA’s Chief Will Test Water With Own Line
In a move likely to hit Southern California’s booming surfwear business like a monster wave, industry titan Bob Hurley is severing ties with Billabong to distribute a line of beachwear bearing his own name.
Hurley’s high-level team of designers and other executives in Costa Mesa is abandoning Billabong USA--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 Inc. in Costa Mesa, Billabong’s main competitor. “One of the true-blue, hard core giants is sort of imploding.”
Indeed, Hurley’s departure is likely to shake up the tightly-knit and hotly competitive surfwear 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 surfwear 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.
As head of Costa Mesa-based Billabong USA, Hurley is credited with transforming the company into one of the nation’s top surfwear 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 and Macy’s.
The departure of Hurley and his staff could prove to be a setback for Billabong Australia, which said it plans to find a new U.S. licensee as quickly as possible.
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.
John Olinski of Wedbush Morgan Securities in Los Angeles said any number of companies might be interested, given Billabong’s ability to appeal to the “extreme sports,” including skateboarding and snowboarding.
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“It’s an extremely strong label in not only the surf shops but the specialty stores,” Olinski said.
And Hurley may be in for some rough water, trying to build a new company with a name that is not known to most consumers.
Despite his standing in the industry, it is unlikely that retailers will ditch a top-selling brand like Billabong. There’s also no guarantee that they will immediately embrace Hurley’s new brand, known simply as Hurley.
“It’s going to be hard for them to transmit the equity they have in Billabong into a new thing overnight,” said Quiksilver’s McKnight. “It’s going to take time. It’s like a start up. But if anybody can pull it off, they can.”
On Monday, word of the change began to filter onto the sand at Huntington Beach, where some surfers seemed shocked while others shrugged off the news. Among those questioned, hardly any were familiar with the name Hurley.
“If I saw something that looked good, I’d buy it,” said T. J. Hale, an 18-year-old Beverly Hills resident. “It’s not about the name.”
“It’s all about style,” said Brad Martinew, 18, visiting from Mesa, Arizona.
But many surfers are fiercely loyal to brand names, especially local ones. And Hurley’s roots already are deeply planted in Orange County, where he opened Hurley’s Surfboard in Costa Mesa about two decades ago.
Partly for this reason, some shop owners say Hurley could swipe business from Billabong.
“I remember [him] before he ever was at Billabong, when he was shaping boards,” said Rick Fignetti, who owns Rockin’ Fig surf shop in downtown Huntington Beach. “We were all stoked to see a company he was part of do so well.”
Retailers large and small 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.
“There’s a lot of people really into brands,” said store manager Zack Montez. “And you get a lot of people coming in saying, ‘Where’s your Billabong?’ ”
At Nordstrom, Billabong has been a top-seller in the chain’s young men’s department for years, said spokeswoman Leslie Harris.
“We can’t speculate on what’s going to happen,” Harris aid. “Hopefully, whatever happens, Billabong will continue to put out a good product.”
Hurley and Merchant clashed last year over Billabong Australia’s push to add a women’s apparel line in the United States.
When Hurley refused, Merchant granted a license to San Francisco-based Burleigh Point Ltd., which is producing the Billabong Girls line and will debut it at the Action Sports Retailer trade show in San Diego in September.
Hurley is hoping to present his new line at the same trade show, industry sources said, if he can break free of his licensing contract before it is due to expire.
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Crest of the Wave
Billabong ranks among the Top 10 in the highly competitive surfwear industry. How the top firms rank by estimated 1997 U.S. sales (in millions):
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% Change from 1996 1. Quiksilver $151 23.7 2. No Fear 95 -13.6 3. Big Dog 86 24.6 4. Hang Ten 81 5.2 5. Gotcha 74 12.1 6. Ocean Pacific 72 7.5 7. Mossimo 71 -34.9 8. Rusty 58 16.0 9. O’Neill 48 37.1 10. Billabong 45 21.6
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A Look Back
Hang Ten’s famous barefoot logo became synonymous with the California surf lifestyle popularized by the Beach Boys in the ‘60s. The firm still ranks among the top in an industry now crowded with competitors. Surfwear lines popular with the local hard-core surfing crowd:
1960s: Hang Ten, Jantzen Sportswear
1970s: Lightning Bolt
1980s: Ocean Pacific
1990s: Quiksilver, Billabong, Rusty
Billabong USA at a Glance
Headquarters: Costa Mesa
President: Bob Hurley
Parent company: Billabong Australia
Business: Surf apparel
Employees: 72
Established: Began designing its own line for U.S. market in 1986
Sources: Jack’s Surfboards, Surf Industry Manufacturers Assn., Surfer Magazine, Billabong; Researched by JANICE JONES DODDS / Los Angeles Times
