ASBMAG#85

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Australian Surf Business Magazine December

2018

ASBMAG.COM AUS $6.95 (INCLUDING GST)

FEATURE ARTICLES: The Top 5 Stories for 2018 / The Big 3 Now / Talking Shop: How Healthy Paranoia Could Save Your Business

#85


THE U LT I M AT E SURFING C O M PA N Y and for the second year running... 6 x SBIA Award Wins 3 x Runner-Up Awards


S U R F E R B E T H A N Y H A M I LT O N - A P R O D U C T O F T H E S E A R C H

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WINNERS OF

MEN’S BRAND OF THE YEAR LADIES SWIMWEAR BRAND OF THE YEAR MEN’S BOARDSHORT OF THE YEAR - MIRAGE CONNOR SURGE WETSUIT OF THE YEAR - FLASHBOMB CHEST ZIP C U STO M E R S E RV I C E T E A M O F T H E Y E A R - TO R Q UAY H E A D O F F I C E WA ACCOUNT MANAGER OF THE YEAR - KERRY WHITFORD

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RUNNER-UP

LADIES BRAND OF THE YEAR S U R F I N G AC C E S S O RY O F T H E Y E A R - F - L I G H T P O S S E B AC K PAC K Q L D AC C O U N T M A N AG E R O F T H E Y E A R - S E A N F I N L AY


LATCH™ / PRIZM™ SAPPHIRE POLARIZED

©2018 OAKLEY, INC



CONTENTS

ISSUE #85 DECEMBER

inside this issue

contents 08

Industry News

20

Feature Article

22

Media Meter

26

Fresh

28

Buyers’ Guide

30

Buyers’ Guide

32

Buyers’ Guide

34

Buyers’ Guide

36

ActionWatch OZ Insights

38

Feature Article

44

Talking Shop

45

Faces in the Lineup

THE TOP 5 STORIES FOR 2018

EYEWEAR

SNOW

GOGGLES

WATCHES

36

THE BIG 3 NOW

HOW HEALTHY PARANOIA COULD SAVE YOUR BUSINESS

Who are the brands that own the brands? Will Oaktree, VF and Kering become the new ‘Big Three’.

PUBLISHER ASB is published six times a year by Australian Surf Business Pty Ltd ABN 38 109 415 983

AUSTRALIAN SURF BUSINESS PTY LTD PO Box 747 Torquay VIC 3228 Australia Phone/fax 03 5568 3488. Mobile 0417 747 855. Email info@australiansurf.biz

CREATIVE

If you have any comments to make about ASB, or any aspect of the surfing industry, drop us a line: editorial@australiansurf.biz

fluid.com.au studio@fluid.com.au

ACCOUNTING & FINANCE Montgomery Carey & Associates www.mcaaccounting.com.au ACTING EDITOR editorial@australiansurf.biz ADVERTISING Keith Curtain 0417 747 855 sales@australiansurf.biz

EDITORIAL PLATFORM Australian Surf Business (ASB) magazine objectively reports on all aspects of the Australasian surf market. ASB is committed to editorial excellence and provides the only one-stop forum for the entire Australasian surf industry. Views expressed in ASB do not necessarily represent the opinions of the editors or publishers. No responsibility is accepted by ASB for the accuracy of advertisements or information within the publication.

ABOUT THE ENVIRONMENT Australasian Surf Business Magazine is printed using ECO-CLEAN print processes. We use vegetable based inks and recyclable metal plates during the printing process. ASB is printed on FSC® accredited stock.

QLD & NZ GREG SCOTT +61 (0) 407 577 997 sales@australiansurf.biz

Our printer is accredited for ISO9001, ISO14001, AS/NZS 4801 and is an FSC® certified printer ensuring that we uphold the highest international standards for the prevention of pollution and promotion of a clean environment. No animals were harmed during the production of ASB.

FASHION CO-ORDINATOR Fiona Hampson fashion@australiansurf.biz

SOCIAL MEDIA

SUB EDITOR Jock Serong Bryan Dickerson Cover Photo: Will Mills/Sam Woolston ASB PROUDLY SUPPORTS

https://www.instagram.com/australiansurfbusiness/ https://www.linkedin.com/in/keith-curtain https://twitter.com/asbmagazine https://www.facebook.com/asbmag2004/

This article came together with one simple question to the brands that own the surf brands: “How does surf brand X fit into your overall portfolio?” Nothing groundbreaking, and generally a softball question. After several emails and a few phone calls, very few companies got back to us. That’s when our curiosity was piqued and we knew that there was more to this story. The press outfits for the publicly traded companies like VF and Kering replied with static press releases on the particular brands at question, but no one addressed our specific questions. It’s difficult to write an article when no one is talking. To get answers we turned to Ed Prendergast, a kindly investor for the average surfer who wants to invest in the surf brands they love. He’s been investing in listed companies for 25 years and was twice ranked BRW magazine Analyst of the Year. Ed provided great insight into how both publicly traded and private companies operate. He shared with us how investment capital companies such as Oaktree work by radically restructuring brands like Quiksilver and Billabong to reap dividends, but also how publicly traded companies in line with Kering can shift their focus at the whims of shareholders. For these publicly traded brands, we discovered that a shift in shareholder vision can steer the company toward only working with luxury goods, leaving a brand like Volcom up on the auction block (where they remain today.) Ed also went into the gory details of how sometimes an investing entity will filet a brand, and sell off its best assets for quick cash should the opportunity be there. Quiksilver and Billabong, two of the largest in our little surf industry bubble when combined represent just 2% of Oaktree’s total $110 billion value. What will happen to Boardriders when their “turnaround period” ends and Oaktree must show profit? In this article we dig deep and excavate all we can to deliver on just who controls your favourite surf brands and hopefully shed some light on its likely future in the process. Bryan Dickerson Guest Editor

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INTRODUCING THE ONSHORE SERIES | REVENGE TRUCKS

Developed and designed to offer an enhanced surf-like experience, The Onshore series features Revenge trucks allowing for a greater range of motion while maintaining stability to push like a normal cruiser.

@globebrand | GLOBEBRAND.COM | est. Australia 1994


INDUSTRY NEWS

brand news

“Given that we had told our boat operator to pick us up in 3 hours, it was a long and frustrating session where I missed plenty of good waves while I was swimming in to retrieve my board,” said Michael Sidebottom.

Other awards to be presented on the night will be:

BOARDRIDERS TO PURSUE SALE AND LEASEBACK OF ASIA PACIFIC HEADQUARTERS.

That was the genesis of a Surf ResQ, the trio aimed to resolve the immediate problem of continuing to surf with a simple effective solution. Two years later, the Surf ResQ device was designed and developed in Mandurah and the company has partnered with Mandurah Boardriders to develop, sponsor and R&D the revolutionary device.

• RISING STARS (MALE & FEMALE)

“You don’t expect to paddle out and break your leash, but if you do, you’ll be thankful you have a lightweight, quick and easy repair solution right there with you.”

• NIKON SURF PHOTO OF THE YEAR

Corner Surf Shop (Geraldton, WA) took out the Single Store Retailer of the year. Surf Culture Bondi took out the coveted Core Boardstore of the Year and Newcastle’s Sanbah Surf was recognised with the Breakout Retailer of the Year award.

• AUSTRALIAN SURFING HALL OF FAME INDUCTEE

Surfboard of the Year was again taken out by JS Industries Monsta Box Surfboard

The winners of the Nikon Surf Photo of the Year and Nikon Surf Video of the Year will each receive a new Nikon Z7, along with the Nikkor Z 24-70mm f/4 S and FTZ adapter.

FCS’s revolutionary Freedom Leash took out the judged category of Product Innovation as well as Surf Accessory of the Year while OTIS Eyewear won Sunglass of the Year for the third year running.

Boardriders announced that it has decided to list its Burleigh office property for sale and maintain its occupation under a long-term leaseback. The property was acquired by Boardriders as part of the acquisition of the Billabong business earlier this year and is its Asia Pacific headquarters. As part of the acquisition, the combined business now owns the Quiksilver, Billabong, Roxy, DC Shoes, RVCA, Element, VonZipper, Xcel, Kustom and Palmers brands. Boardriders has appointed Mark Witheriff, from Knight Frank Australia to sell the property with a lease over the entire property for 12 years via an Expressions of Interest campaign closing on Thursday, 6 December 2018. Greg Healy, Global President and President APAC of Boardriders Inc., said: “The sale of the property is in line with our strategy to focus on our core business and free up cash to invest in our brands. Importantly, under the sale and leaseback arrangement, we will secure Boardriders long-term occupation of the property (including the office, store and warehouse area).” The announcement is expected to have no impact to occupation and follows earlier decisions by Boardriders to maintain office presence in both Burleigh Heads, Queensland, and Torquay, Victoria.

CARVE IS CELEBRATING 20 YEARS! From humble beginnings in Australia in 1988, Carve has grown to become an international surfwear brand, extending its product offering from sunglasses to clothing, wetsuits, swimwear, snow gear and accessories that are sold in hundreds of stores across the world. “Driven by a passion to design great products at affordable prices,” this mantra is at the core of Carve’s businesses proposition for over 20 years ago. Already established on home turf and with an impressive support for 150+ strong team covering a wide range of sports & lifestyles including Surfing, Snowboarding, FMX, MX, MTB, Kiteboarding, Golf, DJ’s & Music. Marquee team riders Keanu Asing, Clay Marzo & Stu Kennedy fly the Carve flag on the world stage with a host of local chargers & young guns from a range of sports building the brand from the grassroots up. Congrats to founder Matt Whyte, James Robinson and the team at Carve on twenty years. Thanks for your support along the way.

MANDURAH SURFERS LAUNCH SURF RESQ LEASH ACCESSORY Three Mandurah surfers have developed a simple solution to a long-standing problem for surfers; breaking your leash mid-surf with no backup leash. The patent-pending device aims to resolve this problem with a simple temporary surfboard leash connection known as Surf Rest. The idea was developed after an Indonesian boat trip where co-founder Michael Sidebottom snapped his leash early in their session.

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The Surf ResQ device is extremely simple to use and can be activated in seconds. It’s a temporary repair solution, similar to a puncture repair kit on a bike, but has been engineered to ensure that surfers are able to continue surfing immediately. Surf ResQ have also developed a small pouch which connects to the rail saver on your leash so you can have your Surf ResQ device with you when you need it most – while you’re out in the water surfing. “We’ve been testing and using the pouch for months now, and we find that it’s perfect for storing your Surf ResQ device on your board. We all keep one on each board so we know that if we do break a leash, we’ve got our repair solution right there with us, rather than having to paddle in only to find you don’t have a spare leash, because a thrifty mate borrowed one and conveniently forgot to give it back,” said Michael Sidebottom. Surf ResQ will retail for $19.95 or $34.99 (Twin pack) and $29.95 for a starter pack. Check out: https://surfresq.com.au

association news NOMINATIONS OPEN FOR 2019 AUSTRALIAN SURFING AWARDS INCORPORATING THE HALL OF FAME Nominations are now open for the 2019 Australian Surfing Awards incorporating the Hall of Fame. Surfing Australia’s night of nights will be held on Queensland’s Gold Coast on Tuesday April 2nd at QT Gold Coast. Tourism Industry Development Minister Kate Jones said the Australian Surfing Awards were a natural fit for Queensland. “It’s fitting that we’re welcoming the Australian Surfing Awards back to Surfers Paradise for the second year running. Surfers love coming to Queensland and every year our beaches play host to some of the biggest names in the sport,” she said. “Queensland is known around the world for its iconic beaches and we’re proud to have to some of the best surf breaks on the planet. “We’re growing Queensland’s reputation as a world-class destination to host major events. We’re proud to again host the Australian Surfing Awards on the Gold Coast.” World Surf League (WSL) siblings Owen Wright and 2017 WSL Women’s World Champion Tyler Wright took the honours last year for the Male and Female Surfer of the Year awards, while Pauline Menczer became the 40th inductee into the Hall of Fame.

• MALE SURFER OF THE YEAR • FEMALE SURFER OF THE YEAR • HEAVY WATER AWARD • ASB GREATER GOOD AWARD • PETER TROY LIFESTYLE AWARD • SURF CULTURE AWARD • SIMON ANDERSON CLUB AWARD • NIKON SURF VIDEO OF THE YEAR

World-renowned Surf Journalist Nick Carroll continues in the role of Curator of the Australian Surfing Awards incorporating the Hall of Fame. Operated with the support of Tourism and Events Queensland, the Australian Surfing Awards is renowned for recognising the best in surfing talent. To nominate, visit: australiansurfingawards.com NOTE: Nominations close Friday February 15th, 2019. The Australian Surfing Awards incorporating the Hall of Fame is proudly supported by Tourism and Events Queensland, QT Gold Coast, Nikon, nudie, Australasian Surf Business Magazine, 2XP, XXXX Summer Bright Lager and DrinkWise.

COOPERS AND RIP CURL BIG WINNERS AT 2018 SBIA AWARDS The eighth annual SBIA Banquet and Awards were conducted in style last month at Crowne Plaza, Coogee Beach in Sydney. The Surf and Boardsports Industry’s leading brands, products and retailers were recognised for their outstanding achievements in front of over 200 industry retailers and brand executives at the gala event. The awards were highlighted by Coopers Surf talking out the coveted Australian Retailer of the Year – Multi Door award ahead of Strapper Surf. However, the big winner on the night was Rip Curl taking out the Men’s Brand of the Year, Swimwear Brand of the Year as well as our own sponsored category the ASBMAG Sales and Customer Service Office of the Year award. Rip Curl took to the stage more times than any other brand on the night to clean sweep these awards picking up an impressive six SBIA Awards to cap a stellar year for the brand. Commenting on Coopers Surf victory, Andrew Lindsey told ASBMAG, “I’m really stoked we won this award for our amazing, hardworking team. We are fortunate to have great people in our business and this trophy is just reward for all their efforts. I would like to also thank all our supply partners. Without their amazing products, marketing and athletes we wouldn’t have the industry we have.” Twenty seven of the coveted SBIA trophies were handed out by surfing legends Joel Parkinson, Ozzie Wright and Rob Bain. Billabong took out the top gongs of Ladies and Men’s Brand of the Year as well as picking up both Men's and Ladies Marketing Campaign awards making it another big year for the brand.

Another big winner on the night was Reef, winning Footwear Brand of the Year and Breakout Brand of the Year. This year’s Environment Award went to Vissla for their campaign which raises awareness for ocean-related environmental stewardship. The award was presented by representatives of the Surfrider Foundation.

A highlight of the night was the Surfing Australia Hall of Famer, shaper and inventor of the thruster, Simon Anderson was awarded the ‘Service to the Industry Award’. On hand to present the prestigious award was freshly crowned WSL Masters Champion and O’Neill Marketing Executive, Rob Bain as well as industry veteran Dougall Walker. The night also raised over $3000 for Surfrider Foundation with auction items donated by Volcom and Onboard Industries, going under the hammer. The 2018 Australian Surf Industry Awards were sponsored by Brandscope (Retail Awards), Surfrider Foundation (Environment Award), Australasian Surf Business magazine ASBMAG (Service Awards), Coastalwatch and Surfing World (Brand Awards), Shop! (Marketing Awards), Australian Retailers Association, Stryker Media, Davidsons Business Advisors, Philter Brewing and Surfing Australia.

