Billabong Announces Deal to Buy RVCA
Australian surfwear label Billabong International Ltd. brought weeks of speculation to an end by announcing on July 11 that it had signed a conditional agreement to purchase RVCA, an upstart fashion label in Costa Mesa, Calif., for an undisclosed amount.
RVCA founder Pat Tenore will remain with the label he started out of a Costa Mesa garage in 2001, building the company into a celebrated brand sold in core surf shops and Nordstrom.
RVCA—known as a genre-busting label that appeals to the surf, skate and fashion crowd—is expected to help Billabong grow its business beyond its current clientele.
Billabong is expected to provide RVCA with back-office acumen and financing power, according to Paul Naude, president of Billabong’s North America division in Irvine, Calif.
“There comes a time in the development of a young brand when the administrative side of doing business can start to consume resources that are better applied to the creative development of the brand,” Naude said in a prepared statement. “I think this is one of the strengths of the Billabong group. We have capabilities in areas including sourcing and the management of the supply chain, distribution and general financing, and these types of support structures allow our brands to focus on product and marketing.”
Billabong has acquired a number of fashion labels and retailers in the past decade including Nixon, Element, Becker Surf & Sport and Swell.com. Billabong has offered these companies a high degree of freedom, which appealed to RVCA owner Tenore.
The RVCA deal comes at a crucial time for Billabong’s development. The Australian surf giant announced on June 30 it was about to complete the biggest acquisition deal in its 37-year history. It had a tentative agreement to purchase 138 stores from Canadian retailer West 49 Inc. in a deal valued at $99 million (Canadian).
However, on July 9 Zumiez Inc. offered West 49 a better deal. On July 14, Zumiez decided not to pursue the bid.
The RVCA acquisition might make a Billabong-owned West 49 a stronger vehicle, said Shaheen Sadeghi, a former surfwear executive who keeps in close touch with the top leaders in the surf industry.
Billabong will have a highly popular, in-house label to stock its stores, said Sadeghi, who served as president of Quiksilver from 1990 to 1992. Sadeghi now owns the specialty shopping centers The Lab and The Camp in Costa Mesa.
Sadeghi noted that Billabong’s deals must be crafted carefully for the health of the surfwear industry, which has been increasingly dominated by the big three surfwear companies, Billabong, Quiksilver and O’Neill.
“Every healthy industry needs organic growth and competition. We have to be careful it does not become dominated by a few operators,” he said.
Duke Edukas, co-owner of Surfside Sports in Costa Mesa and co-chair of the Board Retailers Association, agreed.
“Even though it’s sad to see an independent vendor be acquired, especially one with as much potential and strength as RVCA, it’s good to know that they should only be stronger now with the guidance of Billabong. Billabong is creating a stable of the most successful brands in our industry,” he noted. “Billabong has always treated the specialty retailer fairly and honestly. It does, however, become a potential concern when one brand becomes so powerful. I guess only time will tell on the overall impact acquiring all these brands within our industry will ultimately have.”
When RVCA was a small label, it dared to bust genres and made an immediate impact by designing T-shirts made out of cotton with a softer feel than the stiff T-shirts that had been the industry norm, said Jason Bates, who was RVCA’s sales director until 2003. Bates now owns the Derelicte showroom in Los Angeles.
“They were pushing the envelope from the skate and surf norm, and they were pushing fashion,” Bates said. RVCA further appealed to the fashion crowd when it partnered with model Erin Wasson to debut women’s line Erin Wasson X RVCA. It also appealed to the mixed martial arts crowd by endorsing fighters for that burgeoning sport and recently designing MMA clothes.
RVCA made a splash with its Artists Network Program, where T-shirts employed graphics from rock stars such as Mark Mothersbaugh of Devo and Brandon Boyd of Incubus along with graffiti artist Ed Templeton. Ever since then, emblazoning T-shirts with graphics from collectives of popular artists has become popular in the surf- and skatewear industries. Boardsports labels Volcom and Hurley have experimented with artist-network programs.—Andrew Asch
