By DAN BEIGHLEY
Orange County Business Journal

Clothing maker La Jolla Group Inc. has made a big investment in a new Irvine headquarters.

The company, which makes clothes under the O’Neill, Lost, Rusty and Metal Mulisha brands, recently consolidated operations in Irvine, where it used to be spread among five buildings.

La Jolla now operates from 200,000 square feet of space at 14350 Myford Road near Tustin, where it has 150,000 square feet in one building and 50,000 in an adjoining one.

About 140,000 square feet of warehouse space makes up the bulk of the operation.

La Jolla employs about 350 people in Irvine.

The new space is double La Jolla’s old headquarters in the Irvine Spectrum.

The company sells clothes inspired by surfing, skateboarding and motocross through J. C. Penney Corp., Pacific Sunwear of California Inc., Macy’s Inc. and other retailers.

La Jolla has revamped its Irvine building to include skateboard ramps, a gym, an indoor basketball court, a 2,000-square-foot store as well as 6,000 square feet of conference and showroom space.

Chief Executive Toby Bost, clad in jeans and a T-shirt, declined to say what the company spent on the improvements.

“We built the building around action sports,” he said.

La Jolla Group has yearly sales of more than $200 million. Last year, sales grew 15% in a tough economy, Bost said. In 2007, they were up 30%.

Sales last year were helped by La Jolla’s opening of six of its own stores in California and Las Vegas, as well as a flagship O’Neill store in Anaheim.
The stores employ about 100 people.

Half of La Jolla’s business comes from its O’Neill brand, which it licenses from brand owner O’Neill Trademark BV under a “long-term” contract, according to Bost.

The other half of La Jolla group’s revenue is split evenly among its three other brands.

The company is feeling the clothing industry’s challenges, as shoppers pull back on purchases and stores such as Wal-Mart and Kohl’s have come up with their own lines of surfwear, Bost said.

“There’s definitely a recession going on in surf,” he said. “Fall is usually the toughest time for the industry. This one should be the toughest.”

For more on this story, see the July 6 edition of the Business Journal.

By ANDREW HORAN

Read the article at ShopEatSurf.com

The La Jolla Group is moving to add brands to fill out its portfolio, O’Neill Clothing and La Jolla Group CEO Toby Bost said last night.

He was speaking to a more than 100 action sports folks gathered at The Camp in Costa Mesa for an Innovator Series discussion hosted by GroupY and moderated by Shop-eat-Surf.com founder and CEO Tiffany Montgomery.

Toby was engaging and forthright as he answered questions from Tiffany and the crowd and dispensed advice and insight into his company and the state of the action sports industry. La Jolla is the privately held licensee for O’Neill Clothing, Lost Clothing, Rusty and Metal Mulisha.

Here are some highlights, in Toby’s words. I’ve consolidated some answers from different questions under the headings. For more photos, see GroupY and ZexSports later today.

Adding brands to the portfolio

We get presented with opportunities all the time, and there are some great opportunities out there.

We are building diversity within our portfolio. We’d love to be able to cover every level of distribution, and every level of action sports. We want to be in every sport in action sports.

So you can definitely read between the lines. We’ll be doing something soon.

The La Jolla Group business

We have a formula, and it’s super important: you have to know who you’re getting in bed with, who you’re going to be working with.

So we can pick great brands to partner with, and not spend a lot on an acquisition fee. Great brands that might need help with financial backing, operations, merchandise design and production. … Our model doesn’t have any cash out of pocket.

The owners of La Jolla don’t work in the business. They’re five guys who went to college together. … One of the owners is Kurt Rambis of the Lakers, and you know, he doesn’t have a lot of time to worry about whether we’re shipping T-shirts.

State of LJG and the industry

We’re a private company, so we don’t report sales, but it’s safe to say they are north of $200 (million).

The biggest challenge we have is managing inventory. There just has been no way to forecast it. For the fall, we took it down 10 percent – and the industry was down 30 percent. Holiday will probably be off 20 percent, and that’s where we are (on inventory).

The major retailers have figured out how to tune down their buying, and we can rely on their pre-booking. The core stores, there’s been mass confusion, and people taking the approach of not putting in any orders. There’s a lot of educating going on. We’re telling people, “even if you’re down 20 – 30 percent, don’t leave yourself exposed because you didn’t buy, because your customers are still coming in and they expect new product.”