FULL LIST OF 2018 SBIA AWARD WINNERS AND RUNNERS-UP Sales and Customer Service Office of the Year: WINNER: Rip Curl Customer Service Office – Torquay, VIC RUNNER UP: Boardriders Customer Service – Torquay, VIC NSW Account Manager of the Year: WINNER: Nathan Marsh: Creatures of Leisure/Otis RUNNER UP: Bruce Turner (Carv’n Co): Billabong VIC/TAS Account Manager of the Year: WINNER: Josh Grimshaw: Quiksilver RUNNER UP: Lahnee Firth: Roxy QLD Account Manager of the Year: WINNER: Bryan Balthazaar: Quiksilver RUNNER UP: Sean Finlay: Rip Curl SA/NT Account Manager of the Year: WINNER: Will Mills (Will Mills Agency): (Hurley / Electric) RUNNER UP: Ryan Anderson (Instant Agencies): Creatures of Leisure / Otis WA Account Manager of the Year: WINNER: Kerry Whitford: Rip Curl RUNNER UP: Marty Farrow: Quiksilver Boardshort of the Year: WINNER: Rip Curl: Mirage Conner Surge Boardshort RUNNER UP: Quiksilver: Men’s Highline New Wave Boardshort


FIND REFUGE IN THE SEA

MATT MEOLA | HAWAII


INDUSTRY NEWS

Wetsuit of the Year: WINNER: Rip Curl: Flashbomb Chest Zip RUNNER UP: O’Neill: Men’s Psycho 1 Surfboard of the Year: WINNER: JS Monsta Box RUNNER UP: Firewire: Go Fish Surfing Accessory of the Year: WINNER: FCS: Freedom Leash RUNNER UP: Rip Curl: F-Light Posse Backpack Sunglass Style of the Year: WINNER: Otis Eyewear: After Dark RUNNER UP: Oakley: Oakley Holbrook Footwear Brand of the Year: WINNER: Reef RUNNER UP: Havaianas Swimwear Brand of the Year: WINNER: Rip Curl RUNNER UP: Billabong Men’s Brand of the Year WINNER: Rip Curl RUNNER UP: Quiksilver Breakout Brand of the Year WINNER: Reef RUNNER UP: Afends Core Board Store of the Year WINNER: Surf Culture: Bondi RUNNER UP: Kirra Surf: Kirra JUDGED CATEGORIES: Ladies Marketing Campaign of the Year WINNER: Billabong | A Bikini Kinda Life RUNNER UP: Roxy | Make Waves, Move Mountains Men’s Marketing Campaign of the Year WINNER: Billabong | Life’s Better in Boardshorts RUNNER UP: Dragon | The Baile Campaign RUNNER UP: Quiksilver | Generations of Quiksilver Retail Digital Marketing Campaign of the Year WINNER: The Central Surf Style Surf Gifts RUNNER UP: Sanbah Product Innovation WINNER: FCS | FCS Freedom Leash RUNNER UP: Boomerangz Footwear | Boomerangz Interchangeable Thongs Environment Award WINNER: Vissla RUNNER UP: Afends Shop Fit Out of the Year WINNER: Stormriders Tamworth RUNNER UP: Dessa Australian Breakout Retailer of the Year WINNER: Sanbah RUNNER UP: Strapper Surf Australian Retailer of the Year – Single Door WINNER: Corner Surf Shop RUNNER UP: Saltbush Surf Australian Retailer of the Year – Multi Door WINNER: Coopers Surf RUNNER UP: Strapper Surf

MIKE BAIRD JOINS THE SURFING AUSTRALIA BOARD Surfing Australia has announced the appointment of former New South Wales Premier Mike Baird to the Board of Surfing Australia. Mike’s long and illustrious career in banking began back in the late 1980s as a National Australia Bank (NAB) graduate in Sydney, something he used as a springboard to senior roles at NAB’s Corporate and Institutional Banking team in Australia and the United Kingdom. "It's an honour to be serving on the Board of a sport I am so passionate about. Surfing Australia has an important role in encouraging participation in a sport that is part of our nation’s DNA, developing up and coming talent, and preserving its history. I will be proud to play a role and hopefully get some surfing tips along the way.” Surfing Australia Chair and 8x World Champion Layne Beachley said, “Mike is a respected leader, an avid surfer and a great bloke so I’m excited to have him join the board of Surfing Australia. His immense depth of knowledge and experience in politics, banking and philanthropy will bring tremendous value to the organization and I look forward to working with him and sharing a few waves with him as well.” Surfing Australia CEO Chris Mater said, “Mike brings a wealth of experience in the financial sector to the board of Surfing Australia as well as his obvious leadership experience as a former New South Wales Premier. Very importantly Mike loves surfing and we warmly welcome him to the board of directors.”

ERIK LOGAN JOINS WSL AS PRESIDENT OF CONTENT, MEDIA AND WSL STUDIOS The World Surf League (WSL) announced that Erik Logan will join as President of Content, Media and WSL Studios. Logan’s role at the WSL will include the delivery of all live and non-live content and media, in addition to global distribution across all the WSL’s owned and operated channels, as well as its partners. Logan will also oversee the creation of WSL Studios, which will deliver a broad range of high quality scripted and unscripted surf and lifestyle content. He will also lead a new direct-to-consumer membership offering, which will in the future become a key aspect of the WSL’s world-class content portfolio. Logan has a stellar track record as a media executive and is currently President of Oprah Winfrey Network (OWN). He led OWN’s turnaround from 2011 and has positioned the company today as the #1 cable network in its target demographic with 5 of the top 20 shows in scripted cable programs for women ages 25-54, more than any other cable network. WSL CEO Sophie Goldschmidt said, “Erik joining our leadership team is a very big moment for the WSL, as we look to take surfing and its special lifestyle to an even broader audience. He is a world-class, highly talented executive with a huge passion for surfing and the ocean. He is deeply respected in the media and entertainment industry and is the ideal person to take our content offering for fans to the next level. We know him well and I am thrilled that he is joining our team.” Logan will start with the WSL in January 2019. An avid waterman and current adviser to WSL, Logan served on the Board of Directors of USA Surfing, the NGB for the United States Olympic Committee is cofounder of Shred & Speed, LLC Infinity SUP, and is co-owner in Nikau Kai Surf Shop.

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SURFING WA & THE DEPT OF FISHERIES ENHANCE SHARK MITIGATION Surfing Western Australia announced a new partnership with the Government of Western Australia that will promote WA’s shark mitigation strategy and educate surfers on how to keep safe. The State Government through the Department of Fisheries today announced vital funding for new water safety equipment for Surfing WA including a new jet ski and drones for surveillance at events and competitions. The Government also announced funding over three years for the Surfers Rescue 365 program, which delivers free first aid training that is tailored specifically for surfers. The Surfers Rescue 365 program aims to provide recreational surfers with lifesaving skills sets via the provision of free training courses. The idea behind the program is that surfers are in the water 365 days of the year dawn till dusk and therefore often the first to respond to emergency situations. Arming these surfers with these skills will go a long way to making our coastline safer environment and forms a major part of Surfing WA's ocean safety program. Each course consists of Board Rescue, First Aid and CPR training in a concise 3-hour session. "Western Australia has an amazing coastline and some of the best waves in the world and therefore our beaches are very popular,” said Surfing WA CEO Mark Lane. “With such a vast and sometimes remote coastline surfers are often the first on the scene when emergency situations arise in the ocean. There is a great appetite from the surfing community to learn more around ocean safety and first aid.” “The Surfers Rescue 365 program provides surfers with this knowledge in short, comprehensive training sessions and with the fantastic support of the Western Australian Government we are able to provide this training for free and therefore reach more surfers across WA making our coast a safer place to enjoy." Fisheries Minister Dave Kelly was at Trigg Beach today to unveil Surfing WA’s new jet ski as well as four new initiatives to boost beach safety and announced a new campaign - Sea Sense - to encourage Western Australians to play their part in minimising the risk posed by sharks. “While the risk of a shark encounter in WA is low, the McGowan Government is doing more than ever before to keep Western Australians safe at the beach,” said Minister Kelly. “These five new initiatives bolster our existing comprehensive shark mitigation strategy, giving ocean users more information, more choice and more assistance, so they can continue doing what they enjoy with confidence.” The Sea Sense campaign aims to inform the community about the McGowan Government’s shark mitigation strategies, which are based on science and robust research, and how best to use them so people can keep enjoying the beach with confidence. The campaign will feature across print, television, radio and digital platforms. The new measures add to the existing evidence-based strategies which include enhanced beach helicopter and drone patrols; a world-first personal shark deterrent subsidy for divers and surfers; beach enclosures; an extended Shark Monitoring Network to Esperance; tagging operations; and a SMART drumline trial off Gracetown to start in 2019. For more information visit www.sharksmart.com.au

retail news HURLEY OPENS FLAGSHIP STORE IN BURLEIGH HEADS Hurley has opened a retail store in Burleigh Heads just in time for Summer, marking this as the first brick-and-mortar location for the brand in Australia. Andrew Ross of Deluxe Agency is the sole owner of the store and has been working closely with Hurley Australia who is supporting through marketing and merchandising. Ross, who has worked as a Hurley Agent since 2010, secured the location that was home to original surf brand Hot Stuff which closed earlier this year after 40 years of trade. This decision was intentional, as the connection between Hurley and Hot Stuff dates back to the 70’s, 80’s and 90’s. The common thread linking Hurley and Hot Stuff together is none other than Gold Coast local, surfing legend and 1978 World Champion Wayne ‘Rabbit’ Bartholomew. “The idea of the Hurley Burleigh store started as they most often do; over a few beers with Trean (Mrs Hot Stuff ) back in Feb. Hot Stuff wanted to make sure that the site remained as a surf store to serve the needs of the local Surf Community. We were stoked to be given the opportunity to continue the journey with a respectful nod to the history created and with an eye on the future,” said Andrew Ross. Prospace were engaged for the fit out which pays tribute to the rich heritage of Hot Stuff through subtle nods in design such as opting to keep the original floorboards. The space is also homage to Rabbit, and his ongoing contribution to surf culture and the Gold Coast community. The store will feature the Hurley x Rabbit collection, which is a retroinspired capsule that is a tribute to a man that revolutionised the sport of surfing. According to Mick Talbot, National Marketing Manager for Hurley “We are pumped! We are focused on delivering an awesome experience, supporting the locals and inspiring the future generation of surf. We are incredibly blessed to partner with Andrew who has lived and breathed the Hurley brand for the past 8 years.” The collective vision for the store is to create a space that not only represents the Hurley brand but is focused on connecting and working with the local Burleigh community. Customers that visit the store are presented with a 360-degree experience that celebrates surf culture through a carefully curated selection of Hurley products and complimentary brands including Slowtide, FCS, Raen, We Are Feel Good Inc. and Hydroflask refill station. Hurley hosted a celebratory party for media, VIP’s and friends of the brand on 8th December 2018 (see photos at ASBMAG. COM). The new store is located on 1706 Gold Coast Highway, Burleigh Heads Queensland.


W H AT ’ S T H E N AT U R A L PROGRESSION?

Between a rock and a hollow place: Dan Ross in the split second before a set wave goes square at a remote North Atlantic slab. AL MACKINNON © 2018 Patagonia, Inc.

Newly reformulated Yulex® natural rubber, and now Fair Trade Certified™ We’ve been working with Sheico, the surf industry’s leading wetsuit manufacturer, to progress the materials that go into our Yulex full suits—making them stretchier and more comfortable while further reducing their environmental impact. With natural rubber from sources that are Forest Stewardship Council® certified by the Rainforest Alliance*, solution-dyed linings that use 86% less water compared to conventional dyeing, and water-based AQUAa™ glue that’s free from harmful VOCs, they’re also the world’s first Fair Trade Certified™ wetsuits. *85% Yulex natural rubber by polymer content, blended with 15% synthetic rubber


INDUSTRY NEWS

MICK HELPS RIP CURL NEWCASTLE OPENS ITS DOORS

This attitude reflects the broader bricks-andmortar strategy for Accent Group: to engage customers with the best experience possible.

Rip Curl opened the doors to its first Newcastle retail store. Rip Curl Newcastle is located at 205 Union St, at the junction opposite the award-winning Sanbah Surf. The store will offer core surfing products, including surfboards, wetsuits, accessories and both technical and lifestyle apparel.

“We’re seeing great growth in our brand presence, and the larger footprint stores are allowing us to showcase more and more brands and products than we ever had before,” said Daniel Agostinelli.

3x World Champion Mick Fanning was on hand to help celebrate the opening of Rip Curl Newcastle. According to a statement on its website, “Rip Curl is stoked to add the store to its portfolio and be amongst a proud surfing town with such a rich surfing history.”

SIDEWAYS OPENS NEW NOOSA STORE Sideways announced the opening of its Noosa Heads store. With this new store addition, the Sideways group spreads its wings a step further up the East Coast. Sideways Surf was established over 10 years ago and is founded and operated by surfers. The new store in Noosa will be the smallest amongst all the Sideways surf outlet stores, however, it will have a great selection of surfboards, surf and skate hardware, clothing and accessories at outlet prices. According to the company’s website “With quality as our top priority, we aim to keep delivering outstanding products and customer service as we grow. We put a great effort into ensuring that the team members in our factory in Indonesia follow the highest standards during all the manufacturing processes. Community support is a must for us, so we make sure we create and maintain jobs for the locals in both in Indo and Australia as we evolve.” Sideways new Noosa store is located 23 Sunshine Beach Rd, Noosa Heads.

ACCENT GROUP OPENS BIGGEST PLATYPUS STORE Accent Group opened its biggest store yet, located at Melbourne Central in a massive 600+ square meters, boasting over 1000 styles. it’s more than twice the size of the next largest store and features an in-store DJ, Instagram able photo area and over 33 footwear and accessory brands. The store will function as a click-and-collect and click-and-dispatch center for Platypus’s online orders in the area, and staff will be outfitted with portable POS systems, allowing them to help customers find what the store has, and order what it doesn’t. “That’s a real change for us, it provides a quicker experience on the shop floor and checkout, [and] enables our team members and customers to have much more flexibility on the shop floor,” Accent Group chief executive Daniel Agostinelli told Inside Retail. “From our point of view, it’s allowing a better engagement with our customers to provide a real personal experience on the shop floor.” This customer-first experience is “critical” to Platypus’s success, according to Agostinelli. If a business is unable to provide a modern retail experience it will only be able to offer the “status quo”, and the customer will move on. One of the advantages this store provides is its extended range of product. “If you go to stores that are showing five or six lines of Vans, we are showing 200 lines… [You need to showcase] many, many more products than just your great sellers. You need to have good sellers in the mix as well,” said Daniel Agostinelli.

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“At the end of the day, you need both [online and bricks-and-mortar] to be resonating with customers if you want a business that’s going to be sustainable moving forward.”

WELCOME MCTAVISH OUTPOST After 45 years in the Byron region, McTavish Surfboards announced it has opened a new retail store in the heart of Byron Bay. The McTavish Outpost opened Thursday November 15th in a heritage cottage at 29 Fletcher Street, Byron Bay. “We’re excited to finally have a presence down-town. Our McTavish Outpost will stock a range of McTavish Surfboards – all handmade in Byron Bay, as well as McTavish clothing, accessories, gifts and art prints. We’ll also have an exclusive range of surfboards available to hire. Once we settle in we will also be holding exhibitions and events in the gallery part of the Outpost” McTavish CEO Ben Wallace says. McTavish founder, Bob McTavish said “I’m stoked we now have a high street store on the groovier side of town. Now you can buy or rent a beautiful handmade board just two blocks from the beach!”

e-tail news SIMPLE SURF CHASING THE STOKE WITHOUT GOING BROKE. A new online startup launched recently out of Newcastle. Simple Surf Australia started after countless chats in the lineup about the price of mainstream surf gear. Simple Surf recently launched its first surf product range including surf leashes, grip pads and fins. ​ ccording to the website, Simple Surf uses A specialised manufacturers in China with partners that have over 15 years experience supplying some of the largest surf brands. Simple Surf offers free shipping Australia wide on orders of $29 or more. www. simplesurf.com.au

CITY BEACH INCREASE CUSTOMER RETENTION WITH EMARSYS After 33 years in business, City Beach wanted a way to better engage the 1.4 million contacts in their database. Tasked with improving an underperforming email channel and replacing a legacy email system, City Beach decided to combine forces with Emarsys to address this challenge. Together Emarsys and City Beach shared a vision of the database as more than just a bunch of email addresses; that data represented real people that had expressed interest in the brand, product, and lifestyle City Beach represents. Emarsys is a leading provider of marketing software, that enables true, one-to-one interactions between marketers and consumers. City Beach significantly improved not only customer engagement through their email channel, but the brand was able to scale personalized interactions through mobile, social, SMS, and web channels as well.

By cleaning up their customer database, City Beach was able to unify profiles for each customer. As a result, their undeliverable email rate dropped from 28% to 1%. They were also able to create targeted campaigns that drive up revenue and retention and provide a better omni-channel customer experience. “City Beach integrated Emarsys and hasn’t looked back,” said Michael Doyle, Head of Marketing, City Beach. “With a 100% increase in revenue from key channels, improved speed to market, deeper customer insights, and all with a decreased cost base, Emarsys is now the marketing team’s ROI engine and one that’s clearly designed and turned for modern communications.” With the Emarsys marketing platform, City Beach was able to get their existing data into shape, automate the personal connection and create better CX with integrated musthaves. As a result, City Beach saw +105% YoY email revenue, an increase of +38% active customers a 14 times Facebook return of advertising spend with CRM ads.

media news RIP CURL’S NEIL RIDGWAY CRACKS CMO MAGAZINES TOP 50 Rip Curl’s Neil Ridgway has made the Australian CMO TOP 50 – joining a list of the top 50 marketers in the country as compiled by CMO. CMO Magazine is the newest media title from IDG Communications, the world’s leading technology media, events and research company. CMO Magazine is now in its fourth year and Neil Ridgway is in good company on CMO’s LIST with the top award going to Tourism Australia’s, Lisa Ronson. Ridgway came in the back 26 to 50 which are not ranked and appear in alphabetical order. In typical Ridgway style he joked that there are “Only 50 CMOs in Australia, so it can’t be that hard to be in it!” Ridgway went on to reveal some interesting business insights about Rip Curl in his CMO submission which you can read below. What’s particularly interesting about the rise of the CMO is the function they play in an organisations hierarchy and ultimately their function as ‘custodians’ of their brand. The TOP50 is essentially a list of the best ‘brand managers’ in the country, as compiled by CMO magazine. This year’s listees boast responsibility for everything from ecommerce and digital capability to customer experience functions, service, innovation, technology, diversity and inclusion, international business planning, and cross-functional ways of working. “CMOs are orchestrating major changes in their businesses. I can’t think of another time that’s happened in the last five or 10 years,”said CMO magazine’s Editor Nadia Cameron.

WSL PARTNER WITH SOCIAL MEDIA PLATFORM VERO The World Surf League (WSL) entered a partnership with social media platform Vero. Vero, which is an ad-free photo-sharing app with an emphasis on interaction, has enjoyed a surge in popularity this year, reaching number one in the UK’s Apple store in February. Touted as a rival to Instagram, Vero was featured at the Quiksilver and Roxy Pro event in France.

