Volcom has nearly completed the recruitment of the new management team that will gradually take over next year the large European business developed under the brand by a licensee, Michel Gamay, with growing annual sales estimated at about $30 million. Volcom Europe, whose head office is being erected in a new dedicated business park for the boardsports industry in Anglet, on the Basque coast of France, will take it over fully with the Fall 2007 collection.
Bruno Gujère, former Swiss distributor of Volcom, is relocating there to act as general manager of Volcom Europe. Peter Smith, an Englishman, has been appointed as European sales director. Smith worked previously for Aigle and then for Oakley Europe, where he was brand manager in charge of apparel, footwear and accessories, and he will be supported by Christian “Chè” Guevara, a former Rusty official, for the French market. Other members of the team are Gilles Duhamel, who will act as chief financial officer as he did at Quiksilver Europe, and Stéphane Santoni, who comes from a skate brand, Matix, and will handle product management.
No decision has yet been made on the development of Volcom stores in Europe or anywhere else. The company recently opened two stores in California, in San Diego and in Santa Barbara. Volcom’s European licensee opened one near the European head office in Hossegor, where almost every surf brand has its own shop.
Volcom has confirmed and renewed all its existing distribution agreements in Europe, where the brand’s strategy of avoiding the big chains and focusing on core surf and skate shops will continue. The policy is different in the USA, where Volcom’s single largest retail customer is Pacific Sunwear, but this large American retail chain may not be carrying as much of the company’s product in the future.
The change has prompted the U.S. action sports brand to lower its sales expectations for the 3rd quarter of its financial year, ending Sept. 30, to a growth of 16-17 percent. Revenues from Pacific Sunwear were up by 26 percent in the 2nd quarter to $13.4 million and are expected to decline in the 3rd quarter and to be flat in the 4th quarter. However the company anticipates a jump in total revenues of 25-27 percent to $200-203 million for the full year.
In the 2nd quarter ended June 30, the company, which went public recently to help finance the takeover of its European license, had a strong 28 percent increase in revenues to $46.1 million. Volcom’s gross margin shrunk by 230 basis points to 49.8 percent, and selling, general and administrative expenses (SG&A) decreased at nearly the same rate, allowing net income to climb by 41 percent to $6.5 million.
Revenues in the USA grew by 28.2 percent to $36.8 million during the 2nd quarter. Outside of the country they rose by 27.9 percent to only $8.7 million as the European business continues to be handled by a licensee. For the brand’s other revenues, men’s products increased by 20 percent to $25.4 million, girl’s items were up by 33 percent to $16.5 million and boy’s products jumped by 103 percent to $3.1 million.
