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Roxy helps Quiksilver reel in more females

By Molly Knight

Quiksilver says it hopes a new line will allow it to keep its young women just a bit longer.

The Huntington Beach, Calif.-based outdoor lifestyle chain says it will roll out a brand for women 18 to 24 next fall. This new label is for customers who have outgrown its Roxy juniors brand. The price points will lie between $34 and $128, about 20 percent higher than Roxy’s.

For sure, the company has created a substantial following among younger shoppers. Its apparel and footwear sell in about 90 countries, and total revenue amounted to $2.36 billion for the fiscal year ended Oct. 31, 2006.

The new collection will sell in its own stores and in department stores, specialty stores and surf shops, says Chairman and CEO Robert B. McKnight Jr. Women’s Wear Daily reported that the line will feature 118 styles in its first collection, including an $89 pair of gray-tinted skinny jeans and a $120 silk minidress.

The launch of this line comes as sales of women’s outerwear have been driving the multibillion-dollar surf-wear business, company officials say, catching up on Quiksilver menswear sales. Roxy brought in sales of $647 million last fiscal year, while the Quiksilver menswear division posted $750 million. Roxy revenues rose 18 percent year on year, and Quiksilver’s went up 6 percent. Sources say it may not be long before the women’s category surpasses the men’s.

“Quiksilver has done extremely well on the men’s side for a number of years, but now we’re seeing that it has the legs on the women’s side as well,” said John Bemis, executive vice president and director of leasing in the Atlanta office of Jones Lang LaSalle. “This beach-casual look is very popular with the ladies.”

When Roxy launched as a swimwear line in 1989, many thought it would fill a small niche with Southern California surfer girls, though Quiksilver expanded Roxy’s apparel and appeal over time. “The initial perception was that Roxy was just a Southern California surfer brand,” said Jeff Green, president of Jeff Green Partners, a Mill Valley, Calif.-based retail consulting firm. “But now it’s become a coastal apparel chain that has done a superb job selling a lifestyle not just for surfers but for any girl who loves looking like they love the beach.”

Quiksilver says it hopes older females will demonstrate a fondness for coastal apparel as well. But hooking women in the 18-to-24 age group is trickier than landing their younger counterparts, sources say. “This tends to be an extremely fickle age group that is increasingly more sophisticated and discerning than in previous generations,” said Bemis. “This consumer isn’t going to buy anything she’s doesn’t want, and the trend cycles are a lot faster than they used to be, so Quiksilver really needs to get it right in the first season, because the patience isn’t there if the line is wrong.”

By setting the price points higher than its core customer is used to, Quiksilver runs the risk of alienating customers not expecting to spend the better part of $100 on a skirt or a pair of pants, sources say. That makes it vital for the company to change the perceptions of the quality of its clothing. “It’ll take a little bit of education and advertising to inform customers that they’re taking the brand to another level,” said Bemis. “Twenty years ago people were paying $3,000 for Hyundai cars that were basically square boxes they could throw away after three years. Now Hyundai is selling cars for $25,000 to $45,000, because they’ve repositioned themselves as a reliable car dealer. For Quiksilver to be successful selling a silk dress for $125 or a pair of jeans for $80, they’re going to have to do that as well.”

Indeed, rather than target surf-wear companies like Billabong and O’Neill as competitors, the new Quiksilver line will challenge higher-end women’s clothing apparel chains like Diesel and Guess for customers, company officials say. “Though the price points won’t be as high, I also see them going up against places like Forever 21,” said Bemis. “It’s that age group and that level of style consciousness that they’re looking at here.”

Sources say in its effort to branch out within the beachwear industry, Quiksilver may be able to learn from the recent mistakes of Pacific Sunwear of California, another giant in this market. After a series of miscues involving merchandising and expansion, PacSun posted a net income decrease to $40 million for fiscal 2006, which ended in February, down from $126 million a year earlier. For the first half of this fiscal year, the company suffered a net loss of $15.6 million.

“PacSun made the mistake of thinking that everybody in the U.S. aspired to be coastal, when that simply wasn’t the case,” said Green. He predicts the company will be forced to shut many of its stores soon. “Companies like American Eagle that started in the middle of America and then slowly went coastal have a better shot of resonating with every American than a brand like PacSun or Quiksilver that starts in Southern California,” said Green, “because the lifestyle might be a little much for a kid in Oklahoma to buy into, whereas a polo shirt and khaki shorts works pretty much anywhere.” At the epicenter of PacSun’s woes, though, was Demo, an urban-street-wear concept the company launched in 1998 to reach a different consumer. The company closed 74 underperforming Demo units last year.

If Quiksilver wants to avoid a similar fate, Green says, it will need to understand its customer and introduce the new line in areas where it has a chance to succeed. Quiksilver continues to test the waters with Roxy to get a feel for where the customers may be, sources say. Quiksilver currently has four Roxy stores open in Arizona, California and Hawaii. The company announced that it would open four additional units by the end of this year — at Garden State Plaza, in Paramus, N.J.; The Florida Mall, in Orlando; The Shops at Wailea (Hawaii); and Somerset Collection, in Troy, Mich.

Based on the strong foundation Quiksilver has built with Roxy, the company may have good reason to believe it can paddle out and ride yet another wave of success.