Vero’s Social Lounge will be created at the event’s Fanzone for spectators to meet other fans, including a dedicated beachside area for fans to relax at during the competition. The next-gen social platform will also offer VIP ticket experiences as part of the agreement. Vero aims to radically change the way consumers think and interact on social media by mirroring real-world relationships in an online setting. “In a world where you are what you post, Vero serves the needs and desires of people who want a safe, genuine reflection of their real-life relationships in an online setting,” said Ayman Hariri, CEO and Co-Founder of Vero. “We have created a platform where users can express themselves in the most natural way possible,” Latin for true, Vero seeks to inspire communication. Vero humanises online relationships through the lens of relationship comfort, regardless of a singular interaction experience. “Social networks tend to treat online relationships as a one-size-fits-all model, and that simply isn’t the way people interact in real life,” said Hariri. “There’s a special tone you use to talk with your coworkers, just as there is an ease in your voice when you chat with your closest friends. At Vero, we’ve figured out a way to humanize online relationships and replicate these one-to-one communication nuances.” Due to extraordinary demand, Vero has extended its “Free for Life” offer. The first million users have access to Vero free for life. The start date and pricing of Vero subscriptions will be announced soon. More info at www.vero.co

TRUE SURF - THE OFFICIAL MOBILE GAME OF WSL The World Surf League announced the launch of True Surf in partnership with makers of True Skate. As the official mobile game of the World Surf League and Surfline, it features the world's best breaks, real-world conditions forecasted by Surfline, and World Surf League Competitions. Thanks to Surfline, the waves in the game reflect real-life conditions. There are 21 locations to choose from including Pipe, Teahupo'o or J-Bay among others. You can compete on the World Tour. When the world's best surfers hit the lineup in France, you can too via the app. You can compete against the entire surfing world, but only while the WSL competition window is open. True Surf is powered by real-time surf forecasting data from Surfline. Data is updated throughout the day and includes Swell Height, Swell Direction, Wind, Tide and Water Temperature. Power up by initiating 'Perfect Storms' at your favorite surf breaks. To compete in the World Surf League, with the app you can test your skills via LIVE WSL competitions and surf against other players from around the world to see if you have what it takes to become a world champ. Available on iTunes.


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on the move

the entire SurfAid team, having seen the passion the Sydney staff bring to their work. I’m excited to take their skill and enthusiasm to the next level, making an even greater humanitarian impact.”

SCOTT HARGREAVES JOINS (WSL) AS COMMERCIAL DIRECTOR

“Over the past few months, I’ve had the great pleasure of meeting SurfAid Directors from NZ, USA and Australia. One of the most exciting prospects of my new role is the opportunity to work with such an amazing bunch of people who have all impressed me with their enthusiasm and passion for SurfAid and the projects they undertake,” added Lees.

The World Surf League (WSL) announced the appointment of Scott Hargreaves as WSL Commercial Director. Hargreaves has a long and established career in the surf industry, bringing a wealth of strategic insight, global expertise and credibility. He is a passionate daily surfer and a massive professional surfing fan. Scott was recently Global Vice President of Marketing for Billabong and previously worked at Rip Curl in numerous leadership capacities. Throughout his career he has managed many World Tour events, global partnerships with international brands, developed industry-leading brand campaigns and has strong relationships with many of the WSL’s marquee athletes. Key areas of focus for Hargreaves will be driving growth via partnerships and other business opportunities in Australia, Asia and Oceania. He will also be responsible for Global Endemic Surf Partnerships. “Scott is a well-respected professional in the surf industry with a clear track record of success both in Australia and globally,” said Sophie Goldschmidt, WSL CEO. “We are delighted to have him as part of the team. Having gained experience from managing and driving revenue for marquee surf brands and event programs, managing athlete rosters and large scale digital and retail marketing campaigns, Scott has the perfect skillset to make the most of the undoubted opportunities that exist in the coming years for WSL and surfing.” Hargreaves will work alongside Andrew Stark GM WSL and Kelly Slater Wave Co Australia and Oceania out of the WSL Australian office, and also closely with the WSL’s new Head of Strategic Partnerships, who will be based in Santa Monica. Scott will start in January 2019. I’m incredibly excited to be joining WSL, at a time of real opportunity for the company,” said Hargreaves. “Back in 1999 I sat on the beach in Hawaii and watched the entire Pipe Masters unfold. It was such a pivotal moment in my life and one that shaped my career in the surf industry. It was then when I realized I needed to be part of pro surfing. Today, I’m confident my understanding and respect for professional surfing and the industry will provide value on many levels for the WSL and the organization’s key partners. I'm thrilled knowing my next career chapter with the WSL will help shape the future of professional surfing”.

DOUG LESSX APPOINTED SURF AID CEO SurfAid announced that industry stalwart, Doug Lees will replace Andrew Judge as CEO. Lees brings extensive connections to surfing communities and SurfAid. “I am delighted to welcome Doug Lees as the new CEO of SurfAid International,” said Charlie Lancaster, SurfAid Australia's Board Director. “Doug comes to us having led the team at Coastalwatch and Surfing World for over a decade.” SurfAid has shared the same office in Avalon Beach with 3CMG for almost 10 years. Doug Lees adds, “I’ve been fortunate to work on many projects alongside the SurfAid team, including many SurfAid Cups and Surfing Chefs events. I have a lot of admiration for

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“When I look back over my career in the surf industry, I feel as though it’s prepared me for this position with SurfAid, and with the team in place, I’m very optimistic about the year ahead. The opportunity to give back in a meaningful way to people who live in regions of the world that have given so much to surfers and surfing is something I am truly honored to be part of.” Judge will step down on January 1, 2019, and join its Board of Directors. Lees paid tribute to outgoing CEO Andrew Judge, “Andrew leaves SurfAid well positioned for the future and he’s a man passionate about his role in improving the lives of others.” “SurfAid’s mission statement is a compelling one that I love: a non-profit humanitarian organisation seeking to improve the health, wellbeing and self-reliance of people living in isolated regions connected to us through surfing. I see no reason why every surfer on the planet part of the solution should not be and embrace SurfAid as the surfing community’s way of greatly improving the lives of people who live near some of the great waves of the world.”

environment news RIP CURL DIG DEEP ON PLANET DAY Rip Curl recently celebrated another successful Planet Day on Victoria’s Surf Coast. Planet Day is an annual event in which every crew member from Rip Curl Torquay is asked to leave his or her desk for the day, put down the phone and pick up the tools – all in an effort to help keep the local environment healthy and rejuvenated. Each year the company’s large crew is split into groups and sent to different areas of Victoria’s Surf Coast, where they work with local councils and environmental action groups to help rejuvenate areas of the coast. "Here at Rip Curl we really place an emphasis on the importance of Planet Day,” says Nichol Wylie, the General Manager of Australia and New Zealand. “Getting crew out into nature and working with the community and environment is invaluable. It's epic to see the positive impact that people can make when they get out and work together for a common goal, and to then see that hard work flourish over the years." "Everyone who works at Rip Curl here in Torquay gets the huge benefit of enjoying what the Surf Coast has to offer, and we want to do everything we can to keep the community, and the coast, in good condition." This Planet Day the Rip Curl crew worked around the coast, getting their hands dirty mulching and weeding at Southside, Jan Juc and Point Impossible, cleaning up Taylor Park and the Greenfields Reserve, planting indigenous shrubbery on the Torquay Esplanade, and more.

QUIKSILVER VOLUNTEERS GET HANDS DIRTY ON REVEGETATION DAY Quiksilver’s Boardriders Foundation in partnership with Torquay Landcare held their 11th annual “Revegetation Day” a few weeks ago, focussing on Bowman’s Track (Spring Creek region) for the sixth year running. The Boardriders Foundation – which is a not-for-profit organisation – is committed to supporting chosen environmental, educational, health and youth-related projects to improve quality of life for communities across Australia. The decision to work on Bowman’s track has been inspired by the rapid growth of urban development in the area and the recreational activities it has invited as a result. Speaking with local media, Torquay Landcare Group president Margot Galletly said Boardriders had a vested interest in protecting the environment and its natural inhabitants. “Boardriders (Quiksilver) is a local corporation that has a strong interest in conserving the environment, and this will be the 11th year that the Boardriders Foundation has sponsored Torquay Landcare Group’s (TLG) regeneration work,” she said. “The people from Boardriders have been wonderful, bringing all their energy and good cheer to the job.” Quiksilver’s Eve Hollenkamp said the organisation has been involved with the local community for years on various projects. “Our staff love being involved in the annual revegetation day as it’s a great opportunity to environmentally improve the area so it is preserved and enjoyed by all for many years to come,” she said. “This year staff brought along their children, which was fabulous, to share this opportunity with our future coastal guardians.”

PATAGONIA’S NEVERTOWN WINS MOVIE OF THE YEAR The 2018 Surfer Awards presented by Pau Maui Vodka are won and done. This year’s winners are crowned from a star-studded list of surfers and films who stood above the rest in 2018 and earned the coveted Surfer Poll bronze trophies for their efforts. The Surfer Awards celebrate everything awesome and inspiring from the year in surfing from abyssal barrels, staggering airs, deft storytelling and bold personalities who abound the list of nominees. However, it was a humble, grassroots surf activism film, based largely in Australia that took top honors. Patagonia’s short film ‘Nevertown’ starring Wayne Lynch and Dave Rastovich was crowned Movie Of The Year. “When we set out making this film, we weren’t quite sure what we were doing,” the film’s Director Sean Doherty said via social media. “But we did know why. Our humble surf activism film won Movie of the Year at the Surfer Poll last night which was great, but far happier the idea that the film presents was recognized…that surfers need to lead in the protection of the coast and the waves.” Doherty continued, “Thanks to Short Films for making it sing, to Patagonia for making it happen to Dave (Rastovich) and Wayne (Lynch) for spiritual guidance, to Surfer Magazine for the support and to all the surfing activists who gave their time for it.” You can catch Nevertown here: www.patagonia.com.au/pages/never-town

finance news EXCEPTIONALLY WARM OCTOBER LEADS SLIGHT MARGIN AND CATEGORY IMPROVEMENT Our ActionWatch Oz panel experienced a slight improvement for October showing a (-14.2%) decline YOY compared to Septembers (-18.9%) decline across all categories. October’s double-digit decline does bring us closer to Q3’s (July-AugustSeptember) decline of (-17.8%). According to the Bureau of Meteorology, October was an exceptionally warm month for Australia. The national monthly mean temperature was the fourth-highest on record. October’s highest average maximum temperature was the 9th hottest on record and a timely reminder that summers just around the corner, and we’d better make sure we’ve got our stock and inventory right in the ‘hottest’ categories. Looking for bright spots amongst the October results, our panel showed improved Avg Margin YOY increase of (+2.2%) and PPS Average $ Sales increased from $69,251 in September to $72,035 in October. The PSS-Avg Unit Sales (all categories) increased from 1,340 units to 1426 units. Unit Sales/ Inventory is a measure we really haven’t touched on in this report before. This measure is a ratio of monthly unit sales to month-end inventory. It is using the "sell-through" concept but is slightly different than the traditional weekly sell-through metric retailers commonly use. It is simply taking our Avg Inventory measure and dividing it by our Avg Unit Sales measure. In October the Unit Sales / Inventory was 16%. Improvements in these overall category metrics help tip the needle towards a positive end to 2018, but let’s not sugar coat this report, we’ve experienced double-digit decline every month for the YTD. October results were led by a double-digit decline in the Male market down (-14.4%) yet showed slight improvement over Septembers (-20.8%) The women’s market also recorded double-digit decline of (-13.2%) compared to Septembers (-20.3%). As we noted earlier, men’s and women combined category’s recorded double-digit decline of (-14.2%) across all categories. It was pleasing to see Avg $ Sales YOY% Change in our Same Store Gender report out of redline territory for a change. Looking deeper at the category analysis, Footwear fared the best down single digit (-9.6%) followed followed by Apparel (13.9%), Accessories (-15.9%), Wetsuits (-17.0%) whilst Hardgoods (-19.1%), were down (-34.2%) for the same period last year. It was pleasing to see another report showing improved Average Margin YOY Change of (+2.2%) led by Wetsuits at (+8.1%) A big mover in the full wetsuit (Steamer) category was Quiksilver, leading with a 4.2% Brand $ Share YOY Change in this category. by Apparel (13.9%), Accessories (-15.9%), Wetsuits (-17.0%) whilst Hardgoods (-19.1%), were down (-34.2%) for the same period last year. It was pleasing to see another report showing improved Average Margin YOY Change of (+2.2%) led by Wetsuits at (+8.1%) A big mover in the full wetsuit (Steamer) category was Quiksilver, leading with a 4.2% Brand $ Share YOY Change in this category. Number One brand Rip Curl took a slight hit down (-2.1%) and an even bigger hit down (-34.9%) Avg $ Sales YOY Change.


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INDUSTRY NEWS

It’s a different story over on the Top Styles report for Rip Curl, but you’ll need to subscribe to Action Watch Oz wetsuit category report to dig deeper and find out what brands and styles are outperforming the market. The women’s segment experienced very few bright spots in terms of specific individual categories but was highlighted by Shoes up (+34.1%) while Footwear showed single-digit decline (-8.0%). Looking to specific Women’s category performances, Unknown Apparel was up (+645%). Women’s Accessories was down (-16.9%) and experienced growth in Purses up (+2.5%) while Duffel Bags eased (+4.7%). Sunglasses were down (-17.9%) led by Plastic Frames (+31.5%). But Wetsuits were down (-35.1%) led by Wetsuit Accessories up (+46.5%) Women’s Wetsuits were down (-28.2%). The Women’s category also showed a (+1.1%) Average YOY Margin Change increase. For the second month in a row, finding highlights in the Men’s categories were few and far between. Apparel was down (-15.6%). For Tops we can again point to Other T-Shirts up (+16.7%) Bottoms/ Completes were down (-10.7%) with Boardshorts down (-10.4%) a slight improvement on last month’s performance down (-35.0%). Maybe October’s higher temperatures fuelled growth in this important category and it’s a positive sign as we move into summer. While Accessories remained down (-16.7%) Sunglasses are down single digit (-7.4%) while Metal Frames were up (+53.9%). The Men’s Wetsuit category was down (-9.1%) led by Wetsuit Jackets up (+150.2%) and Spring Suits up (+50.9%), Short Johns (+92.6%) and Footwear down (-11.1%). YoY sales growth in Surf Hardgoods slipped from last month’s single-digit increase of (+3.0%) to close (-19.4%) in October. This category was led Surfboard Fins up (+3.6%), Bodyboard Hardgoods improved (+8.3%) with Fins up (+20.1%). While a (-14.2%) double-digit decline is nothing to get excited about, October showed a softening on September decline across all category’s and single digit (+2.2%) margin improvement. It’ll be interesting to see if this continues next month’s report and whether December’s weather, helps tip the needle towards a bumper summer. How did these results compare to your store? We’d be stoked to hear from you.

RIP CURL POSTS +$9M NET PROFIT FOR FY18 Privately held Rip Curl Group has posted a net profit after income tax of $9,857,000 for the financial year ended June 30, 2018 returning strong dividends to its shareholders during the financial year. Despite difficult trading conditions in many markets, which attributed to a 2.4% decline in sales, we remained true to our brand focusing on full price sales and strong margin over volume. Dedication to our strict distribution and pricing policies gave rise to short-term sales and margin reduction, but ensures long-term protection of the brand, its products and its people. “Quality sales and disciplined working capital management have allowed us to continue to effectively manage the brand and stay true to our surfing roots as we approach our 50th year in the surf industry,” said Michael Daly, Group CEO.

16/ Australian Surf Business Magazine  issue #85

“We continue to invest in R&D of core products, run world class surfing events in both hemispheres, sponsor world champion surfers including Mick Fanning, Tyler Wright and Gabriel Medina and provide a career surfing pathway for thousands of juniors world wide,” he added. The main dilution to earnings was the write down of investment in its multi brand operations in Australia and further investment in South Africa. As such Rip Curl recognized a once off impairment charge of $7.9m, which accounts for much of the earnings reduction. “Adjusted for the impact of one off items, our underlying profit result for 2018 was in line with that of 2017. A tightening of consumer spending in some markets has hurt revenues slightly, but we remain in a good position to search for growth in new markets, direct to consumer channels and to continue making fewer, better products for our customers on the beaches and mountains of the world,” said Daly. The Group was also successful in its refinancing strategy during the year, which has seen it obtain certainty over its financing facilities for a further three-year term. For a full breakdown of the results and interview with CEO Michael Daly please subscribe to our Professional Edition

ACCENT GROUP WINS BIG ON ANTI-DISCOUNTING Accent Group expects earnings for the first half of fiscal 2019 to be 15-20% higher than last year. The company more than doubled its forecast after seeing better than expected results in the first 20 weeks. Accent Group recorded a full year profit for the 52 weeks ended 1 July 2018, with underlying Net Profit After Tax rising 17.9% to $47.1 million. The full year FY18 results announcement outlined that it was targeting mid-singledigit EBITDA growth in FY19 through: Low single digit LFL store growth, continued strong growth in digital and growth from new stores. Continued margin improvement through increasing vertical brands penetration, new emerging brands and reduced discounts. Overall, results for the first 20 weeks of FY19 have been stronger than expected. LFL sales after the first 20 weeks were up 2.5% on last year and on track with expectations. The group has removed discount-driven core promotional activity. Digital growth has been stronger than expected, up 88% on the prior year. There has also been an increase in new store openings with more than 40 stores now targeted to open in FY19 against 30 stores originally planned. Accent Group CEO Daniel Agostinelli said the group is delighted with its current results for the first 20 weeks of FY19. “Whilst we still have a significant proportion of the H1 and annual EBITDA to achieve in the key Christmas and back to school periods through December and January, our operational plans are well set for this trading period.” “Based on the strong results achieved to date in H1, and if LFL sales continue to track at low single-digit growth, EBITDA for H1 is now expected to be between 15%-20%

higher than the prior year. The outlook for H2 FY19 has not changed and the group is still targeting mid-single-digit EBITDA growth for the second half.” “In H1, margin improvement has been a key driver of the increased profit guidance. In H2, we do not expect the same margin impact as we will be cycling through an already improved margin from the second half of the prior year.” Company-owned retail sales grew strongly to $566.9 million, which was 12.2% up on the prior year. This was driven by strong growth in digital sales of 131% and new store rollouts. Like-for-like (LFL) retail sales for the second half of FY18 grew by 3%3 and were up 2%3 for the full year. The business continued the strategy of reduced discounting, which in June negatively impacted LFL sales, but resulted in a significant margin improvement. Accent Group Gross Profit Margin % for H2 FY18 was up 350bp on H2 FY17. Accent Group opened 31 new stores and closed 15 stores during the year, with some standout performances from new store formats. The targeted investment in store concept updates continues with new “next level” concepts launched for Hype (QVB Sydney, Queen St Mall Auckland) and Platypus (Bondi Junction), all performing ahead of expectations. During the financial year, 29 stores were refurbished. Mr. Agostinelli said, “The new concept stores for Hype and Platypus continue to evolve our in-store design, bringing the key elements of a world-class integrated (stores and digital) retail experience to our customers. The results achieved from our new store openings continue to be ahead of business case expectations in both EBITDA performance and return on capital. As flagged at the halfyear, we closed a number of stores where agreement with landlords on sustainable renewal terms could not be achieved. We expect this to continue in FY19.” Total digital sales, including click-andcollect and click-and-dispatch, grew 131% during FY18. During the year a range of new initiatives were implemented, including 4 new ecommerce sites for Timberland, Dr. Martens, Platypus New Zealand and Skechers New Zealand, the launch and rollout of click-and-collect and click-anddispatch in Platypus and Hype and the rollout of Afterpay in-store for all retail banners. During FY19, Accent Group will implement and roll out further new initiatives including endless aisle in-store, Vans New Zealand, The Trybe, a new website focused on kids shoes and same day delivery which was launched July. “Digital sales continued to grow strongly and beyond expectations. With a nationwide network of 446 stores and digital sites, we are uniquely positioned in our sector to deliver an integrated, seamless customer experience through click-and-collect, clickand- dispatch, endless aisle and same-day delivery,” said Daniel Agostinelli. “We have been planning and investing in our digital strategy for several years and believe we have the platforms to take our businesses to the next level of growth and continue to outperform others in our sector in both Australia and New Zealand”, concluded Daniel Agostinelli.

