In a deal that is likely to send shockwaves through Southern California’s surfwear businesses, industry icon Bob Hurley has sold his company in Costa Mesa to giant Nike Inc.
The terms of the sale were not disclosed. But in acquiring Hurley International, Nike, which has been trying for years to break into the burgeoning market for surf, skate and snowboard clothes, is picking up one of the industry’s hottest brands that last year did about $70 million in business.
Hurley, who is 46 and considered one of the titans in the surfwear community, said in an interview Thursday that he decided to sell his company to the Beaverton, Ore.-based sneaker giant to help him build the brand and expand internationally. Nike’s foray into the market could present a formidable challenge to the hundreds of smaller youth sportswear firms that have grown up around the beach communities of Orange County.
“I’m not sure how this is going to play to the hard-core surf crowd that Hurley targets,” said Tony Cherbak, a partner at Deloitte & Touche accounting firm and an expert on the industry. Hurley said he will remain as president of the Costa Mesa business, which he founded in 1998 after splitting off from Billabong USA, a brand that Hurley built into one of the biggest names in the casual youth apparel business.
Hurley said he expected no change in direction for Hurley International, which employs about 150 people and will operate as a subsidiary of Nike. It is “a monumental task” to try to build a global brand, and linking with Nike will make that easier, he said. “We thought it best to partner up with a global brand to get the Hurley message out there.”
But word of the deal stunned industry insiders, who have fiercely guarded the tight-knit community of hundreds of small companies that have thrived in an anti-establishment culture.
Jen Fair, manager of Beach Access in Costa Mesa, a surf and skate clothing shop, said she expected a backlash among some surfers. “The industry considers itself on being core [rooted in the sport],” she said, “and Nike is a big corporation that stretches everywhere.”
Fair said Hurley clothes are among her shop’s biggest sellers and have cool cachet, even though they’re also sold at Nordstrom. Under Nike’s ownership, she said, Hurley products could start appearing at department stores and other mass retailers. And if that happens, she said, her shop might stock fewer Hurley products.
But Tim Harmon, president of Pacific Sunwear of California Inc., said the partnership between Hurley and Nike should be “very strong” and provide Hurley with more money to market the brand. He said Hurley was the top-selling men’s brand at his stores in December.
For Nike, buying Hurley fits into the $9.5-billion athletic shoe company’s plans to diversify into other brands, said Tom Clarke, president of Nike’s new business ventures. Over the years, Nike and other outsiders have had difficulty moving into surf and skate apparel, because the local industry is cliquish and tends to close ranks especially when a large corporation tries to tiptoe in.
At one point Nike opened ACG (All Condition Gear) South in Irvine for that purpose, but that office closed after just a month. After that, the company gave seed money to Savier Inc., a start-up skate shoe company in Oregon, which it now owns.
Hurley, who opened Hurley’s Surfboard in Costa Mesa more than 20 years ago, said he’s not worried about what some might see as an unusual union.
“We think teenage kids are super smart,” he said. “They’re going to decide if we’re a relevant brand or not.”
Times staff writer Marc Ballon contributed to this report.