Gotcha Gets Funds to Boost Expansion
Gotcha International has lined up $25 million to fuel its expansion plans, including a $5-million infusion from the surfwear company’s top executive.
“We are just positioning ourselves in the marketplace to get more aggressive,” Chief Executive Marvin Winkler said. “This allows us to be a powerful company in our industry and push this whole board-sports lifestyle to the next level.”
Eventually, Irvine-based Gotcha intends to buy more brand names, perhaps related to the skateboard industry, Winkler said. He declined to identify the potential targets.
The money also puts Gotcha in a stronger position if the privately held company opts to eventually sell shares to the public.
“There may be some [initial public offering] plans in the future,” Winkler said. “At this point we are not ready to say if we would go public or not.”
Until then, Gotcha will use the money to expand the core business and increase brand awareness, he said. Gotcha has about 135 employees and projects sales of more than $90 million this year.
The company expanded its credit line with CIT Group/Commercial Services, a unit of New York-based CIT Group Inc., to $20 million, from $5 million.
The money comes at a time when the surfwear industry is on the upswing, said John D. Olinski, an analyst with Wedbush Morgan Securities.
Winkler “does have a brand with recognition,” Olinski said. “From what I’ve seen, they’ve done a lot to improve the product.”
The $25 million won’t be used to build the proposed Gotcha Glacier, an indoor snowboard park that would be part of the Sportstown shopping and entertainment center adjacent to Anaheim’s Edison International Field. That project has separate funding, Winkler said.
Gotcha will hire more top executives and develop a strong marketing plan, including expanding the company’s television and magazine advertising campaigns, Winkler said. The company will also hire more design and art department staff, create more videos and sponsor more sports-related events.
Gotcha also plans to open more retail outlets, where it can test its products to see what sells best, he said. The company has a store in Laguna Beach and is opening one in Texas.
Winkler has had expansion plans for Gotcha since he took the reins 15 months ago. Industry experts said the money is key to making those plans a reality.
“Ultimately, he was not going to be able to fulfill some of the things he wanted to do with the company without additional funding,” said Nate Franke, a partner and apparel expert at the accounting firm of Deloitte & Touche. “If he’s been able to line this up, that’s a big first step in the process.”
Gotcha, which was founded in a garage in 1978, started by selling surfing-themed T-shirts and board shorts. In 1991, the company began selling MCD apparel, a brand that includes surf trunks and snowboard apparel. Gotcha launched GirlStar, its girl’s clothing division, in 1996.
Last year, Winkler, his wife and a friend bought controlling interest in the company from co-founders Michael Tomson and Joel Cooper.