SURF LAKES LEADING PROJECTS IN THE PIPELINE Following first waves and global publicity in early November, interest has risen dramatically and Surf Lakes are receiving steady enquiries from new potential licensees. In total over 250 inquiries from over 25 countries. Through a process of due diligence the company has determined that around 10 solid projects in locations including, Arizona, California, Brazil, Spain, UK, Middle East and two in Australia reveal the most potential. To date Surf Lakes have signed 3 HOAs and have two are expected to sign on in the following months. Of the leading groups, they are very serious about bringing surfing to their area. Some have been working on their plans for many years and already have suitable site/s that they either own or control. Five of these groups have indicated to us that they intend to begin construction on their facility in 2019, however the reality is that many will take longer to get the necessary approvals in place. Based on all of this, Surf Lakes are confident of starting construction of at least 2 commercial builds in 2019 with each commercial build having a project value of $20m+. Surf Lakes earns revenue from the design, construct and build of each facility, as well as an ongoing royalty stream Their full scale Prototype, located near Yeppoon in QLD, is a private test facility and was built to refine the concept, and demonstrate to licensees. It is the largest wavepool/surfing lagoon ever built (by water volume) and contains 10 separate breaks (5 lefts and 5 rights). Our nearest competitor has only 2 breaks. Size and productivity is extremely important to operators, because the more waves per hour, the higher the capacity and therefore more revenue from surf sessions as well as food, drinks, product sales, etc.

VFC COMPLETES THE SALE OF REEF TO THE ROCKPORT GROUP FOR $139.4M VF Corporation (VFC), announced that it has completed the sale of the Reef® brand to The Rockport Group (Rockport). A leading maker of casual and dress shoes, Rockport is a portfolio company of certain affiliates of Charlesbank Capital Partners, LLC (Charlesbank), a middle-market private equity firm. The announcement follows our October 4, 2018, release in which VF announced that it had entered into a definitive agreement regarding the sale of this business. Terms of the agreement were not disclosed although it was reported that Reef ’s annual sales were roughly US$150M. VF acquired Reef in 2004 with reported sales at the time of US$75M annually. In its US Securities Exchange Form 10 Q VF said it had recorded an estimated US$9.9 million loss based on the anticipated terms of the sale. The loss is included in the other income (expense), net line item in the Consolidated Statement of Income for the three months ended September 2018. VF received cash proceeds of $139.4 million, which are subject to working capital and other adjustments.



OVERSEAS NEWS

u.s news BILLABONG TEAM OPEN LARGEST FLAGSHIP STORE The Billabong team celebrated the grand reopening of its flagship store at the Hyatt Regency Waikiki Beach. The newly renovated store brings together an innovative approach to customer experience with surf lessons and rentals in Waikiki. According to Billabong the goal for its flagship store is to create an experience that is authentic, reflects Hawaiʻi and highlights the significance of Waikiki to the global surf culture. Located directly across the street from Waikiki Beach and the famous Duke Kahanamoku statue, the new store has been expanded and extensively renovated to offer customers a curated experience of fashion, art, home goods, music and ocean activities. Billabong's Waikiki location will also be its largest in the world featuring an expanded retail space. The flagship store will also include a new Home Decor section that offers a curated assortment of home goods and gifts that embody the island lifestyle. While shopping, customers can view Billabong's exclusive artist collaboration collections, vintage Gerry Lopez Lightning Bolt surfboards, and see local surfers' boards and stories highlighted on a display wall. Billabong is also focused on helping the local community – and specifically the high traffic tourist area of Waikiki – reduce single-use plastic bottle usage. The store will offer a selection of branded water bottles and an in-store FlowWater refill station. As part of the move to create a memorable in-store shopping experience, the recently renovated location is introducing a new concept, the Bikini Bar. The female consumer is fuelling the growth of both the surfwear market as well as the sport. To enhance the retail experience of this growing customer base the Bikini Bar has been designed to personalize the swimsuit shopping experience while providing an expanded private area to try on Billabong swimwear. The Bikini Bar showcases fashionable styles and the new layout offers customers a comfortable and memorable experience when purchasing swimwear. In addition, Billabong is partnering with the Moniz Family Surf School, which will operate out of the new location. This new business endeavor demonstrates how global brands can work together with local businesses to provide authentic experiential retail experiences for customers while also benefitting the communities they operate in. Commenting on the partnership, Tammy Moniz said, "We are so excited to deepen our longstanding relationship with Billabong especially here in Waikiki, our home and the historic beach where Hawaiian kings and queens practiced the art of surfing. The store's location gives us the opportunity to share our Hawaiian culture and surfing traditions with families from all over the world and we are so thankful to be a part of this collaboration."

18/ Australian Surf Business Magazine  issue #85

RESULTS PIPER JAFFRAY TAKING STOCK WITH TEENS REPORT

SIMA AWARD NOMINEES ANNOUNCED

Piper Jaffray Companies is a leading investment bank and asset management firm, and it’s annual Taking Stock With Teens® survey highlights discretionary spending trends and brand preferences amongst 8,600 teens across 48 U.S. states with an average age of 16. Generation Z, which contributes approximately $830 billion to U.S. retail sales annually, represents an influential consumer group where wallet size and allocation provide a proxy for category interest.

The Surf Industry Manufacturers Association (SIMA) announced the nominees for the 2018 SIMA Awards, a program that strives to identify the surf industry’s most influential and innovative companies and recognize them for their efforts to advance and grow the industry in 2018. Now in its fifteenth year, the SIMA Awards is the only awards program that gives the surf industry the opportunity to recognize their peers for their outstanding contributions to the industry. Regular, Board Builder, and applicable Associate SIMA members were given the opportunity to enter their own brands and products for consideration in qualifying categories.

Overall Spending Behavior • Overall teen spending up 6% from fall and up 2% from a year ago. • Food, beauty and video games continue to dominate teen wallets. • Athletic cycle above historic average but streetwear cycle accelerates. • Teens opt for Snapchat and Instagram as Facebook stabilizes. Spending & Shopping Behavior • Food reaccelerates as teens’ No. 1 spending category, returning to its 24% peak. • Male spending on video games reaches a new peak at 13%, closing in on fashion. • Beauty spending hit a new high for females at $368 per year led by skincare, up 18% year-over-year. • Department stores and legacy channels continue to shed shares as online hits new highs. Brand Preferences • Streetwear has seen the largest incremental gains led by Vans (No. 1 footwear brand) and Supreme (No. 7 apparel brand); 1990s revival underway with Champion and Tommy Hilfiger. • Nike mindshare declines; adidas is firmly No. 3 brand (14% share footwear, 6% apparel). • Ralph Lauren moves out of top-10 brand list for males, formerly a top-10 brand since 2002. • Intent to buy iPhone reaches a new high – 84% of Gen-Z will choose the iPhone next (compared to 82% last fall). • eBay mindshare declined to its lowest level recorded at 1.8%, compared to 3% in fall 2017. “Our fall survey showed overall teen spending as flat with the prior year,” said Erinn Murphy, Piper Jaffray senior research analyst. “That said, teen spending continues to expand in categories like video games & food. Females now indicate they spend 3x more on beauty than accessories. Within fashion, we see a strong brand cycle emerging led by athletic, streetwear & 1990s brands ranging from Vans, Supreme, Tommy Hilfiger & adidas.”

ABOUT THE SURVEY The Piper Jaffray Taking Stock With Teens® survey is a semi-annual research project that gathers input from approximately 6,000 teens with an average age of 16.4 years. Discretionary spending patterns, fashion trends, technology, and brand and media preferences are assessed through surveying a geographically diverse subset of high schools across the U.S. Since the project began in 2001, Piper Jaffray has surveyed more than 161,000 teens and collected over 42 million data points on teen spending.

Additionally, specialty retailers that carry surf products with 15 doors or less are able to enter one of their storefronts for consideration in the four Retailer of the Year categories. Entries are then reviewed and voted upon by a nominating panel of experts from both surf industry manufacturers and retailers. The outcome of the nominating panel votes determines the final nominees in each category. Winners of these categories will be determined by a final vote open to all SIMA member companies, as well as specialty retailers. For the full list of outstanding products, brands, media and specialty retailers will be recognized as the nominees in the 19 SIMA Award categories see www.sima.com

WAVEPOOL MAGAZINE LAUNCHES In the next decade the surf industry will see a dramatic increase in unsalted surfers, with an estimated 20+ surfspecific wave pools scheduled to open in the next two years. To address this trend WavePoolMag officially launched this week at WavePoolMag.com and across all major social media platforms. WavePoolMag (WPM) sources content for this new surfconsumer segment. WPM is the only major source of wave pool-focused information, features, news, in-depth and investigative articles, reviews, guides, and visual media. The site also hosts the interactive WPMSurf Planner, the world’s most comprehensive guide to the planet’s open and anticipated wave pools. WPM features advice from contributing writers like Scott Bass, Matt Warshaw and Matt Biolos, as well as tips from wave pool resident pros like Surf Snowdonia’s Jo Dennison. “At WavePoolMag we strive to deliver all available information related to wave pool surfing, as well as the products, benefits and lifestyle news associated with the growing wave pool culture,” says publisher Bryan Dickerson. “I’ll be working within the surf industry alongside global brand representatives to bring product information and wave pool news front and center to this growing demographic.” Also featured are special projects including product reviews, tests, and showcases. WavePoolMag can be found on the web, on Twitter and Facebook at @WavePoolMag and on Instagram at @WavePoolMagazine.

european news EUROSIMA WATERMAN’S BALL NAMES WINNERS, HONORS PIERRE AGNES EuroSIMA celebrated the European surfing industry at the Hossegor Casino for the 19th edition of the annual Waterman’s Ball. Nearly 200 guests, including CEOs, public representatives, pro surfers, journalists and celebrities, attended the festive event. EuroSIMA President Wilco Prins kicked off the traditional European Surf Industry Awards ceremony, which featured Tom Carroll as the honored guest, and awarded performers of the year, industry movers and up-and-comers. Tom Carroll launched his exposition “1980-1985”, a tribute to the ‘80s through twenty or so photos from the Australian World Champion’s private collection. The awards ceremony began with a heartfelt tribute from the surfing world to former pro surfer and Quiksilver CEO, Pierre Agnès, who disappeared while fishing near Capbreton last January. Close friends from within the industry, including athletes Robbie Naish and Jérémy Flores as well as founders of other legendary brands like François Payot, Frédéric Basse and Stephen Bell shared their own personal recorded tributes on a giant screen for the audience to see as an opening to the ceremony. Pierre Agnès was awarded the Lifetime Achievement Award in recognition of the exceptional accomplishments in his career as well as for his unconditional dedication to surfing as a culture, a sport and an industry throughout the world. “Pierre always wanted to encourage the newest generation and this year, with EuroSIMA, we decided for the first time to hand out a “Rookie of the year” award,” said Mikey Picon. The award was given to young French surfer Justin Bécret for his results on the international junior pro tour as well as for his commitment in free surfing and big-wave riding. French surfer Johanne Defay was awarded the prize of European Female Surfer of the Year for the 4th year in a row for her performance on the World Surf League Championship Tour. Defay added to her already incredible track record in elite world surfing by winning the Uluwatu CT in Bali last June, allowing her to reach 6th place in the world rankings. “It’s a unique time for women’s surfing at the moment,” said Defay. “Lots of things are happening and I am really proud to be able to be a part of that.” Quiksilver received the Product of the Year Award for their inflatable Highline Airlift vest. Pull tabs at the front of the big wave vest allow the surfer in distress to inflate the vest and immediately reach the water surface. The evening then continued with a solo concert by musician and surfer Lee-Ann Curren. Her music, which includes a mix of 80’s indie rock and electric folk, draws inspiration from her bi-cultural upbringing between France and the US and her frequent trips around the world.


Wavepool Magazine launches

FINISTERRE LAUNCHES WETSUIT LINE European eco brand Finisterre has added women’s wetsuits to their line of sustainable products. Recently the UK-based brand launched their Nieuwland 4 Hooded Wetsuit, the first in a series. In an exhaustive process, the brand enlisted input from surfers to shape new suit. 100 women, including Irish surf celebrity Easkey Britton, camped out on a windy field overlooking the Cornish Sea to get feedback and observations on the new suits. “Over the 13th-15th April, we invited our Women of the Sea to join us for an industry first, Women’s Wetsuit Tester Camp,” said Oli Culcheth of Finisterre. “The weekend gave testers the opportunity to share waves and connect whilst also discussing the wetsuit and the programme as a whole.” The testers then descended upon the Finisterre workshop for two days of discussion and notes. The feedback led to some unique design features like an added 5mm lumbar patch as well as pull-straps on the ankles of the suit to make it easier to get out of. Not groundbreaking designwise, but still key to high-performance suits, a special flexible neoprene was used throughout the shoulders and upper body. Wetsuit designer Mat D’ascoli admitted that he approached making the suit from a “builder” mentality, but that changed after receiving feedback. “My experience and expertise only offered into the construction of the suit, not the design,” said D’ascoli. “The suit was changed, single-handedly, by the April camp." The social and environmentally certified company divulged that, yes, it took them quite a while to build a special women’s wetsuit and bring it to market but added that “for a small company these types of things can’t be rushed.”

UKPSA PRO SURF TOUR LAUNCHES EQUAL PAY, GROWS AUDIENCE 15-FOLD The United Kingdom’s domestic pro tour, the UKPSA is on a roll, advancing equal pay and exploring new digital platforms to further their audience. Following the example of the World Surf League, the Newquay-based organisation announced that starting with the 2019 season, they will be offering equal prize money for the Men’s and Women’s Open categories. In addition, at the onset of the 2018 season, the UKPSA made a shift to a new digitally focused marketing strategy that increased their audience from 30,000 to 500,000 per event. In just one year.

Billabong open largest Waikiki Store

The organisation implemented live video broadcasts and distribution through Push Live, a service that distributes live content across all the major digital channels. Using Push allowed UKPSA to have their content hosted and shared socially instead of viewers having only one platform on which to view events. The quality of the broadcasts also increased significantly. The UKPSA broadcasts are done on a minimal budget, with a skeleton crew to produce each event and send it out through a combination of 4G tech and fibre broadband. “We rely heavily on software developments and Push. Live is just one of those platforms we have embraced to help build our audience,” said Operations Director Biff Lancaster. “Their groundbreaking video production and distribution platform enables us to increase our reach and fully exploit social channels with the help of media partners.” Lancaster said they were still crunching the viewership numbers for the season but that so far the Surf Snowdonia event has had the biggest reach. “I think this is due to the fact that wave pools are still viewed as new and intriguing events and so naturally engagement levels are higher. Having said that, because the event was held in a controlled environment, we were able to involve the audience who were there on the ground and work with them to push it out to their social networks. I think audiences love experiences like that where they feel a part of what is going on.” Working with sponsors outside of surfing has also helped the organisation boost numbers this year. “We value having non-endemic brands such as Nerf and Korev on board, they push us to expand our reach outside of surfing,” Lancaster concluded. “We have adjusted our approach to be more inclusive of non-surfers. The surfing market is actually quite small, but the market for sports entertainment is huge.”

n.z news NEW ZEALAND SURF JOURNAL LAUNCHES A new surf media brand has launched into the New Zealand market with the goal to “raise the tide for all boats” in the New Zealand surf industry. “New Zealand Surf Journal has lofty goals for surfing in New Zealand,” explains founder Derek Morrison. “We exist to shine a light on all the good things happening in the New Zealand surfing industry, sport and recreation.

