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Nicola Mira
Jul 26, 2019
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Volcom’s vision for future following sale by Kering

Translated by
Nicola Mira
Jul 26, 2019

For the last five months, Volcom has been flying free. The board sports brand is no longer the one being edged out of the Kering portfolio, having lost its alignment when the luxury group's new strategy was put into place in 2011. In short, Volcom is now evolving in an environment, far from the glitz, that suits it much better.

Indeed, the Californian brand, founded in 1991 by Richard Woolcott and Tucker Hall, was sold last April by Kering to Liberated Brands, which is backed by CEO Todd Hymel and Volcom’s own management, with the Authentic Brands Group (ABG) as minority shareholder.

Todd Hymel, CEO of Liberated Brands, owner of Volcom - Volcom

Kering had heralded the intention of selling Volcom some time ago, preferring to focus on its luxury business. “Without entering into details, this kind of negotiation is usually quite lengthy,” said Hymel, the CEO of Liberated Brands.

“ABG bought sports brand Tretorn [in 2015]. When Kering’s senior management indicated it wished to sell Volcom, ABG naturally signalled its interest, as its CEO Jamie Salter is a big fan of action sports,” added Hymel.

The value of the transaction has not been disclosed. The French group led by François-Henri Pinault bought Volcom for $608 million in 2011, when Kering was still known as PPR. According to the latest figures published by Kering, in 2017 Volcom generated a revenue of about €230 million.

“We are growing in the direct retail channel, and business with multibrand retailers is stable.  This year, we will reach close to $300 million. In Europe, while France was affected by the ‘yellow vest’ movement, the trend for the region as a whole is extremely stable,” said Hymel. Globally, Volcom has about 130 monobrand stores, between directly operated ones and concessions.

However, as Volcom announced when the acquisition was made official, its ambition is to boost performance by growing on the US market, a crucial one for surfing, snowboarding and skateboarding, as well as music. Volcom currently generates 60% of its revenue in the USA and, to deploy more extensively in the country, it will be able to rely on ABG’s know-how. ABG specialises in brand licensing and marketing, and its revenue forecast for 2020 is $10 billion. Its portfolio includes brands like Airwalk, Frye, Vision Streetwear and Tretorn, the lines of former NBA stars Julius Erving and Shaquille O’Neil, of golf legend Greg Norman, and of Elvis Presley and Marylin Monroe.

Volcom's collaboration with artist Mike Giant - Volcom

“We will continue to tap the expertise of our existing staff, and keep working with our long-established partners and core retail network,” said Hymel. "ABG’s connections will enable us to reach out to new retail networks, where their various brands are already present. With the help of ABG's staff, we will be able to launch initiatives that will boost our visibility. We will also extend our US branding work to overseas markets. Last year, our offices in Hong Kong and Tokyo merged, but otherwise the offices in Europe, Australia and Asia remain unchanged.”

Volcom will also continue to stage events like this summer's ‘Garden Experience Tour’, with stopovers in Berlin, Breda (the Netherlands) and Bordeaux, and will keep on sponsoring skateboard, surf and snowboard athletes, to have a presence at international competitions and boost its core content.

Snowboarding has been clearly identified as one of Volcom’s growth drivers, together with women’s and children’s products. “We continue to push into the snowboarding market. We are very successful, posting double-digit growth. We aren't simply targeting sport practitioners, we are going for a broader audience. In the US, we started doing business with Recreational Equipment Inc., [the retailer better known as] REI,” said Hymel.

"Nowadays, about 70% of our revenue comes from men’s products. But we want to strike a better gender balance, and three years ago we set up a team dedicated to women’s products, whose work is beginning to pay off. Assuming a growth rate consistent with that of men’s products, we should be able to reach a 60-40 split in the near future. We are also working with ABG on the sourcing front, to eventually combine orders on certain product categories. The products of some of ABG’s brands like Nautica or Aeropostale are much closer to our experience than those of Kering.”

The connection with ABG works on various fronts, since Liberated Brands is more than an extra group of brands within ABG’s portfolio. “ABG currently doesn’t have the kind of distribution platforms and international presence we have. We are assessing which brands we might support internationally. There are many opportunities,” said Hymel.

Among them, perhaps the setting up a new group dedicated to action sports. ABG owns Spyder, Vision and Airwalk, and has the ability to foster external growth, so that the expansion potential is very attractive. Hymel, a specialist in mergers and acquisitions, simply said for the time being that he is looking “at some possibilities” with ABG.

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