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Surfwear Maker's Delicate Maneuver

Costa Mesa's Volcom takes its rebellious, offbeat image to Wall Street for an IPO.

June 06, 2005|Leslie Earnest | Times Staff Writer

It was the last night of its annual conference, and the Tribe, as the surf industry calls itself, was stoked.

Clothing makers, sales directors, marketing experts and shop owners gathered on the beach for an awards ceremony. When Volcom Inc. of Costa Mesa was named manufacturer of the year, supporters chanted "Wool-y, Wool-y" as pals carried the company's chief executive to the stage.

Richard Woolcott acknowledged his father -- who provided $5,000 to help launch the business in 1991 -- with a "Right on, Dad." He mentioned the relief of being able to call Quiksilver Inc. Chief Executive Robert B. McKnight Jr., a mentor and former boss, whenever he needs to talk.

"He knows what I'm going through right now," said Woolcott, whose company recently filed to go public, hoping to raise $86 million in a stock offering.

Then, in an awards ceremony ritual, he took a slug of tequila.

These may be stressful times for the 39-year-old executive -- who with colleagues has nourished that seed money into a $113-million-a-year apparel company -- but he seemed to be having a good time at the gathering last month in Los Cabos, Mexico.

Indeed, the Surf Industry Manufacturers Assn. conference, sandwiched as it was between rounds of surfing and partying, gave Woolcott a chance to whoop it up before his company begins the stodgy "road show" it must endure to prove its worthiness to large investors.

Volcom's rebellious image, with its "youth against establishment" mantra, has served it well among surfers, skateboarders, snowboarders and other mostly young shoppers in 40 countries. The offbeat mind-set is reflected in the clothing, which may have slanted seams, a crooked version of its stone logo or an upside-down word in the label.

Friends say the company's creativity stems from Woolcott, by all accounts a regular guy who is unfazed by his success. Sure, he pulled down nearly $487,000 in salary and bonus last year, but the former competitive surfer still lives in a Laguna Beach mobile home park -- albeit one with an ocean view.

Woolcott, who has long dodged the mainstream press, couldn't talk now if he wanted to, as Volcom must observe the pre-offering "quiet period" during which public comment is prohibited. From the start, he has preferred to communicate through less traditional channels.

The company's guerrilla marketing tactics and quirky antics have become industry lore.

"They're pretty much the masters of getting something for nothing in the marketing world," said Mike Bill, vice president of e-commerce for Becker Surf & Sport, a five-store chain based in Hermosa Beach.

At trade shows, Volcom employees may show up dressed as clowns or even bananas. They once staged a fake breakdown of the company's recreational vehicle, which was emblazoned with its logo, during a surfing contest in Huntington Beach to call attention to themselves, Bill said. During an event at retailer Surfside Sports in Newport Beach, anyone willing to kiss a dead carp got a free Volcom T-shirt, store owner Duke Edukas said.

"You've got to get it to be part of it," he explained.

The kids get it. But will Wall Street?

Quite likely, say longtime surf industry watchers and experts on initial public offerings.

Volcom is growing faster than Quiksilver was when it went public, said Walter Cruttenden, whose former securities firm Cruttenden Roth handled Quiksilver's offering in 1986. Volcom is also "edgier," which plays well with youth, he said.

"Boy, right now I'd say anything Quiksilver has done it looks like Volcom could do," said Cruttenden, now a director at IPO research firm Current Offerings in Newport Beach.

The stock sale also ratchets up the pressure on the easygoing Woolcott, whose business will face increased scrutiny as a Nasdaq-listed company.

Last week, Volcom filed documents disclosing that Chairman Rene Woolcott, Richard's father, settled insider-trading allegations 30 years ago involving a sum of $6,500. The elder Woolcott neither admitted nor denied the allegations, according to the Securities and Exchange Commission filing.

To scale its next hurdle, Volcom must persuade investors that it can maintain the rapid growth that caused its sales to nearly double from 2002 to 2004.

But at the industry conference last month in Mexico, Richard Woolcott didn't have to prove anything to anybody. There, he was surrounded by "the brethren," to use McKnight's term, some of whom were about as eager to grab Volcom stock as they were to catch the next wave.

"Everybody's excited to buy" shares, said Jessica Rush, a spokeswoman for competitor Ezekiel USA, echoing the supportive buzz about Volcom.

Although fiercely competitive, the surf and skate apparel industry has been banding together in recent years as it frets over significant changes.

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