We have some of the country's best surf writers, experts, photographers and videographers on the schedule to deliver the best stories from throughout the country.” The publishing model is based off paid subscriptions – a growing trend in Australia, the UK and USA – serving an audience that values quality niche content. Subscriptions start from $4/month for full access or $5/month on a month-by-month basis and New Zealand Surf Journal also offers a gift subscription feature. "We've kept the price low so readers can become a part of the growing New Zealand Surf Journal family,” shares Derek. “Our readers are jumping on board to buy a subscription knowing that they’re helping to support our goal to boost the profile of our best minds and people. Each subscription helps us raise the profile of our surf athletes and board shapers and helps our contributors to dive deeper into their stories and the stories our readers love.” New Zealand Surf Journal is feature driven with stories aimed at a readership from 25-65 years of age and delivered completely online through a fully responsive, retina-ready website. A peek inside reveals a set of stories that you might not find in a traditional surf magazine. Delve into the Tao of Johnny Ramone, or learn how to surf better with technique editor Matt Scorringe, of the Art of Surfing, or work on your paddling with surf physiology expert and fitness editor Dr. Oliver Farley, of Farley Performance Training. The website also features an extensive section on environmental issues and reviews of high-end surf hardware. “There is a gap in the market in New Zealand,” offers Derek. “The two current magazines have experienced a very deep low, but both are starting to build again and there is not a single editorial competitor online. We’re coming out of some tough times. Advertising budgets have been slashed and redirected into brand-generated content these past few years, but does that work? The numbers suggest it does not. Does a brand talking about itself have the same value as a credible editorial team talking about the brand? I think the demise of surf media has precipitated the demise of the surf industry. That buzz gets created when an editorial team gets excited and shares its honest insights with its readers and viewers. That relationship between the magazine (or online platform in our case) and its audience is where the magic happens and where it always has. We want to bring that back and we’re aiming to do it with our heart on our sleeves. We want to be measured by the success of those around us. If we can build the visibility of a local shaper or surf business, by telling their story then that’s what we’re here to do. That to me is an exciting journey and New Zealand is fertile ground for these incredible stories.”

In early 2019 New Zealand Surf Journal will introduce a dedicated app – delivering on trend with demand for multi-platform experiences. “That’s the digital media reality right now,” explains Derek. “Mobile has been growing incredibly fast these past few years and accounts for more than 70% of time spent on a device consuming media. But now we are also seeing the emergence of the multi-platform media consumption – whether it be mobile on the way to work, the desktop during the working day and then a tablet or internet capable TV in the evening. We have to be able to reach our audience in all these places and become a part of their daily lives and habits. That’s our intention with New Zealand Surf Journal.” Derek said he loved print media, but with New Zealand Surfing Magazine and Damaged Goods Zine owning that space and doing a great job of it, he wanted to focus online. He doesn’t see either of them as threats, but rather as allies and said that their success would also be his. “I’ve always had a vision to bring all the best surf writers, photographers and filmmakers under one media brand and produce something that really captures the unique surf culture we have here in New Zealand. And more than that – a team that celebrates it and the people within it. I feel very honoured to have had the support of these creatives – each of them is a legend in their field and they are as much a part of the NZ Surf Journal fabric as I am. That has been one of the greatest achievements of this project so far.” You can visit New Zealand Surf Journal at www.nzsurfjournal.com

BACKDOOR EXPANDS FURTHER Just when you thought Geoff Hutchison and the team at Backdoor would be worn out from refits and new store fit-outs throughout 2018, they’ve added another to the empire. Mid-spring an opportunity arose to acquire a footprint in Coastlands Shopping Centre on the Kapiti Coast north of Wellington. “It’s a good piece of coast up there – it certainly has its days,” explains Geoff. “There were no natural competitors there and it was a good site that had plenty of potential with a great population base.” Aside from the intense period of new store fit-outs and refits – including a Chartwell, Hamilton, refit that was “sprung” on them, Geoff said it was business as usual as the busy period cranked up.

19/


FEATURE ARTICLE /

The Top 5 Stories For 2018 2018 WAS A TRANSFORMATIONAL YEAR FOR THE SURF INDUSTRY, HIGHLIGHTED BY BOARDRIDERS’ ACQUISITION OF BILLABONG EARLIER THIS YEAR. WHILE THAT STORY RANKED AS OUR FOURTH MOST POPULAR, IT WAS OUR PROFESSIONAL EDITION INVESTIGATION INTO THE INDUSTRY’S REACTION THAT WAS THE THIRD MOST POPULAR STORY FOR 2018. WAVE POOLS CONTINUE TO DOMINATE THE HEADLINES AND ‘STATE OF THE WAVE POOL BUSINESS’ BY BRYAN DICKERSON, WAS THE FIFTH MOST POPULAR STORY OF THE YEAR. Since relaunching ASBMAG.com just under 12 months ago there’s been over 800 articles published and thanks to the power of analytics we’re able to rank the most viewed stories of the year. In 2018, we launched our Professional Edition that includes exclusive content for our subscribers. Two of the most popular features this year were available exclusively to our growing list of industry professionals.

Despite these seismic shifts in our industry, the most viewed article of the year was the news and instructions to download True Surf, the official game of the WSL. It seems like whether we are at home, or office, we all just like to surf :) The second most popular story of 2018 almost didn’t run when we broke news on a new technology by Firewire. Below we compiled a snapshot of the TOP FIVE stories for 2018. To read these stories and many more head over to asbmag.com

1. TRUE SURF - THE OFFICIAL MOBILE GAME OF WSL This story had the most views for 2018 and was almost double the number of the second most popular story for 2018, which is surprising given the business nature of our platform. True Axis is a multi-awarding winning game development company based in Melbourne, Australia and along with official partners World Surf League (WSL) and Surfline they announced in October the worldwide launch of True Surf. True Surf is an incredibly realistic mobile surfing game. True Surf utilizes True Axis’ real-world physics simulation engine, powered by live Surfline weather forecasts, to enable the virtual replication or ‘mind surfing’ of a surfer’s favourite wave. True Surf includes 21 of the world's best waves from classic reef breaks like Pipeline and Cloudbreak, to rolling ‘power-curve' breaks like Bells. Players can also try to beat the sections at some of the fastest pointbreaks like Jeffreys Bay. If Big waves are your thing, then True Surf lets you take on Nazaré, Portugal and Jaws (Pe-ahi), Hawaii. The app debuted on iTunes during the Quiksilver and Roxy Pro events in France.

20/ Australian Surf Business Magazine  issue #85


2. FIREWIRE’S ‘WOOLIGHT' SURFBOARD Firewire announced in February, it was going to release a new super light and durable surfboard that uses (sheep friendly) wool instead of fiberglass. Firewire’s ‘Woolight' technology was developed in partnership with Kiwi innovator Paul Barron of Barron Surfboards and The New Zealand Merino Company (NZM). Firewire debuted The Rob Machado design Go Fish using the Woolight technology at SurfExpo Orlando Florida in January. We spoke to Firewire's Mark Price at the time, who said the new technology was set to be released to Australian retailers in June. Despite the new tech’s debut in Florida, which Mark Price confirmed on US website Shop-Eat-Surf this story almost didn’t run when we were asked by Firewire to delay the story indefinitely. It was the second most viewed article online for 2018 and also one of the most popular posts on Instagram @asbmag.

3. INDUSTRY LEADERS REACT: TO THE MERGER OF QUIKSILVER AND BILLABONG

4. WOW. BOARDRIDERS INC. ANNOUNCES ACQUISITION OF BILLABONG

Undoubtedly the single biggest transformational event was our Professional Edition announcing that Boardriders Inc had acquired Billabong International. We did a quick whip around the country to find out how industry leaders reacted to the news with the consensus being that both companies will be better off not being listed and that ‘time will tell’. We’ve since covered the acquisition extensively on ASBMAG.com but while many parts of the deal are now done, a lot of business strategy and i ntegration plans still remain largely unknown.

It was a seismic shift for our industry and never in our wildest imagination did we dare to dream that Boardriders Inc under the ownership of Oaktree Capital Management would acquire the Billabong Group to create the world’s leading action sports company. Billabong shareholders voted in favour of the $1 per share offer representing an implied enterprise value for the business of A$380 million. Boardriders is now the world’s leading action sports company with sales to over 7,000 wholesale customers in more than 110 countries, owned e-commerce capabilities in 35 countries, and over 630 retail stores in 28 countries. The combined company includes some of the most coveted brands in the industry like Billabong, RVCA , Element, VonZipper, and Xcel are all part of the Boardriders family of brands.

5. MAKING WAVES - THE STATE OF THE WAVE POOL BUSINESS The sport of surfing is changing dramatically with the coming wave pool boom. Along with old salts scheduling after work tube time, pools will draw land-locked groms away from ball sports and into the tribe. The surf industry will blossom beyond the beach. There are several companies in Australia fuelling this emerging market, each with a very different wavemaking system. Our article was the very first story to discover the different technologies, how much it costs to open a wave pool and whether it’s a good investment. And while it’s been termed a "Space Race," the general consensus is that due to the variety of systems popping up, there is enough room at the table for everyone. This Professional Edition article examines everything you need to know about the burgeoning 'space race' to bring the modern wave pool concept to market.

21/


ASB MULTI MEDIA METER 2018

Print Media SURFERS Rank THE PRINT MEDIA METER SHOULD BE USED AS A GUIDE ONLY TO SURFERS’ AND BRANDS’ IMPRESSIONS IN THE FOLLOWING MAGAZINES OVER THE SAMPLE PERIOD OF JANUARY THROUGH UNTIL DECEMBER (2017) MAGAZINE COVER DATES. Magazines Tracks Magazine Australia’s Surfing Life Magazine Surfing World Magazine Surfers Cumulative advertising and editorial impressions using the point score legend opposite. Brands First past the post. To qualify company logos must be clearly legible to the average person. Corporate advertising bearing more than one company logo earns one impression. Brands accrue one point for every legible impression including all editorial and advertising. Advertising & Editorial Ratios Magazines are ranked in order of highest editorial content percentage. The Pointscore Legend Cover Poster (pull-out) Three-page action gatefold Double page spread Full-page plus column Full-page Half-page Quarter-page Less than Quarter-page

20 20 15 10 7 5 2 1.25 1

Athlete

Total

ANALYSIS OF THE #ONYAPARKO

22/ Australian Surf Business Magazine  issue #85

325.75

1

MICK FANNING

363.75

2

JOHN JOHN FLORENCE

204.75

3

CREED MCTAGGART

139.50

4

MASON HO

97.00

4

ANDY IRONS (RIP)

97.00

97

5

CRAIG ANDERSON

95.00

95

6

TAJ BURROW

86.00

7

JULIAN WILSON

82.00

8

MIKEY WRIGHT

68.00

9

GABRIEL MEDINA

57.25

10

p

RUSSELL BJERKE

55.00

Brand

Total

BRANDS Rank 1

BILLABONG

48.00

2

RIP CURL

47.00

3

HURLEY

42.00

4

ROCKSTAR ENERGY DRINK

38.00

5

QUIKSILVER

37.00

6

DHD SURFBOARDS

33.00

7

RED BULL

32.00

8

REEF

19.00

9

DRAGON

18.00

10

O’NEILL

15.00

10

p

VOLCOM

15.00

Social Media Commentary We used Keyhole app to measure the impact of the hashtag #onyaparko during Parko's last lap on the North Shore.

Advertising

184.5

20.25 1.25

138.25 1.35

62

86 82 68 47.25

10 26

29

Editorial 38


ASB MULTI MEDIA METER 2018

Social Media SURFERS Rank 1

GABRIEL MEDINA

8.230

2

KELLY SLATER

5.139

3

p

MICK FANNING

2.0

JOHN JOHN FLORENCE

1.945

p

Using top brands and surfers we’ve tallied surf brands or brands operating in surfwear distribution as the baseline for our social media list. Using the social media links from each brands Australian website homepage, we’ve combined their Facebook ‘likes’ as well as Instagram and Twitter ‘followers’ to determine our overall social media top performers. If there’s a brand that deserves to be on the list, write to us and let us know. If the link to your social media site isn’t the right one or there’s an alternative social media page for your brand we should be monitoring, also let us know.

Total (millions)

p

#SOCIAL_MEDIA_METER

Athlete

JULIAN WILSON

1.429 1.362 1.232

4 5 6

p

FILIPE TOLEDO

7

p

STEPH GILMORE

8

JORDY SMITH

0.975

#SOCIAL MEDIA METER (ALPHABETICAL ORDER)

9

TAJ BURROW

0.668

NB NO TOTAL OR RANK DUE TO THE MIX OF GLOBAL AND REGIONAL SOCIAL MEDIA CHANNELS. SHOULD BE USED AS A GUIDE ONLY. TABLE CORRECT AT OCTOBER. TABLE REPRESENTS THOSE BRANDS ON THE PRINT MEDIA METER ONLY. NOT EVERY BRAND.

10

OWEN WRIGHT

0.654

Brand

Total (millions)

Facebook

Twitter

Instagram

BRANDS Rank 1

NIKE

122.749

2

GO PRO

27.483

3

VANS

19.670

4

p

NIKON

15.038

p

QUIKSILVER

8.863 6.640 4.677

5 6

p

HURLEY

7

p

BILLABONG

8

p

VOLCOM

4.347

p

RIP CURL

2.789

p

NIXON

1.965

9 10

Lincoln Eather. Lincoln is co-founder of Empire Ave, an Australian-centric content platform whose core focus is on art, fashion and tech-product developments across contemporary mens fashion and beach lifestyle. Lincoln Eather is a branding, marketing and social media strategist known for creating renewed value, life and traction for brands that intersect function and lifestyle. Head over to #ASBMAG.com for full social media results and analysis. 23/


A Corporate Retreat at Pinnacles on Telo. More than just a surf trip you can claim as a business expense. Honestly, it really is. Stop giving me that look, we’re getting good things done out here!

We’re smashing the agenda, kind of. Sure, we’re surfing five, six hours a day, and maybe we won’t get through ALL the figures Dave from accounting sent through, but ... geez, Dave really should be here hey. Poor bastard’s gonna lose it when he sees pics from The Left this morning... If your executive retreat, offsite conference or annual team getaway is feeling a little predictable or same-old same-old, Pegasus Surf Lodges is here to help...

We also offer corporate packages at the mighty Aganoa Lodge Samoa, Telo Island Lodge, Monkeys Resort South Telo


All pics by Andrew Shield, who incidentally can capture your Pinnacles experience in stills and footage from land, boat, water and sky angles.

Let us take you and your team to the Telo Islands of Sumatra, Indonesia. This region has some of the funnest, most user-friendly surf options on the planet. Pinnacles on Telo is set up to accommodate groups ranging from eight to 20 guests. We have eight split-level villas that comfortably sleep three; pool, bar, dining pavillion and social/meeting spaces. Oh, and an island all to ourselves.

andTenggara TenggaraPoint PointLodge. Lodge.Hit Hitpegasuslodges.com pegasuslodges.comor orcall callKellie Kellieon on0412 0412482 482655 655for fordetails details and


FRESH

RIP CURL PRO GUM JACKET Code: SCJDE4 Colourway: Steel Grey RRP: $599.99 Available: November 2019 Description: The Pro Gum Jacket features the very best in mountain technology, comfort and performance. From 37.5 membrane that provides outstanding breathability, to gear pockets and stowaways, nothing is compromised here.

ELECTRIC EGG Code: EG2418203 Colourway: Darkside Tort RRP: $260.00 Available: May Description: New for the 19 season, the EGG is an updated design to the innovative and best-selling EG2.

DRAGON DEADLOCK Code: 38642-003 Colourway: Matte Black H2O/Petrol P2 Polar RRP: $230.00 Available: Now Description: Featuring a recessed lens to protect you from you, these life-proof sunglasses are floatable, polarised and ready for anything you throw at them.

DRAGON THE VERSE Code: 38673-004 Colourway: Matte Black H2O/ Copper ION P2 Polar RRP: $240.00 Available: Now Description: The Verse has squaredoff edges, an oversized frame & array of lens colour offerings, making it hard to miss & the comfiest Dragon style yet. SCARFINI AIR FINS Colourway: Blue/Black RRP: $109.00 - $139.00 Available: Now Description: Scarfini Air Fins. Lightest floating fins on the market. Available in Single Tab or Dual Tab TRI Set in either Small, Medium & Large, or L/B Box Centres in 6”, 6’5” & 10”.

RIP CURL WOMEN’S GUM JACKET Code: SGJDE4 Colourway: Lilac Rose RRP: $449.99 Available: November 2019 Description: Featuring 20K20K fortress membrane, 37.5 technology, a DWR treatment, an adjustable breathable collar and gear pockets galore, the Women’s Gum Jacket is the Ultimate choice for an avid skier or snowboarder.

SCARFINI ECO FINS Colourway: Bamboo/Hemp/Cork RRP: $119.00 - $139.00 Available: Now Description: Scarfini Eco Fins. Beauty in fins made from Bamboo, Hemp & Cork. Available in Single Tab or Dual Tab Tri Set in either Medium & Large, or L/B Box Centres in 7.25” & 9"

26/ Australasian Surf Business Magazine  issue #85

SALTY CREW SNAPPER MOUNT SS TEE Code: 20035097A Colourway: Black RRP: $49.99 Available: December Description: Screen printed front and back graphics. 100% combed ringspun cotton, 30 singles.