A lot of us (wholesalers) have stepped in to see that the core retailers make it. We have all identified that we want to keep the core retailers alive.

We have some pretty tough times still ahead of us, so you’ll definitely see more manufacturers stepping up to aid the core retailers.

The Rusty-JC Penney deal

We took on the Rusty license as the whole macro economic shift was happening. We weren’t being given the opportunity in the core market to build the brand back to its glory days. And we were victims of this “Sea of Sameness” in the industry, with the Top 5 – including O’Neill – and even second- and third-tier brands, this market saturation.

And at the same time buying dollars were shifting.

We’re a growth company, so we had to think, how do we put Rusty back in the spot where it was in the 90s?

You’ve seen product segmentation work with Nike and Vans. So we’re going after it through product and brand segmentation. Penney’s caters to the mid-level of retail, and we’ll also cater to the core market.

I know a lot of people were offended by it, but Penney’s has 1,100 doors, and that allows us to some special things for the core market. We can get creative with the product, so it doesn’t look like this “Sea of Sameness,” and we can give them margin support.

For the core market, we’re definitely going to take risks with the Rusty product. In the past, we fell into the trap, “you have to have the price-point board short, the price-point walk short.”

I’m happy to say we’re moving forward at a fast pace. It feeds a need for action sports on a national scale. (But) we’ve lost a few key customers, and we get it. We have to perform, and we’ve asked our key customers to hold us to performance.

Supporting the core market

We definitely believe in the core market, especially those retailers who carry hard goods. Definitely, special things happen for that core market.

There are a lot of term incentives going on, like net 180 days or net 100 days. The net 30-60 days model is dead.

And we’re helping with margins. We need to help them make up for their revenue loss with profitability.

Marketing in down times

We have a tight formula, marketing is always a certain percentage of sales. But as a company, we’re never afraid to spend on marketing. You can never spend enough in marketing. You can’t be afraid to take the risk and invest.

Social media and marketing

We’re having a lot of fun with it. The whole social element is so new and exciting, and the impressions are vast. For print, it’s been pretty tough lately.

I blog (internally) once a week, and a lot of the executives and director level have the opportunity to write on it. (He also has personal Twitter and Facebook accounts, along with brand accounts).

The web is pushing us to evolve, fast. The key to it is the content. We’re all pressed to put out great content. That’s what sets apart anybody, in any industry.

Young people today, they want to know what’s going with your athletes, your company. They want to feel like they’re part of your brand. They want to come back and see something new and fresh, every day.

For the young bucks out there, there’s a lot of opportunity in social media. We have a department now called social media marketing.

You need people out and about, and we’re building an army to be at every event.

Our summer intern program this year is going to be in the social media group. They’re going to be blogging, about the company, products.

Advice for young people in the industry

My advice for young people just starting out in this industry: hard work and perseverance get you through the ranks. We have a ton of success stories of people coming up through the ranks. You’ve got to be able to break down a garment to be a CEO in this industry.

Don’t be afraid to compromise what (salary) you think you should be making for the opportunity to rise up.

Shifting trade show spending

In the last cycle, we took the approach, you go to a trade show to do what you do: show product to retailers, not show off your booth to the industry.

There was a lot of internal marketing going on in the industry. We were spending upwards of $250,000 to construct big, giant booths.

We found that we could take that money and it could be better spent supporting our retailers. So, we’re taking down the curb appeal on the booths, but inside, we’re still doing the job in there, doing what we’re there to do: sell product to retailers, not market ourselves to each other.

That big booth, that’s out the window. That’s the old model. Those old booths are sitting in the warehouse, in crates, gathering dust.

His background

Early in high school, I told my friends, “I want to run a company like Quiksilver some day.”

I majored in business at the University of San Diego, but I was supposed to be a third generation orthopedic surgeon, so I’ve really brought it down.

I don’t tell many people this – I’m not proud of it – but my first job was at Boondoggles. It was cheesy surf. I started as something like the office manager, got to wear a lot of hats, saw how production and finance and the business operated.

Then I went to No Fear, and that was a great opportunity to run the pre-production and understand how to put garments together. I was production manager, VP of manufacturing. The Simo brothers were great mentors and that’s where I learned how to market and sell.

