In the first few weeks of October, rumors spread across the surfindustry that several buyers from Pacific Sunwear had quit the companybecause they were pissed off about PacSun’s new emphasis onprivate-label business.
But according to Tim Harmon, PacSun’s president and chief merchandisingofficer, there’s been no change in the company’s private-label strategy.”There’s absolutely no truth to the rumors,” says Harmon. “It’s adocumented fact that over the past five years our percentage ofprivate-label business has been at a low of 35 percent and a high of 38percent of sales. We don’t see any change in that going forward.”
However, Harmon says there have been a few internal changes at PacSunthat will allow the company to do a better job developing newprivate-label styles. “We’ll do a better job developing product anddoing research on the new fashion trends,” he says. “We won’t be sittingback waiting for others to show us the way.”
He says Pacific Sunwear has slightly altered its buy-in strategy aswell. It will eliminate quite a few “wide pant leg” urban brands out ofLos Angeles and recommit those open-to-buy dollars to five or sixsurf-apparel vendors. “We saw a greater opportunity to grow the businessin a profitable manner by focusing on several key surf and skatebrands,” he says. “There’s no reason to waste our time on those brandsat the fringe of our marketplace.”
So are the rumors completely without basis? Harmon admits that severalbuyers have recently been recruited away from PacSun and that severalothers have left “for other reasons,” but says that less than 50 percentof the buyer workforce was affected.
Bob Skoldberg, Rusty’s international sales manager, says he’s familiarwith the rumors but says PacSun did a good job by quickly getting theword out about the changes: “I know they’ve done some restructuring withthe buyers, but they recently went around to Quiksilver, Billabong,O’Neill, Rusty — really all the heavies — and explained how they werecutting out some of the fringe brands and going heavier with others.”
So, did the move shrink the size of PacSun’s order with Rusty? “No,thank goodness we were one of the brands they really wanted,” saysSkoldberg. “They mean a lot to everyone — just because of the number ofstores they have.”
Indeed, PacSun recently announced plans for a new distribution centerand corporate headquarters in Anaheim that will be capable of servicing1,200 stores — or more than double the number of existing storefronts.”By 2004, we expect there will be 200 d.e.m.o storefronts, 75 outletstores, and 720 Pacific Sunwear stores,” says Harmon. As of October 1,the company operated 68 d.e.m.o. stores, 43 outlets, and 449 PacSunstores — for a total of 560 stores in 48 states and Puerto Rico.
Harmon says the surf market is strong right now, but the fastest-growingcategory is skate apparel: “The skate business is growing quickly, andthese brands have a much more defined distribution pattern than many ofthe beach brands.”
He’s quick to point out, however, that the skate brands do far lessbusiness than the surf brands. “The skate brands could double in sizeovernight and they’d still be only about 25 percent of our surfbusiness,” says Harmon, who quickly adds that those numbers are roughestimates at best.