SALTY CREW SNAPPER MOUNT FLEECE Code: 20335059A Colourway: Black RRP: $89.99 Available: December Description: Screen printed front, back, and sleeve graphics. 80% cotton / 20% polyester.

GLOBE THE ONSHORE SERIES- STUBBY Code: 10525170_ONSHRCLST Colourway: On-Shore/Closeout RRP: $249.99 Available: Now Description: Introducing the onshore series. Developed and designed to offer an enhanced surf-like experience, The Onshore series features Revenge trucks allowing for a greater range of motion while maintaining enough stability to push like a normal cruiser. The popular and versatile shape of the Bantam ST in a Resin-7 hard rock maple wood construction with raised grip


GLOBE THE ONSHORE SERIES- SUN CITY Code: 10525031_ONSHRBLKBL Colourway: On-Shore/Blackball RRP: $219.99 Available: Now Description: Introducing the onshore series. Developed and designed to offer an enhanced surf-like experience, The Onshore series features Revenge trucks allowing for a greater range of motion while maintaining enough stability to push like a normal cruiser. Resin-7 hard rock maple mid-sized surf inspired swallow-tail cruiser. 30” x 9.0” x 18.5” WB. Mellow concave with kick tail. 62mm 78a wheels. Clear broadcast grip.

PATAGONIA WOMEN’S MICRO D SNAP-T PULLOVER Code: 26020-PLCN Colourway: Pelican RRP: $129.95 Available: March 2019 Description: Providing everyday warmth and comfort, this classic pullover is made with 100% recycled polyester and features clean style lines and is Fair Trade Cerified.

OAKLEY FALL LINE XL PRIZM REACT Code: OO7098-01 Colourway: Matte Black w/Prizm React RRP: $389.95 Available: August 2019 Description: Forget the forecast with Oakley’s new Prizm™ React technology. Have the confidence to hit the slopes without checking the weather. With the touch of a button, The technology of Prizm™ React lets riders adapt to on-mountain conditions from morning to dusk by adjusting lens tints.

OAKLEY RIDGELINE Code: OO9419-0127 Colourway: Polished Black w/Prizm Grey RRP: $194.95 Available: Now Description: Ridgeline brings the expanded view and style of Oakley Double Edge into our largest ever lifestyle shield, along with interchangeable icons and the grip of Unobtainium® nosepads.

NIXON REGULUS Code: A1180-3100-00 Colourway: Surplus/Carbon RRP: $249.99 Available: December Description: The Regulus is built to last. 100m water-resistant case and pushers, 5-year battery life, and shock-absorbent materials withstand any terrain and condition.

PATAGONIA MEN’S MICRO D SNAP-T PULLOVER Code: 26165-MACH Colourway: Matcha Green RRP: $129.95 Available: March 2019 Description: Providing everyday warmth and comfort, this classic pullover is made with 100% recycled polyester and features clean style lines and is Fair Trade Cerified.

ELECTRIC KLEVELAND Code: EG2518104 Colourway: Murked/Jet Black RRP: $175.00 Available: May Description: Working handin-hand with one of the world’s most innovative and progressive snowboarders, this season we introduce the Kleveland–Electric’s first ever pro-model goggle.

ROXY MOONROCK Code: ERJEY03086 Colourway: Crystal Blue/Blue RRP: $99.99 Available: Now

BRAND: XTM STRETCH BELT Code: HU072 Colourway: ASST RRP: $19.99 Available: May Description: One size fits most, stretch elastic belt.

NIXON DORK TOO Code: A1266-000-00 Colourway: Black RRP: $249.99 Available: February 2019 Description: We’re bringing back a favourite to bring back the happy. The Dork speaks the time at the press of a button but also throws some unexpected sounds to keep you smiling all day long.

27/


BUYERS’ GUIDE

EYEWEAR

QUIKSILVER REKIEM POLARIZED FLOATABLE Code: EQYEY03100 Colourway: Matte Black/Green Polar RRP: $169.99 Available: Now

SIN EYEWEAR SPARTAN Code: SSIXCL-3976-GRY-SMK Colourway: Grey Tort Smoke RRP: $59.99 Available: January

ELECTRIC ANDERSON Code: EE17501620 Colourway: Gloss Black RRP: $249.95 Available: Now

SIN EYEWEAR PECCANT Code: SSIXCL-3866-GRT-SMK Colourway: Grey Tort Smoke RRP: $59.99 Available: January

NIKE SB KEVIN DURANT FLICKER Code: EV1135 001 Colourway: Oil Grey/Black Mirror RRP: $180.00 Available: Now

DRAGON BAILE Code: 35069-245 Colourway: Matte Dark Tortoise/ Brown P2 Polar RRP: $220.00 Available: Now

ELECTRIC JOHN JOHN FLORENCE KNOXVILLE XL Code: EE16065266 Colourway: Bronze polarised plus. RRP: $299.95 Available: Now

DRAGON HYPE Code: 34235-008 Colourway: Matte Black/Rose Gold RRP: $180.00 Available: Now

SPY+ SYNDICATE Code: 873525973863 Colourway: Black – Happy Grey Polar RRP: $219.95 Available: Spring 19

OAKLEY HOLBROOK XL Code: OO9417-0359 Colourway: Polished Black w/ Prizm Sapphire RRP: $194.95 Available: Now

EPOKHE POKE Code: 0802-BLKPOBLK Colourway: Black Polished Black RRP: $220.00 Available: Now

NIKE SB FLATSPOT SE Code: EV1115 001 Colourway: Matte Black Grit/Dark Grey RRP: $180.00 Available: Now

CARVE IVI Code: 3510 Colourway: Matt Tort RRP: $59.99 Available: Now

LIIVE ENVY Code: L0623A Colourway: Matt Black RRP: $39.95 Available: Now

CARVE ICON Code: 2540 Colourway: Gloss Tort RRP$: 59.99 Available: Now

EPOKHE UZI Code: 0793-BLKPOBLK Colourway: Black Polished Black RRP: $200.00 Available: Now

OTIS EYEWEAR CASA BAY Code: 30-1803LL Colourway: Matte Black/Grey LIT Polar RRP: $339.95 Available: Now

OTIS EYEWEAR A DAY LATE Code: (25-1805) Colourway: Ebonywood/Grey Non Polar RRP: $199.95 Available: Now

28/ Australian Surf Business Magazine  issue #85

OAKLEY PITCHMAN R Code: OO9439-06 Colourway: Polished Brown Tortoise w/ Prizm Tungsten Polarized RRP: $284.95 Available: Now

REFRESH BY SPY+ HI-FI Code: 673512222963 Colourway: Crystal – Grey w. Light Blue Spectra RRP: $99.95 Available: Spring 19

LIIVE CHEAP THRILL Code: L0356A Colourway: Mirror Matt Black Orange RRP: $49.95 Available: Now



BUYERS’ GUIDE

SNOW

DRAGON BASIC CUFF BEANIE AS Colourway: LT Rose RRP$: TBA Available: January OAKLEY SNOW JKT 10K/ 2L ANORAK Code: 412525-9A1 Colourway: Camou – 9A1 RRP: $449.95 Available: Now

PATAGONIA POWDER TOWN BEANIE Code: 29187-PRVB Colourway: Park Stripe: Viking Blue RRP: $54.95 Available: March Description: Made with 100% recycled polyester with a textured knit construction, this timeless beanie is itch-free and quick-drying.

PROTEST WOMENS RISTO SNOWBOARD JACKET Code: 9.23.6610982 Colourway: 290 RRP: $349.00 Available: February Description: 10,000/10,000mm waterproof, breathable quilted snowboard jacket, true fusion of street style and snow innovation.

PATAGONIA WOMEN’S INSULATED SNOWBELLE JACKET Code: 31090-VBNA Colourway: Village Byrd: Navy Blue RRP: $399.95 Available: March Description: Updated this season with an attached hood, exposed waterproof center-front zip and a lighter-weight insulation package for better versatility, this fully featured H2No® Performance Standard 2-layer jacket has an articulated fit for freedom of movement and a smooth taffeta liner for ease of layering.

GLOBE YES UP AND DOWN SNOW SOCK Code: GB71839002_BLK Colourway: Black RRP: $29.99 Description: Merino wool blend. Unisex fit. Anatomical cushioning. Stabiliser points for increased comfort.

30/ Australian Surf Business Magazine  issue #85

BILLABONG EXPEDITION 2L 15K JACKET Code: Q6JM17S Colourway: Magma RRP: $329.99 Available: November 2019 Description: Billabong Expedition 2L 15K Jacket featuring Recycled Stretch Ottoman Polyfill and Fully taped seams, adjustable hood with front and back cinching Built in visor and rise up collar for superior weather protection and Hand warmer pockets Bonded, media pocket, Goggle mesh pocket with Key clip and goggle wipe.

RIP CUR1 SEARCH JACKET Code: SCJDF4 Colourway: Jet Black RRP: $499.99 Available: November 2019 Description: With high product durability and low environmental impact, the Search Jacket is designed for the rider who wants high performance technology while remaining environmentally responsible. Featuring 20K20K fortress membrane, PFC free water repellent, Cordura technology in the critical zones, and much more.

PROTEST WOMENS MARANI JACKET Code: 9.23.9911782 Colourway: 825 RRP: $369.00 Available: February Description: 10,000/10,000mm waterproof, breathable snowboard & ski jacket. Beautiful long line cut jacket with woven melange fabric.

DRAGON TRADEMARK PULLOVER Colourway: Alpine Green RRP$: TBA

RIP CURL WOMEN’S SEARCH JACKET Code: SGJCW4 Colourway: Peaches In Cream RRP: $349.99 Available: November 2019 Description: Designed with 20K20K fortress membrane, a PFC water repellent, Primaloft recycled insulation, Cordura on the critical zones, and much more, the Women’s Search Jacket offers high durability, advanced technology and low environmental impact.

OAKLEY BIB 15K/ 3L Code: 422389-9A1 Colourway: Camou – 9A1 RRP: $449.95 Available: Now


PROTEST CLAVIN JACKET Code: 9.23.6710682 Colourway: 811 RRP: $389.00 Available: February Description: 20,000/20,000mm waterproof, breathable snowboard & ski jacket with laser cut ventilation at the high collar making this the perfect jacket for Australia or overseas.

BILLABONG PRISM STX INSULATED 45K JACKET Code: Q6JM07S Colourway: Forest RRP: $449.99 Available: November 2019 Description: Billabong Prism Sympatex 2L 45k Stretch Jacket with Primaloft Black Hi Loft, Fully taped seams with Sympatex tapes, featuring adjustable hood with front & back cinching featuring Built-in visor and rise up collar for superior weather and Bonded hand warmer pockets, Multiple chest pockets also Hidden sleeve pass pocket.

XTM STRETCH BELT Code: HU072 Colourway: ASST RRP: $19.99 Available: May Description: One size fits most, stretch elastic belt.

RIP CURL SEARCH BIB Code: SCPCF4 Colourway: Arabian Spice RRP: $399.99 Available: November 2019 Description: The Search Bib is designed with a 20K20K fortress membrane, Cordura technology in the critical zones, a PFC free water repellent, a lined shell recycled fabric and much more. High durability, low environmental impact.

PATAGONIA SNOWSHOT JACKET Code: 30942-BCMK Colourway: Bunker Camo Multi: Mojave Khaki RRP: $399.95 Available: March Description: Fully featured and focused on utility, this H2No® Performance Standard 2-layer shell jacket has an articulated fit for freedom of movement and a smooth mesh liner for comfort and ease of layering.

XTM CANNON JACKET Code: TM035 Colourway: Grey Denim RRP: $179.99 Available: May Description: Filled with our 100% Australian, 100% natural, MERINOlite thermal technology the Cannon jacket is the next generation in puffer jackets. Unlike its duck down equivalents it can perform even when wet.

OYUKI PEP GTX TRIGGER MITT Colourway: Worn sandstone RRP: $189.95 Available: May 2019 Code: 412598-465

GLOBE YES GS CHUKKA Code: GBGSCHUKKA_20348 Colourway: Yes Apres Black RRP: $119.99 Available: February Description: Mid-top progression of the GS shoe. Shockbed™ insole. Globe’s Super-V outsole. Curved collar

BILLABONG TROOPER STX 2L 45K JACKET Code: Q6JF15S Colourway: Sunset Red RRP: $399.99 Available: November 2019 Description: Billabong Sympatex 2L STX Jacket with Primaloft Black Hi-Loft, featuring Fully taped seams with SYMPATEX tapes. Fully adjustable hood with front & back cinching. Built-in visor and rise up collar for superior weather protection. Dual entry hand warmer pockets, Waterproof side chest zipper pockets with Hidden sleeve pass pocket and Internal media pocket.

GLOBE YES APRES BOOT Code: GBYESB_10001 Colourway: Black Nubuck/Cordura RRP: $279.99 Description: Collaborative design with YES snowboards. Vibram’s™ Arctic Grip outsole. Zip entry on medial side. Premium leather and cordura upper. Metal speed laces.

OAKLEY DIVISION 10K BZI JACKET Code: 412598-465 Colourway: Red Line - 465 RRP: $299.95 Available: Now

DRAGON SKULLY LONG SLEEVE Colourway: Charcoal RRP$: TBA

31/


BUYERS’ GUIDE

GOGGLES

VONZIPPER CAPSULE Code: GMSCAPBSW Colourway: Black Satin Wildlife Polar RRP: $299.99 Available: Now

VONZIPPER FEENOM Code: GMSFENDBL Colourway: Black Satin Quasar Chrome Wildlife Polar RRP: $179.99 Available: Now

DRAGON PXV Code: 382806534400 Colourway: Eagle/Lumalens Red Ion + LL Amber RRP: $290.00 Available: January

DRAGON NFX2 Code: 286056030600 Colourway: Rattler/Lumalens Blue Ion + LL Amber RRP: $270.00 Available: January

SPY+ ACE EC (ELECTROCHROMIC) Code: 313519 Colourway: Black RRP: $349.95 Available: Winter 19

SPY+ LEGACY Code: 313483865702 Colourway: Spy Space RRP: $299.95 Available: Winter 19

CARVE FIRST TRACKS Code: 6006 Colourway: Matt Black RRP: $59.99 Available: Now

CARVE THE BOSS (MAGNALINK LENS SYSTEM) Code: 6170 Colourway: Matt Black RRP: $149.99 Available: March

ELECTRIC THE KLEVELAND Code: EG2518103 Colourway: Brose/Pink Chrome RRP: $185.00 Available: May

ELECTRIC ELECTRON Code: EG2618101 Colourway: Matt Black/Blue Chrome RRP: $470.00 Available: May

OAKLEY LINE MINER XM Code: OO7093-18 Colourway: Arctic Surf Poseidon w/ Prizm Snow Jade Iridium RRP: $199.95 Available: Now

OAKLEY LINE MINER™ KAZU KOKUBO SIGNATURE SERIES Code: OO7080-70 Colourway: Kazu SIG Rokka Army Green w/ Prizm Snow Jade Iridium RRP: $209.95 Available: Now

32/ Australian Surf Business Magazine  issue #85

32/


ÂŽ

xtreme protection xtreme performance SPF 50+ for sport

Official sun protection of:

+ Fragrance free + Oxybenzone free + Non greasy + 4 hours water resistant + Australian owned & made

2XP.COM.AU

2XP AUS

2XP_AUS

Wholesale Inquiries: 1300 650 981 Jenny.Yin@heritagebrands.com.au Always read the label. Use only as directed. Avoid prolonged sun exposure, always wear protective clothing, hats & eyewear when exposed to the sun.

ASMI 29245-0818

Developed with


BUYERS’ GUIDE

WATC H E S

RIP CURL NEXT TIDE
 Code: A1137 Colourway: Military RRP: $249.99 Available: April Description: Surf, sport, street, smart; this is a new tide watch for the next generation. Featuring 500 preprogrammed global tide locations, plus future forecasting. Durable, lightweight and ergonomically rounded. Also available for women.

ADIDAS ORIGINALS PROCESS M1 Code: Z02-3077 Colourway: All Black/ Copper RRP: $159.99 Available: December Description: With a clean and understated approach, Process M1 re-frames timepieces through a modern perspective. Evolving classic watch silhouettes by deconstructing signature elements, Process M1 delivers an elevated aesthetic yet remains grounded in everyday wearability.

RIP CURL REVELSTOKE
 Code: A3189G Colourway: Frost RRP: $99.99 Available: April Description: Watches just got a whole lot more fun! This ultra light colourfast silicone surf watch features a bright graphic dial and a compact ABS case. Take this watch anywhere! Waterproof tested up to 50 metres, backed with a 5-year limited warranty.

NIXON SIREN Code: A1210-001-00 Colourway: All Black RRP: $199.99 Description: The Siren is for those who bring an innate sense of style to their time both in and out of the water. Feature-led but fashion-focused, the 10 ATM waterresistance is a nod to our surfing heritage, blended with versatile functionality with a serious dose of street style.

34/ Australian Surf Business Magazine  issue #84

QUIKSILVER TIMEBOX CHRONO METAL Code: EQYWA03025 Colourway: Black/ Rose Gold/Black RRP: $299.99 Available: Now Description: Fully featured Stainless chrono oversized mens watch coming to your shelves in a fresh colour for 2019.

QUIKSILVER ADDICTIV PRO TIDE Code: EQYWD03006 Colourway: Black RRP: $139.99 Available: Now Description: The ultimate surf watch. Slim, light and simple. Displays the time, tide and its low profile design fits effortlessly under your wetsuit.