I had a short stay at Rip Curl, it was really a stepping stone to O’Neill, where I came on as vice president of manufacturing, and was COO, side-by-side with Kelly Gibson, who ironically left to go to Rip Curl.

Being a young CEO (at 38)

It’s definitely the dream job. I pinch myself for an opportunity like this.

I thought when I took this job, that with these hands and a computer, I could run the company. It took me about a year to get out from behind that computer and go out and build relationships.

It was something I didn’t realize as COO. I left all that to the sales department. But my job is to get out and meet and greet the customers and find out what the specialty core retailers need.

California Apparel News (apparelnews.net) just featured the La Jolla Group in an article titled “La Jolla Group Redefines Action-Sports Business Model.” Check out the write-up here.

Irvine, CA (April 9, 2009) – La Jolla Group, the premiere multi-brand company in action sports with a prominent portfolio that includes O’Neill Clothing USA, Lost Clothing, Metal Mulisha Clothing, and Rusty North America, today announced a new collection of Rusty surf apparel for JCPenney, consisting of an exclusive line of graphic tees, shorts, boardshorts and hoodies for young men and boys to drop in stores this July. Featuring a customized “crown” logo, the Rusty collection for JCPenney will offer a fresh assortment of styles ranging from $26 for tees to $55 for shorts and hoodies. Rusty will also continue to design and distribute a specialty line for core retailers, reinforcing the brand’s high-quality, performance-driven products bearing the signature R-dot logo.

“We’re excited to bring Rusty’s rich surf heritage to one of the nation’s leading department stores,” said Toby Bost, chief executive officer, La Jolla Group. “Rusty has been a core surf brand for 25 years, and has one of the most recognizable logos in the industry. The Rusty collection for JCPenney will offer authentic, beach-inspired products that appeal to a diverse, aspirational and highly impressionable young audience. We’re stoked to add JCPenney to our growing list of premiere retail partners, while enhancing our growth at the core level.”

“With the growing interest in action sports everywhere, we have an exciting opportunity to further segment our distribution channels with product differentiation and distinct branding, while maintaining Rusty’s core authenticity, quality, and innovation,” added Charlie Setzler, president of Rusty North America. “We are now able to make the entire core line available exclusively to specialty stores and more actively explore trends, fabrications and ideas; and at the same time, drive demand at core stores, thanks to the increased exposure in a national retailer like JCPenney.”

The Rusty Collection for JCPenney joins the retailer’s growing list of national, exclusive and private brands for teens such as Vans, Arizona, American Living, RS by Sheckler, Southpole, Third Rail a Zoo York Production, and the extension of Decree into young men’s. Rusty’s specialty retailers will continue selling an exclusive collection of sportswear, printables and boardshorts bearing the iconic R-dot logo. Rusty’s premium boardshorts category, including its unique Global Cooling Boardshort series featuring the brand’s trademarked Ecostretch fabric, will maintain distribution at specialty stores as well.

For more information, visit rusty.com

###

About Rusty
Rusty is a brand with its roots firmly planted in the pursuit of the surfing lifestyle. By 1984, Rusty Preisendorfer had already established himself as a young legend in the surfboard shaping world. When the Rusty brand officially launched in 1985, there were few people who didn’t recognize the R-dot logo on surfboards across the globe. With the initial goal of making the best surfboards on the planet, it soon became clear that the tremendous demand for Rusty boards and recognition of the name would easily translate to apparel. What began with t-shirts quickly grew into a comprehensive collection driven by authentic surf roots, progressive product, edgy style, and the signature R-dot.

Decades later, Rusty continues to be an iconic brand in surf culture, featuring a product mix for guys and girls that includes boardshorts, hoodies, tees, knits, dresses and accessories; all available at leading surf shops worldwide. Inspired by art, fashion, music and design, Rusty delivers surf products that represent the classic, casual beach lifestyle defined by the risk-taking spirit and irreverence of today’s youth.
To get a closer look, visit www.rusty.com.

About La Jolla Group
La Jolla Group is the premiere multi-brand company in action sports, with a prominent portfolio that includes some of the most recognized names in the industry: O’Neill Clothing USA, LostClothing, Metal Mulisha Clothing, and Rusty North America. Enhancing the successful model perfected with the company’s acquisition of the O’Neill Clothing USA license from Jack O’Neill and family in 1992, La Jolla Group has applied its core competencies in design, marketing, sales, production, and distribution to each of its licenses, creating a diversified brand mix specialized in surf, skate, snow, motocross and beach lifestyle.

