Designer Perry Ellis Plans to Acquire Gotcha International

Apparel designer Perry Ellis International Inc. said Monday that it planned to buy Gotcha International, a pioneering Southern California surf wear brand that emerged from bankruptcy protection less than two years ago.

Terms of the deal, which is expected to close in January, were not disclosed.

The acquisition of the Newport Beach-based company and its Gotcha and GirlStar brands would mark the second time since 2003 that Perry Ellis had snapped up a local surf wear concern. The Miami-based company previously bought Redsand Apparel in Irvine.

The deal also is the latest indicator that the surf wear market continues to hold appeal for bigger players in the apparel industry. In 2002, Nike Inc. bought Hurley International, which was based in Costa Mesa and has since relocated to Irvine. Since then, Warnaco Group Inc. has acquired Ocean Pacific Apparel Corp. in Irvine, and VF Corp. bought Vans Inc. of Santa Fe Springs and sandal maker Reef Holdings Corp. of San Diego.

Gotcha would benefit from its new parent’s sourcing, design and marketing resources and other expertise, Perry Ellis Chief Executive George Feldenkreis said in a statement.

The Gotcha brand launched in 1978, following a path created by industry pioneers Ocean Pacific and Hang 10. Gotcha peaked in 1989, when revenue reached $160 million. But the company began to struggle when it started chasing the then-emerging “street” look.

The brand gained fresh attention in 2001, when Marvin Winkler -- who with his wife, Sherri, is the company’s majority shareholder -- attempted to build Gotcha Glacier, an indoor snowboarding, skateboarding and surfing park near Edison International Field in Anaheim. That plan eventually collapsed.

In August 2002, after a variety of other difficulties, Gotcha filed for Chapter 11 bankruptcy protection.

After emerging from bankruptcy in February 2004, Gotcha developed a new business strategy that in the U.S. involved selling through department stores, such as Mervyn’s and Macy’s West, rather than the surf shops and specialty stores where it once sold, such as Pacific Sunwear of California Inc., said Donald S. Grier, Gotcha’s president. It also has been attaching its name to an expanding number of products, including shoes, eyewear, skateboards and wet suits.

“We just started from scratch, basically,” he said. “It was a lot of hard work. I can say overall we’re very pleased.”

Although the name lost its cachet through the years among many in the core surf apparel industry, it still held considerable brand equity and thus value for Perry Ellis, Grier said.

Gotcha merchandise is produced through licensees worldwide. The headquarters, which manages the company’s marketing, employs six people.

Initially, Perry Ellis would work with existing licensees, Grier said. But the apparel company plans to take over development of clothing that would be delivered in spring 2007.

Neither Grier nor CEO Sherri Winkler would remain with the company after the purchase, Grier said, noting that Marvin Winkler has played only a passive role in the business in recent years.

Perry Ellis shares fell 84 cents to $20.70.