MAXUM WATCHES SHOCKWAVE Code: X1806L4 Colourway: Green Jelly RRP: $79.00 Available: Now Description: The MAXUM Shockwave features a lug protector to minimise shock, stop watch, alarm, backlight and 100m water resistancy, making it the perfect surf accessory.

MAXUM WATCHES GROUND ZERO Code: X1834G1 Colourway: Black/ Black RRP: $79.00 Available: Now Description: Made to endure the elements. The MAXUM Ground Zero is built with a stop watch, alarm, backlight, chronograph and 100m water resistancy, so it goes everywhere you do!

NIXON BASE TIDE PRO Code: A1212-145-00 Colourway: Gray RRP: $199.99 Available: December Description: The Base Tide Pro delivers a double-overhead dose of durability and functionality. Featuring 500 pre-programmed tides and sunrise/ sunset locations inside a waterproof, the Base Tide Pro is one of the toughest in the lineup.

NIXON 51-30 CHRONO Code: A083-510 Colourway: All Gold/ Black RRP: $679.99 Available: December Description: Good looks, brains and brawn combined The 51-30 Chrono rates second-to-none. Easyto-read 51 mm design that launched the oversized trend, with 3 CD textured subdials.

ROXY SLIMTIDE Code: ERJWD03290 Colourway: White RRP: $139.99 Available: Now Description: Slim, sleek and functional. Displays the time, tide and its low profile design fits effortlessly under your wetsuit.

MAXUM WATCHES 100 PERCENT Code: X1830G2 Colourway: Grey/ Orange 
RRP: $99.00 Available: Now Description: The Maxum 100 Percent ana-digital watch features grey and orange colour combinations making it the perfect everyday watch. This design includes multifunctions such as a light, easy to read digital display, alarm and 100m water resistancy.

ADIDAS ORIGINALS ARCHIVE M1 Code: Z01-2924-00 Colourway: Silver RRP: $200.00 Available: December Description: Archive M1 pulls inspiration from Adidas’ rich heritage of the 70’s and nods to the more simple time at the dawn of the digital era, offering a modern and progressive interpretation of a timepiece that feels familiar, yet new.

RIP CURL SEARCHGPS 2
 Code: A1144
Colourway: Blue RRP: $399.99 Available: Now Description: The world’s best surf and tide watch now has wind and swell data connected from SURFLINE. The SearchGPS 2 also lets you review your surfing speeds and wave count from the lineup. Track every wave, wind, tide and swell. Now even smaller, lighter and more durable.

UNIT CRANK DIGITAL WATCH Code: 189129003 Colourway: Black/Gold RRP: $99.99 Available: December Description: Water Resistant 10ATM, Month, Date, AM/ PM and ElectroLuminescent light, Chronograph function with lap operation, Timer, 12/24 Hour Format Switch Option.


Chippa Wilson

Have Swell, Will Travel. THE BASE TIDE PRO

UPDATED TIDE & SUN DATA: 550 locations globally for 15 years.

SUPER TOUGH SILICONE STRAP Double locking looperâ„¢ & grooves to shed water.

WATERPROOF PUSHERS For more time in the water.

INDIVIDUALLY TESTED Super durable, 100M waterproof TR90 case.

35/


ActionWatch INSIGHTS ANALYSIS OF AUSTRALIA VS AMERICA SEPTEMBER AND OCTOBER

EXCEPTIONALLY WARM OCTOBER LEADS SLIGHT MARGIN & CATEGORY IMPROVEMENT Our ActionWatch Oz panel experienced a slight improvement for October showing a (-14.2%) decline YOY compared to Septembers (-18.9%) decline across all categories. October’s double digit decline does bring us closer to Q3’s (July-August-September) decline of (-17.8%). According to the Bureau of Meteorology, October was an exceptionally warm month for Australia. The national monthly mean temperature was the fourth-highest on record. October’s highest average maximum temperature was the 9th hottest on record and a timely reminder that summers just around the corner, and we’d better make sure we’ve got our stock and inventory right in the ‘hottest’ categories. Looking for bright spots amongst the October results, our panel showed improved Avg Margin YOY increase of (+2.2%) and PPS Average $ Sales increased from $69,251 in September to $72,035 in October. The PSSAvg Unit Sales (all categories) increased from 1,340 units to 1426 units. Unit Sales/Inventory is a measure we really haven’t touched on in this report before. This measure is a ratio of monthly unit sales to month-end inventory. It is using the "sell through" concept but is slightly different than the traditional weekly sell-through metric retailers commonly use. It is simply taking our Avg Inventory measure and dividing it by our Avg Unit Sales measure. In October the Unit Sales / Inventory was 16%. Improvements in these overall category metrics help tip the needle towards a positive end to 2018, but let’s not sugar coat this report, we’ve experienced double digit decline every month for the YTD. October results were led by double-digit decline in the Male market down (-14.4%) yet showed slight improvement over Septembers (-20.8%). The women’s market also recorded double digit decline of (-13.2%) compared to Septembers (-20.3%). As we noted earlier, men’s and women combined category’s recorded double digit decline of (-14.2%) across all categories. It was pleasing to see Avg $ Sales YOY% Change in our Same Store Gender report out of red line territory for a change. Looking deeper at the category analysis, Footwear fared the best down single digit (-9.6%) followed by Apparel (13.9%), Accessories (-15.9%), Wetsuits (-17.0%) whilst Hardgoods (-19.1%), were down (-34.2%) for the same period last year. It was pleasing to see another report showing improved Average Margin YOY Change of (+2.2%) led by Wetsuits at (+8.1%) A big mover in the full wetsuit (Steamer) category was Quiksilver, leading with a 4.2% Brand $ Share YOY Change in this category. #1 brand Rip Curl took a slight hit down (-2.1%) and an even bigger hit down (-34.9%) Avg $ Sales YOY Change. It’s a different story over on the Top Styles report for Rip Curl, but you’ll need to subscribe to Action Watch Oz wetsuit category report to dig deeper and find out what brands and styles are outperforming the market. The women’s segment experienced very few bright spots in terms of specific individual categories but was highlighted by Shoes up (+34.1%) while Footwear showed single digit decline (-8.0%) Looking to specific Women’s category performances, Unknown Apparel was up (+645%). Women’s Accessories was down (-16.9%) and experienced growth in Purses up (+2.5%) while Duffel Bags eased (+4.7%). Sunglasses were down (-17.9%) led by Plastic Frames (+31.5%) But Wetsuits were down (-35.1%) led by Wetsuit Accessories up (+46.5%) Women’s Wetsuits were down (-28.2%). The Women’s category also showed a (+1.1%) Average YOY Margin Change increase.

36/ Australian Surf Business Magazine  issue #85

A big mover in the full wetsuit (Steamer) category was Quiksilver, leading with a 4.2% Brand $ Share YOY Change in this category. For the second month in a row, finding highlights in the Men’s categories was few and far between. Apparel was down (-15.6%) For Tops we can again point to Other T-Shirts up (+16.7%) Bottoms/Completes were down (-10.7%) with Boardshorts down (-10.4%) a slight improvement on last month’s performance down (-35.0%). Maybe October’s higher temperatures fuelled growth in this important category and it’s a positive sign as we move into summer. While Accessories remained down (-16.7%) Sunglasses are down single digit (-7.4%) while Metal Frames were up (+53.9%). The Men’s Wetsuit category was down (-9.1%) ed by Wetsuit Jackets up (+150.2%) and Spring Suits up (+50.9%), Short Johns (+92.6%) and Footwear down (-11.1%). YoY sales growth in Surf Hardgoods slipped from last month’s single digit increase of (+3.0%) to close (-19.4%) in October. This category was led Surfboard Fins up (+3.6%), Bodyboard Hardgoods improved (+8.3%) with Fins up (+20.1%) While a (-14.2%) double digit decline is nothing to get excited about, October showed a softening on September decline across all category’s and single digit (+2.2%) margin improvement. It’ll be interesting to see if this continues next month’s report and whether December’s weather, helps tip the needle towards a bumper summer. How did these results compare to your store? We’d be stoked to hear from you. Keith Curtain | Director | keith@actionwatch.com


This issue we're comparing the ActionWatch Oz panels performance agains those of their counterparts in the USA for the month of October. Please keep in mind the seasonal differences when reviewing the category highlights. It's important to note that ActionWatch data is assembled using the same reliable methodology that has been refined and developed over a decade. ActionWatch allows global brands, the ability to compare performances of key styles and category performances in the industry's two most influential markets. For more information please email keith@actionwatch.com

ACTIONWATCH US PANEL WITH +6% YOY GROWTH FOR SEP 2018 After starting Q3 2018 with flat growth in July and +5% growth in August, the ActionWatch panel experienced the second consecutive strong month with +6% growth across all categories, representing the second highest growth month this year after the +7% growth we experienced in February. The September results were once again fueled by double-digit growth of the female segment, which grew +11%, while the men's segment experienced growth as well, albeit at a lower +4%. The strong August and September results off-set the poor Q2 sales results, bringing the YTD growth to +1%, which officially moves us into positive growth territory for 2018! After three consecutive years of declines it is good to be in positive territory with only one more quarter to go in the year, reinforcing the belief that we can end 2018 with positive growth for the first time since 2014. There were some notable differences by geographic region, with the South, Southwest and Northwest growing by +12%, +4% and +8%, respectively, while the Northeast and the Midwest declined by -10% and -12%, respectively. Similar to August almost all broad categories grew in September 2018 compared to the previous September. The Wetsuit category grew the fastest at +40%, followed by Footwear (+8%), Apparel (+6%), Hardgoods (+4%), and Accessories at -2% was the only broad category that declined. The female segment experienced quite a few bright spots in terms of specific individual categories. Very similar to previous months we once again saw growth for Tops in L/S T-Shirts (+48%), S/S T-Shirts (+30%), Fleece/Hoodies (+24%), and Jackets (+7%). In addition, there are continued signs of strength in Bottoms/Completes with growth in Skirts (+53%), Pants (+23%), Denim (+18%), Shorts (+15%) and Swimwear other than Boardshorts (+9%). The Women's Accessories segment experienced growth in Jewelry (+128%), Underwear (+54%) Sport Watches! (+49%), Sunglasses (+6%), and Socks (+7%), and Purses (+2%), while Women's Spring Wetsuits (+85%), S/S Full Wetsuits (+68%), Booties (+55%), Short John Wetsuits (+7%), and Rashguards (+7%) all grew in the Women's Wetsuit categories. Similar to the previous 3 months Women's Casual Shoes (+169%) and Sport Shoes (+37%) experienced strong growth compared to the same month last year.

Another very encouraging sign in August is the YoY sales growth in almost all of the core surf hardgoods categories, led by Fins (+45%), Surfboard Leashes (+44%), Traction Pads (+39%), Skimboard Hardgoods (+31%), Surfboard Bags (+23%), Shortboards (+22%), Bodyboard Hardgoods (+15%), Softboards (+10%), and Wakeboard Hardgoods (+3%), while Long Completes (+17%) and Short Completes (+4%) led the Skate Hardware categories. Amazing what happens if the surf is up! The continued growth across both genders, many categories, several geographies as well as the some of the important core hardgoods categories gives us reason to believe that this upward momentum will continue as long as the weather is kind to us. Here's to a strong finish and an even better Q4! Patrik Schmidle | President

Male Boardshorts, arguably the most important Apparel category, was up +23% in September after +4% growth in August.

In the larger men's categories we found fewer segments to highlight, but there are more than last month. For Tops we can again point to Tanks (+34%), L/S T-Shirts (+19%), S/S T-Shirts (+8%), Wovens (+4%), and Sweaters (+23%). Male Boardshorts, arguably the most important Apparel category, was up +23% in September after +4% growth in August, while Fleece Pants (+18%) grew by double-digits as well. Men's footwear is still struggling as the small Casual Sandals (+27%) and Sports Sandals (+2%) are the only growth categories for Men's Footwear. In Men's Accessories the biggest bright spots were Tote bags (+455%), Shoulder Bags (+400%), Duffel bags (+42%), followed by Boxers/Briefs (+25%), a new category we are tracking, Sport Watches! (+23%), Belts/Buckles (+4%) and Jewelry (+27%), while Wetsuit Accessories (+67%) led the way in the Men's Wetsuit category, followed by Standard Wetsuits (+62%).

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FEATURE ARTICLE / WORDS BRYAN DICKERSON

WHO ARE THE

BIG THREE

NOW HOW WELL DO YOU KNOW THE CORPORATE FISH BOWL WE ARE SWIMMING IN? Quiksilver went public in 1998, followed by Billabong in 2000. Soon after, the Mountain and the Wave was worth US$3.45 billion. In the pursuit of growth, brands went on to snap up smaller entities including RVCA, Element and DC Shoes respectively. It was a great time to offer shares in a surfwear company, using Quiksilver co-founder Alan Green’s (and avid horse racing fan) analogy, everyone could take a punt on their favorite surfwear brand and win.

At the eleventh hour, US regulatory courts approved a US$175 million debtor-in-possession financing deal with private equity firm Oaktree Capital Management and Bank of America. Quiksilver had pulled a ‘hail mary’ and rescued itself from the brink of extinction, albeit with a new board and a new seat at the table. The newly christened Boardriders soon set about an aggressive turnaround program led by Oaktree Capital.

Fast forward a few years when Rip Curl planned a US$400 million sale, a prospect they later ditched due to “poor market conditions.”

On the 24th of April 2018 Boardriders, Inc. completed the acquisition of Billabong International. These two businesses combined created the world’s leading action sports company with over 7,000 wholesale customers in more than 110 countries, e-commerce capabilities in 35 countries, and over 630 retail stores in 28 countries. In all, a total of US$1.9 billion in sales.

“The public market looks like a bit of a cesspit at the moment," Rip Curl co-founder Brian “Sing Ding” Singer said. Sing Ding explained that Rip Curl would continue to examine offers and continue 'business as usual' until the market had settled down. It was a shrewd observation by Singer. And once the financial crisis was in full swing the surf industry took a huge hit. Fortunes were lost, pros were cut off the roster, boat charters sat idle in Padang Harbor and investors disappeared. In September 2015 Quiksilver Inc filed for Chapter 11 Bankruptcy protection. While its European and Asia-Pacific businesses were not central to the filing, the US business was in a financial tailspin.

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These days, many of the surf industry’s leading brands like Quiksilver, Billabong, Hurley, Volcom, Vans, Reef, Roxy, DC Shoes, RVCA, element, VonZipper, XCEL, Dragon, Oakley, Arnette are now all controlled by larger, wealthier corporations like Oaktree. In exploring these multi-billion dollar brands that own the surf brands, we discovered that surf makes up a shockingly small percentage of their yearly take, in many cases single-digit percentages. So the question keeps coming back – how important is surf to these companies? How well do we know the corporate fish bowl we are swimming in?


“ B UT WHAT’S HUGE IN OUR LITTLE TIDE POOL IS JUST A DROP IN THE INVESTMENT CAPITAL OCEAN. THOSE EIGHT CORE BRANDS, THOSE GIANTS OF THE SURF INDUSTRY, MAKE UP JUST TWO PERCENT OF OAKTREE’S VALUE.”

TWO DIFFERENT BRANDS TWO DIFFERENT SCENARIOS

PUBLICLY TRADED VS. PRIVATE COMPANY VS PRIVATE EQUITY INVESTMENT

Vans (which recently surpassed Nike as the favoured brand in the young women’s demographic), is the darling of parent company VF. The shareholders are happy as the iconic waffle sole eyes a US$5billion profit benchmark in the next few years. And while Vans is going strong, should a parent corporation suddenly shift focus, even a performing brand such as Volcom can go up on the auction block.

But here is where it gets complicated, there’s a trident in the road as the brands that own the brands fall into one of three categories: Publicly traded corporations like VF and Kering; private equity investment companies like Oaktree or private companies like Rip Curl.

When Kering decided to shift their resources to luxury brands, Volcom suddenly went up for sale (as of press time it’s still up for sale.) François-Henri Pinault CEO of PPR (now Kering) said in 2011, “Volcom is arguably one of the most desirable global action sports brands with an authentic legacy rooted in surf, skate, and snow sports.” Fast forward to early 2018 and the same CEO stated in the quarterly report that, “Volcom no longer constitutes a core asset and Kering has initiated a disposal process.” Both Puma and Volcom were put up for sale as Kering tended to their high-fashion giants like Gucci. In April this year, Boardriders announced that Quiksilver, Billabong and all their brands, Roxy, RVCA, DC Shoes, VonZipper, XCEL, Element are now literally under one roof, as Boardriders located its Australian HQ to Burleigh Heads. Those eight core brands, those giants in our industry, make up just two percent of Oaktree’s value. Welcome to the big leagues.

Rip Curl is private despite offering shares in their company. The owners have a majority stake and because they are not traded on the ASX they are not required to disclose financial information other than through their ASIC filing. Globe is very similar, with the Hill brothers owning the majority of stock and control. Ed Prendergast, Portfolio Manager and CoOwner at Pengana Capital says that publicly traded companies are obligated by law to disclose their ventures. Private equity firms operate under different rules given that there are no minority shareholders to protect, doing whatever it takes to reshape a brand and turn a profit. “The publicly traded companies have to show to shareholders that every quarter is a winner, so there’s a pretty high level of disclosure with these companies,” said Prendergast, who has been investing in listed companies for more than 25 years. “Since a lot of the brands have gone into private equity, we’ve lost a lot of the details and information.”