With four successful brands, over 300 employees across the U.S., six successful retail locations — including O’Neill’s flagship store in Anaheim, CA and the expansion of its Irvine, CA headquarters into a new 200,000 square foot facility — La Jolla Group continues to evolve and leverage synergies across its platforms. La Jolla Group brands are sold in over 3000 retailers across the country, and can also be found in Europe, U.K., Canada, Latin America, Australia, and Japan.

About JCPenney
JCPenney is one of America’s leading retailers, operating 1,101 department stores throughout the United States and Puerto Rico, as well as one of the largest apparel and home furnishing sites on the Internet, jcp.com, and the nation’s largest general merchandise catalog business. Through these integrated channels, JCPenney offers a wide array of national, private and exclusive brands which reflect the Company’s commitment to providing customers with style and quality at a smart price. Traded as “JCP” on the New York Stock Exchange, the Company posted revenue of $18.5 billion in 2008 and is executing its strategic plan to be the growth leader in the retail industry. Key to this strategy is JCPenney’s “Every Day Matters” brand positioning, intended to generate deeper, more emotionally driven relationships with customers by fully engaging the Company’s approximately 150,000 Associates to offer encouragement, provide ideas and inspire customers every time they shop with JCPenney.

Media Contact:
KurenT, Inc.
310.397.9025
Andrea Tagliareni // Lauren Kay
andrea@kurentinc.com // lauren@kurentinc.com

Rusty
949.428.2891
Shelley Sheppard
shelley.sheppard@lajollagroup.com

La Jolla Group
Erik Forsell, Vice President New Business Development
949.428.2969
erik.forsell@lajollagroup.com

The 1st Lusk Legacy Foundation Poker Tournament Party is coming up in just 1 week! All the Metal Mulisha team will be on hand supporting the cause, as well as many of the top riders in action sports. Ticket prices are lower now, and time is running out, so get your tickets NOW!

29 March 2009, Marrawah, Tasmania – It was a battle of the World Tour surfers, as Jordy Smith took out the inaugural Cold Water Classic Series event held in truly epic conditions at Bluff Reef in Marrawah, Tasmania.

In solid 8-foot swell, offshore winds and just to top it off – sunshine, Jordy Smith and Damien Hobgood showed just why they are two of the top World Tour surfers at the moment.

“It was good to get a win,” said Jordy. “It’s been a while. Damo’s been ripping this whole event,” he said. “I looked up to him as a kid so it’s great to be out there with one of your heroes.”

For Damien it was an impressive second place performance, but he was disappointed not to win the engraved wooden trophy; “I was hoping to dedicate that trophy to the Marrawah pub,” he said. “I had needed to step it up. I just didn’t do it. It was hard for me. Sometimes I was really hanging on with my toes so hard. It’s a little bit more bumpy out there than it looks for sure.”

Jordy Smith had blazed his way to the finals, knocking out the phenomenal Australian talent of Owen Wilson in the quarterfinals before an exciting close semifinal heat against the Brazilian Jadson Andre.

The other semifinal also could not fail to disappoint given the talent on offer at this competition coupled with the perfect conditions. The American Patrick Gudauskas narrowly missed out on advancing to the finals with a spectacular barrel on his last wave which came so close to the 9.07 score he had required against Damien Hobgood.

“Thank you to O’Neill for thinking out of the box,” said Damien after his heat, “and thank you to all the people in Marrawah who have been so welcoming and so open.”

Among them were Christel and Max Whish-Wilson who let the final contest day move into their house and front lawn – looking out over Bluff Reef.

“It’s been an awesome experience,” said Christel. “We’ve had the best guys staying with us while we cook and take care of them. They’re so well mannered.”

“Having the final here today was exceptional. We had the first day and now the last day here. We just loved it. Max and I both loved it. Hopefully it will come back next year as well.”

It has been a spectacular week both in the surf and out at this first stop on the O’Neill Cold Water Classic Series.

