Surf wear makers hit rough waters
The economic slowdown, particularly in California, has meant declining sales for companies such as Pacific Sunwear and Quiksilver.
LOS CABOS, MEXICO — On a recent hot night in Baja, short-skirted women gyrated alongside beer-drinking men at the legendary nightspot El Squid Roe, and Fernando Aguerre dispensed shots of tequila to anyone who would have one.
But the party atmosphere during the Surf Industry Manufacturers Assn.'s annual Cabo Crawl belied rough waters for the people who make board shots and bikinis. Business has been hurt by the economic slowdown, leading to declining sales and falling stock prices.
"Right now, everybody's paranoid," said Aguerre, co-founder of the Reef sandals brand and president of the International Surfing Assn. "I think the whole industry probably has a sharper eye on their financials."
Many businesses are being hit by the economic downturn, but the surf industry has another issue to contend with: the location of many of the surf shops that bind manufacturers to their core customers, said analyst Mitch Kummetz of Robert W. Baird & Co.
"You look at California, which is the epicenter of the surf/skate market, and that's where a lot of these surf shops are located," said Kummetz, whose monthly board sports report tracks independent surf and skate retailers across the nation. "Southern California and Northern California have been very difficult markets of late due to the housing market."
Two iconic surf wear companies based in Southern California, Huntington Beach-based Quiksilver Inc. and Anaheim-based Pacific Sunwear of California Inc., are among those that are struggling.
Pacific Sunwear, the largest specialty chain selling surf and skate brands, said last month that its net income for the fiscal fourth quarter dropped to $5.2 million from $9.1 million a year earlier. Its shares have plunged 23% since Jan. 1, dipping 13 cents Friday to $10.91.
Quiksilver, meanwhile, swung to a $21.9-million loss for its fiscal first quarter ended Jan. 31, compared with a $2.5-million profit a year earlier, as its winter sports division flagged. The stock, which traded over $15 last summer, fell 5 cents Friday to $9.81.
Quiksilver Chief Executive Robert B. McKnight Jr., however didn't look the least bit worried Wednesday, the first day of Surf Summit here, an annual event during which seminars are squeezed between rounds of surfing, swimming, golfing and partying. Demand "just goes in waves," he said, and people in the business have to learn to go with it. The industry veteran's advice to his cohorts: "Don't let it freak you out."