“For example, private equity companies can go in and make dramatic change or spend aggressively for medium term benefit. Often this investment pushes the company into losses, which would spook the market if the company was still listed and posting quarterly returns. The boards of the publicly traded companies tend to lose their nerve when the share prices dip on the quarterly report and therefore are less likely to make strategic calls.” Prendergast explains that private equity groups like Oaktree can come in and make changes that a listed company would never be able to get away with. “Once private equity buys a listed company, they can operate outside of the public glare and make changes or merge them with other business,” he said. “So, they buy low and spend money on what will rebuild the brand, and then 3-5 years after, once all the hard work’s been done, they have an asset that looks pristine, that looks profitable and in the meantime no one has seen the drastic cuts and restructuring.” So who are these publicly traded corporations and private equity investment companies entrenched in the surf industry? Who are the brands that own the surf brands?


OAKTREE US$110b Private Equity Corporation What Quiksilver, Rip Curl and Billabong are to surfwear, Oaktree (known technically as the “alternative investment management funds business”) is to the world of private equity. The Los Angeles-based company is one of the largest distressed investors in the world, buying failing companies cheap, investing in and restructuring them to turn a profit. They are very good at doing this. After initial investments of US$175 million in Quiksilver and US$155 million in Billabong, Oaktree has already upped their value to over US$1billion and US$750million respectively. With Quiksilver actions were swift. Oaktree rebranded the Mountain and the Wave as Boardriders Inc., a retail community “hub” concept with music and events and more brands under one roof. This deft planning means consumers have more choices than they would at a single brand’s flagship store. In doing so Boardriders ensures an experience customers can’t get online, one of the few tactics working in the war on Amazon. Boardriders represents just two percent of Oaktree’s wealth, the other 98 percent is made up of a bit of everything and includes an oil tanker line, jet airplane partnership, several retail outlets, a handful of media companies and extensive real estate investments. Investment material from the company boasts of a diversified portfolio that includes 75 of the 100 of the largest U.S. pension plans as well as more than 400 corporations. Oaktree’s wealth is: 43% corporate debt; 5% convertible securities; 24% distressed debt; 14% control investing; 9% real estate and finally 5% listed equities. “Our corporate private equity strategies focus on making control investments in undervalued companies across a variety of industries and sectors,” the company posted in a statement. “In certain cases, our corporate private equity strategies also pursue platform investments in industries that are “out of favor” or undergoing structural change.” Oaktree took “undervalued and out-offavor” Quiksilver and Billabong and created Boardriders in the same way they revamped an expiring oil tanker line.

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General Maritime, valued at half a billion dollars in the early 2000s went into bankruptcy and was turned around by Oaktree restructuring and investment. The World Maritime News estimated the global marine freight industry to reach a value of approximately US$210 billion by 2021. Oaktree’s Sky Leasing executes more than 600 aircraft transactions annually valued at more than $20 billion while their Campo Frio food group moves half a million tons of food each year in sales. Oaktree officially formed in 1995 when a handful of investors who had been working together in the halcyon days of 1980s Wall Street pooled their collective experience and expertise. Co-founder Howard Marks is a bit of an investment celebrity, authoring books on “Mastering The Market Cycle” and having a strong social media following (20K on Twitter). The financial web-o-sphere is peppered with Marks investment quotes, particularly those relating to risks. “It’s not just how well you do in your investments but how much risk you take to get the return,” is one of his more socially shared quotes. But this risk philosophy has also come back to burn Oaktree when they’ve played too loosely and have come under the scrutiny of US security’s exchange. The SEC, fined Oaktree for violating pay-to-play rules when it found that the company made payments to government officials with sway over pension-making decisions (Oaktree owns 75 major pension funds). The SEC said between September 2014 and April 2016 Oaktree contributed to elected officials who were in a position to appoint investment advisors to manage public pensions. But the risk does have rewards. Star player private equity firms like Oaktree are very good at what they do. Prendergast added that, “private equity all operate in a similar way. They can buy a turnaround – something that can be repaired in the quiet. They can buy a business and combine businesses and they know that one and one is three.”

Conversely, private equity firms can also go in with a slash-and-burn approach to suck out any remaining profitability from a flailing brand. Prendergast noted that “if the private equity firm bought a company and all they wanted to do was cut the costs of the business and trim everything back and get the most immediate profit and not invest in the brand itself – which has happened to several brands, not in surf – then it’s low quality and low cost and available at a Target, and the surf shops will hate it. But if they are successful in reinvigorating the brand through innovation then it’s a good news story” While we don’t know fully what Oaktree has planned for Billabong, as they are not obligated to detail their plans, it’s a different landscape for the publicly traded entities. Companies like VF, Kering, Nike and Essilor/Luxottica who live and breathe fashion, are also legally bound to disclose goings-on each quarter.”


VF CORPORATION US$13.7b

KERING US$12.5b

NIKE US$30-$35b

Publicly traded company

Publicly traded company

Publicly traded company

What we do know about the VF (Vanity Fair) corporation is that they are a publicly traded apparel and footwear powerhouse born in the textile heartland of America. The company formed in 1899 and is currently ranked 230th by Fortune 500.

Kering kicked off its corporate life as a timber trading company but shifted in 1999 when the group (then-named Pinault-Printemps-Redoute or PPR) purchased a controlling 42% in Gucci for US$3billion before going on to snatch up other fashion brands.

Perhaps the most well-known of the corporate brands who own the surf brands is Nike.

Vans and North Face are the poster children of their Outdoor and Action Sports segment and sit with other multi-billion dollar brands like Eagle Creek, EASTPAK and JanSport.

In 2017 Kering had a restated revenue of $11 billion euros, half of which comes from Gucci. Other luxury brands Yves Saint Laurent and Bottega Vaenata average out at just over a billion per year in revenue.

The favoured action sports child of VF is Vans who continue to grow and profit. “VF seems to be really switched on,” said Prendergast. “With Vans they did all the right things. They reinvested in the product development and kept their prices high and pumped a lot of money and smarts into the product and killed it.” Vans hit US$3.6billion in revenue this year. The brand also announced plans to grow its revenue annually to reach US$5billion by the fiscal year 2023, not unreasonable as the brand continues with 10-12 percent growth each year. VF Chairman, President and CEO Steven E. Rendle often cites the diversity of the brands at VF – they own Lee and Wrangler, jeans favoured for years by country and western stars – that make the company attractive to shareholders. But not all diversification works out for the brands that own the surf brands. In 2005 VF purchased Reef Holdings Corporation to add an authentic specialty surf brand to VF’s blossoming action sports/outdoor portfolio. Reef ’s annual sales last year were close to US$150million, double their 2004 mark of US$75million. Perhaps growing impatient for another blockbuster like the Mick Fanning bottle opener sandal, VF sold Reef to RockPort late this year. When VF bought Reef 14 years ago, CEO Rendle stated in a press release, "As one of the world's great authentic surf brands, Reef will be a terrific addition to our outdoor portfolio.” Rendle’s most recent take on Reef at the time of sale was a bit different, “Reshaping VF’s brand portfolio to deliver sustainable, long-term growth and superior returns to shareholders remains our top priority,” he said in a circulated statement.

The European fashion giant bought Volcom in 2011 for roughly US$600million as part of their outdoor and lifestyle expansion. FrançoisHenri Pinault, CEO of PPR (now Kering) paired Volcom at the time of purchase with global juggernaut Puma. Pinault added that Volcom was complementary to Puma and that “we are convinced that its integration into our Sport & Lifestyle Group will speed up its development.” Prendergast saw a very different relationship between Volcom and Kering than the one shared by VF and Vans.

The ubiquitous swoosh is the world’s largest supplier of athletic shoes and apparel. They are currently valued at between US$29.6 billion and US$35 billion depending on the source. They own autonomous brands like Converse and Hurley but are best known for their signature brands like Air Jordan and Air Max. Nike forayed into surf with Nike 6.0, a wellfunded shoe and apparel line with team riders like Julian Wilson and Michel Bourez. But somewhere along the line, a change in corporate strategy scratched the concept of Nike 6.0. Nike soon realised it’d be easier to buy Hurley and use the SoCal brand credibility to solidify their place in the surf industry. Bob Hurley is as core as they come. He started shaping surfboards and built up from there. He grew the Billabong brand through the USA in the early days before leaving to do his own thing in 1998. He sold Hurley to Nike in 2004 for US$120million.

“Kering did the opposite of VF. It sounded like they left Volcom on their own and didn’t appear to give them much support. Volcom starved and didn’t re-invest in their product and faded compared to Vans. That’s just a classic pattern of the right people running one and the other one that gets lost in a bigger system.” When Kering announced they would focus solely on their high-end fashion brands, they sold the major portion of Puma (valued at US$5billion) back to shareholders, while celebrity lifestyle brand Stella McCartney shares were sold back to the brand’s founder and namesake. Volcom went up for sale as well. “No one knows for sure if we’re up for sale or if we’ve been sold,” said an anonymous source at Volcom. “It’s eery. We don’t hear anything. But in defence of Kering, I do know that we are really independent as a brand and can run things how we like. That’s cool.” To clarify if Volcom had been purchased or not we reached out to Marketing Manager Brad Dougherty at Costa Mesa headquarters in California. “We are still owned by Kering,” Dougherty confirmed. “If that changes I can send a request to our CEO as he would be the one to comment.”

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“BOARDRIDERS REPRESENTS 2% OF OAKTREE’S VALUE. THE COMPANY’S MORE PROFITABLE VENTURES INCLUDE AN OIL TANKER LINE, JET AIRPLANE PARTNERSHIP, A HANDFUL OF MEDIA COMPANIES AND EXTENSIVE REAL ESTATE INVESTMENTS.”

O’NEILL [NOT DISCLOSED]

MARCHON EYEWEAR US$1B

Logo International B.V. privately held company

Publicly traded company

Jack O’Neill’s eponymous label is held by private Dutch company Logo International B.V. who purchased the Santa Cruz brand in 2007 for an undisclosed sum.

New York-based Marchon Eyewear carries a wide portfolio of brands to cater to wide-ranging consumer needs and demands. The company manufactures and distributes eyewear, and their acquisition of Dragon fit symbiotically with the company’s expansion.

Privately held companies like Rip Curl Group have more control in the long-term protection of their brand, deciding how their product is produced, priced and placed. The company said long-term protection of prices is a key factor.

“Dragon is a gem in Marchon Eyewear’s portfolio of owned brands and was an important strategic addition to the company’s performance eyewear pillar,” said Thomas Burkhardt, SVP, Global Brands, Marketing and Design of Marchon Eyewear, Inc.

“Dedication to our strict distribution and pricing policies gave rise to short-term sales and margin reduction,” said Michael Daly, Group CEO regarding the latest profits report. “It ensures long-term protection of the brand, its products and its people,”

“It provided Marchon unique insights into eyewear and vision protection needs for action sports and Dragon’s innovation capabilities allowed Marchon not only to become an instant leader in surf and snow & ski but also to leverage those technologies in other brands. Marchon, in turn, was able to successfully launch the Dragon eyewear brand in the optical sector.”

Surf brands mean a lot to surfers, more so than in many other sport cultures. Whereas a golfer just might move on to Ping should Titleist go under, surfers have a visceral connection to the brands they love and to which they remain loyal.

Brands Setpoint, Van Gils, Cakewalk, Salty Dog, Barbara Farber and Jeep and Jaguar apparel are some of the other marks in their keep. We discovered that Logo International B.V. is even more private than Oaktree. Their website simply states: “Logo International B.V. is a Dutch holding corporation owning a range of brands in fashion retail and wholesale.” In reaching out to Logo International B.V. for insight into how O’Neill fits within their business strategy, we were directed to O’Neill Asia Pacific Managing Director Justin Daniels. “To be honest on review of your questions there is actually limited details I can even provide,” said Daniels. “It’s not that I wouldn’t want to disclose, I just don’t really know. We work very independently from the holding company. I report to the CEO of O’Neill global who operates out of Warmond but for the most part, we are autonomous.”

But what does this all mean to the independent surf shop? Does it really matter if a favourite surf brand is owned by a pension-holding company? Prendergast believes it does, citing the situation with Oaktree and the secrecy of their plans for Billabong. “If Billabong comes back after restructuring with smarter designs and they can remain at the cutting edge of fashion and avoid that thing where young surfers don’t want to wear the same brand as their dad, then the surf shops will love the brands like Billabong and the effects of a private equity firm.” But what if the parent corporation decides to pursue quick profits to appease shareholders in the short-term? “Historically, Quiksilver had put a lot of the smaller, independent retailers off-side because they stocked their products in the mainstream discount department stores,” added Prendergast. “Once that’s done, a shop can’t sell a shirt for $60 if it’s elsewhere for $20.”

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That’s why Paul Naude ran ragged trying to buy Billabong before launching VISSLA. And why Matt Biolos and Mike Reola went under severe financial risk to wrestle the … Lost brand back from the La Jolla group. It goes deeper than simple logo tees. We go through this hard work and uncertain corporate future because we, as surfers, care about our brands.


Subscribe Online At:

WWW.A S BMAG.CO M

W W W. A S B M AG .C O M

PROFESSIONAL EDITION PROFESSIONAL EDITION: MARK HUDSON - DIRECTOR DRAGON - RETAIL MARK TALKS ABOUT DRAGON'S 25 YEAR ACTIVATIONS | DRAGON IS A LEADING PL AYER IN THE EYEWEAR CATEGORY, OPERATING IN A SMALL BUT INFLUENTIAL MARKET | MARK TALKS ABOUT THE COMPANY 'S REL ATIONSHIP WITH NIKE SB AND PARENT COMPANY US$1 BILLION, NEW YORK-BASED MARCHON EYEWEAR. This article is online now for our PROFESSIONAL EDITION subscribers. Not a member? Subscribe today at ASBMAG.COM for less than $2 a week. 43/


FEATURE ARTICLE / WORDS BRIAN WALKER

TALKING SHOP – BRIAN WALKER THE RETAIL DOCTOR

How Healthy Paranoia Could Save Your Business Success breeds complacency. Complacency breeds failure. Only the paranoid survive. – Andy Grove This Andy Grove quote is one of my personal favourite quotes, and as a reader of quotes, that’s saying something. To some degree, it addresses the question of what the 20-plus retail business collapses that have occurred in a wide range of categories in Australian retail have in common. Was it high-cost structures, a blurry point of difference, lack of innovation, strategy or competitive spirit? Too small to be big, or too big to be small? Did they believe, to the exclusion of everything else, that product is king or queen? Did they think that a shopon-every-corner mentality mattered most? Were they under-capitalised, under-researched, underwhelming and over-geared? From Max Brenner to David Lawrence, to Oliver Brown – the host of recent global retail collapses have certainly exhibited some or all of these symptoms. And yet there may well be two more factors at play. The first common factor I would suggest, and hope to illustrate through the following story, is what I’m calling healthy paranoia and a “never take your eye off the ball” syndrome. Twelve years ago, anyone who wanted the latest and best smartphone was excited about the Nokia N95. Launched at the Nokia Open Studio in September 2006, it was trumpeted as the all-in-one multimedia computer and went on to achieve sales of a million handsets within the UK in its first year. In fact, Nokia executives were so pleased with themselves, the story goes, that they all took an executive holiday, simultaneously demeaning this cheeky little upstart in the US about to launch its first phone. That phone was the Apple iPhone. Until Apple’s entry into the mobile world, handsets had been designed by companies that viewed the device as a phone first and a computer second.

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That’s not too surprising given its history and evolution, starting out as a basic telephone and slowly but surely acquiring more computing features. But a new entrant can turn thinking on its head, and that’s precisely what Apple did by viewing the handset as primarily a computer that just happened to include a phone capability. From this, can we surmise that many of the businesses that have fallen over in retail did so simply because their competitors did it faster, cheaper and better (in terms of quality, trend, etc), and their leaders, perhaps, weren’t paranoid enough to pivot their business models quickly in response to a new threat? Probably. It’s a tricky feat to keep your eyes on the road ahead, as well as the one you’re driving on, but that’s what you need to do in retail. Owning or running a business these days is anything but ‘set and forget’, and yes, we should have sold more chocolate sundaes or brown dresses, but what if customers change their minds and don’t want that stuff anymore? Leaders with a healthy paranoia will see category decline months and maybe even years before it’s too late, and pivot accordingly. I don’t buy the view that these business failures are a direct consequence of online sales. Innovation, fuelled by healthy paranoia, would have embraced new customer distribution channels and pivoted across that space as well. Others have done this. To my mind, there is another common factor in the demise of global retailers, and I’m going to call this ‘leadership lineal thinking’. The world isn’t lineal anymore. There is no predictable order; logical predictions are no longer reliable indicators in today’s marketplace. For example, lineal expressions of retail distribution shown in the classic growth and distribution footprint, are changing. Customers are more random and concentric in their research, use of time, and shopping armoury. This will only accelerate tenfold in the future.

How you deliver agility and nimbleness into your retail model – building your loyal tribe across physical, digital and virtual networks, being able to pivot across categories within your business, building brand invitation to play across categories – will be absolutely critical across all facets of your retail ecosystem. ‘Fit’ retailers aren’t thinking lineally, they are employing adaptive, nimble and agile, community-based thinking both within their organisational leadership and in the environment through which they distribute their brand experience and products. Retailers that can relentlessly evolve are winning the day. Long leases and heavy inventory loads are no longer assets in this new order. Watch how successful retailers, such as JB Hi-Fi and Chemist Warehouse, adapt their models constantly. If the metaphor that ‘it’s a jungle out there’ applies, then being an elephant doesn’t make you the most likely to evolve, it just makes you the biggest target and the slowest to pivot.

Happy ‘Surf ’ Fit for Retailing. Brian Walker is Founder and CEO of Retail Doctor Group and can be contacted on (02) 9460 2882 or brian@retaildoctor.com.au.


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