Rob Bain, O’Neill’s marketing manager summed it up saying; “It’s been more successful that I could have hoped. We wanted raw and challenging, remote and adventurous, and a good spirit and adventure around the event. We ticked all those boxes,” he said.

“The biggest thing I am proud of,” said Rob, “is the spirit of both the locals and the surfers around the event. The locals didn’t know who the surfers were and they didn’t care. All they cared about was if they were good kids or not, and they all came with such a good attitude and spirit.”

…Lost is nominated for Mens Marketing Campaign of the year, and for Surfboard Model of the Year.

O’Neill is proud to announce that it has been nominated for four awards for the 2009 SIMA Image Awards. O’Neill received nominations for Men’s Apparel Brand of the Year, Footwear Product of the Year, Wetsuit of the Year and Boardshort of the Year. The winners will be announced on May 6-9, 2009 at the SIMA Surf Summitt in Cabo San Lucas, Mexico.

Category – Men’s Apparel Brand of the Year
O’Neill has a strong history of being a leader in innovation for the surf industry. From the invention of the wetsuit to the introduction of the Super Freak boardshort, O’Neill has a pioneered the most technically advanced product to ever hit the marketplace.  This leadership position continued in 2008 with development of the TIA boardshort, Jordy Smith’s first signature style.  Riding the momentum of the 2007 Jordy Smith signing, O’Neill designed a unique African inspired standalone boardshort for 2008.  Combining functionality, comfort ability and style, the TIA was a huge success at retail.  O’Neill continues to push all other apparel categories with fashion forward trends.  Key category standouts were sweaters, denim, jackets and boardshorts. Backed by an elite athlete roster which includes Jordy Smith, Cory Lopez, Timmy Reyes, Ian Walsh, Roy Powers, and John John Florence; O’Neill not only has on point product, but the star power to effectively market this product to the mainstream.

Category – Men’s Boardshort of the Year
Product Name – TIA
“This is Africa. This is Jordy.” Jordy Smith’s first O’Neill signature boardshort launched in Spring 2008 and ran the industry a buzz. With its African zebra print and bright color pops, a throw back to Jordy’s personality and South African descent, this boardshort stood out as 2008′s leading contender. The TIA psycho stretch 22″ engineered print boardshort features four-way stretch, a super fly closure, and cargo pocket. Jordy’s Y signature, inspired by the South African flag, integrated into the boardshort design gave this signature style a direct tie to his African heritage.

Category- Footwear Product of the Year
Product Name – Surf Turkey
What every surfer needs when they are stepping out of the water on those cold winter mornings. The Surf Turkey is a novelty tweed mid top after surf boot, with a sherpa lined interior, tricot lined footbed and a vision custom molded rubber outsole. This surf boot not only guarantees to keep surfer’s feet functioning but is also a stylish, comfortable addition to any footwear collection.  

Category – Wetsuit of the Year
Product Name – O’Neill Psychofreak
 
O’Neill, the Industry’s Original Wetsuit manufacturer, never sleeps when it comes to innovative design and materials.  For 2008 O’Neill’s Area 52 Product Development Team introduced another revolution in wetsuit design with the Psychofreak.
 
Determined to make the warmest and most high-performance cold water wetsuit, Area 52 set out to design a wetsuit that improved the insulation from its neoprene without sacrificing flexibility.  The end result was the introduction of the Psychofreak made with 100% XDS-Air insulated neoprene. 
 
XDS-Air insulated neoprene is built with a complex 3D structure of rubber and trapped air components that increase the amount of air in the neoprene.   The increased air-to-rubber ratio provides more insulation, which generates more warmth than traditional neoprene.  
 
Combine the toasty XDS-Air insulated neoprene with the insane features of O’Neill’s stellar Psycho 2, and you have a wetsuit that warrants the Psychofreak name.

Introduced in 2003, the goal of the SIMA Image Awards is to identify the surf industry’s most influential companies and recognize them for their efforts to advance and grow the industry over the past year. As you know, all regular and board builder  SIMA members were eligible to enter their brands or products, as well as enter retailers. All entries were then reviewed by an industry panel of experts which included manufacturers and specialty retailers. The nominees in 15 categories were determined by a vote from this industry panel of experts. All paid SIMA member companies and a select list of specialty retailers will now vote to determine the winners. For for detailed information on the voting process, visit simaimageawards.com