Volcom sells for $608 million
Last week, PPR, a French luxury retail group, announced that it had acquired Volcom Inc. for $608 million. And thus a core action sports apparel brand founded in 1991 with a slogan "youth against establishment" joined a portfolio that includes the likes of Gucci and Yves St. Laurent.
According to a story in The Wall Street Journal, the deal makes sense for PPR as it attempts to beef up its sports division around Puma, the world's third-largest sportswear brand after Nike and Adidas.
Francois-Henri Pinault, chairman and chief executive of PPR, said in a statement that Volcom, which has a small footwear line, makes a good match with Puma. "Volcom is complementary to Puma and we are convinced that its integration into our sport and lifestyle group will speed up its development," he said.
According to The Wall Street Journal, both Puma and Volcom, of Costa Mesa, Calif., have struggled during the economic downturn. PPR's sports lifestyle division, which includes Puma and Cobra golf, made $3.7 billion in sales last year. Meanwhile, Volcom and eyewear brand Electric had sales of $323 million.
PPR will buy 100 percent of Volcom shares, according to the terms of the transaction. The deal is expected to be completed by September, and Volcom founder Richard Woolcott and Volcom's other directors will remain with the company.
Peter Townend, the first world champion of surfing and now an action sports brand consultant, said that Volcom might be relatively small compared to the likes of Quiksilver, Billabong, Rip Curl or Vans, but "what it does have is huge global potential," he said.
"It changes the perspective of the industry overall," said Townend, who coached Woolcott on the gold-medal-winning United States surf team in 1984 at the ISA World Surfing Championships. "One of the things it will do on Wall Street is demonstrate that this industry is for real."
But how will it play on the streets, on schoolyards and in shopping malls, where Volcom has burnished its anti-establishment bona fides? "I don't think kids will know about this acquisition," pro skater Dustin Dollin said last week. "What I've been told, they're not going to come in and change everything."
About questions that Volcom had sold out, Dollin, who has a signature line of jeans with Volcom, said: "As if everything hasn't been exploited already. Look at secondhand clothing. It's so expensive now."
Pro shred Pat Moore is a member of Volcom's streetwear team with snowboarders Terje Haakonsen and Kevin Pearce. He heard about the acquisition in a text message from a friend earlier this week. The text read: "Gucci owns Volcom."
Still, Moore was optimistic about Volcom maintaining its edge. "The company out of Wooly's garage is the same as it is today," he said about Woolcott's early days running Volcom from his house. "That company's not changing."
That was consistent with the company line that Woolcott, Volcom's chairman and chief executive, provided in a statement. "For more than 20 years we have worked to inspire a movement that provokes freedom of thought and expression, and celebrated this spirit through our athletes, worldwide events, rock tours, feature films and, of course, our apparel," he said. "PPR, with its expertise gained through both Puma and its Luxury Group, could bring international market knowledge, sourcing capabilities and other operational expertise in areas such as product development and retailing to help the company grow Volcom globally, while preserving the elements that make the brands authentic."
Looking ahead, Dollin was optimistic that Volcom would have access to better materials. He said, "It's like we have more money to have fun."