In a company-wide meeting this morning, Jake Burton announced a sweeping realignment of the company’s brands and corporate structure including transitioning out of The Program brands, Foursquare; Forum; and Special Blend after this winter, moving Gravis to Tokyo and distributing it solely in Asia, transitioning Analog out of skate and surf, launching anon helmets, and scaling back RED to limited availability.
We caught up with Burton after the meeting to learn more about the impacts and goals of this difficult decision:
Sounds like it was a difficult morning out in Burlington today?
Yeah, it was a little while coming—pretty tough. Especially for the people involved, but something we had to go through.
What’s the mood over there today following this morning’s meeting?
The affects here in Burlington were negligible in the context of people or non-existent really.
The impacts were more in the California offices?
Yeah, it’s obviously more of a blow to our California crew. It’s the hardest part of the whole thing obviously. We all feel that we’ve sort of let each other down, but everybody gave 100 percent in investment and commitment and passion towards those brands, but in the long run the writing was on the wall. I think everybody pretty much accepts that and has come to grips with it.
Will you guys be closing the Costa Mesa offices?
There’s quite a period of time of transition so that won’t be happening immediately, but over time, probably. We have two buildings in Costa Mesa, Burton is out of a building as well. So we’ll probably, over a period of six months or so, squeeze everything into there.
We’re still shipping Analog spring/summer and we want to support it in the context of marketing and inventory and everything else that goes along with having a brand in the marketplace?
Can you share how many people were affected or a percentage?
We are privately held so it’s not like we have to file specific information, but I think it’s a bit vague in the context. We could have put on sort of an act and pretended like the brands were still in business and had trade show booths.
Smoke and mirrors.
Exactly. We didn’t go that route so consequently we wanted to be honest and forth coming and not bullshit people. Our decision was to announce it pretty quickly and consequently a lot of people are sticking around to facilitate the transition. They’re not sticking around forever. Some people are pretty much done, but that’s a minority.
As you know, this is the beginning of a long-term transition strategy. As such, specifics on HR data will not be disclosed. What I can share is that where appropriate and where opportunities exist, we will be absorbing staff into the Burton infrastructure full-time, and/or keeping them on for transitional roles and support.
There’s been a lot of talk and speculation around the industry about how you guys were impacted by last winter and the economy in general.
That definitely precipitated it in some form, but financially we’ve had a couple good years. This year’s looking fine, so this was more of a function of, and I say this in all honestly, looking forward at the long-term viability of those brands. Maybe a killer winter last year would have made us less focused on looking at our longer term deal, but I don’t think it was something that was made in the context of just a tough winter.
You think that would have just prolonged the decision?
Yeah, it would have probably just made us a little bit less inclined to look at the long-term viability of everything we’re involved in.
In saying this has been a long time coming, give me a background of the discussions around these changes and where you’re looking at taking things for Burton?
It’s a combination of the success that we’ve had with the Burton brand and also in new categories on a year-round basis. The apparel thing is going very well and our bag and pack business continues to surprise us with how real it is. We came to the realization that those are the areas where we should be investing and it’s where the brightest future is for us and our retailers.
With focusing more of your efforts on the Burton brand, where do you see reinvesting on that side?
We can focus more money on the marketing side of our year-round business—the apparel, bags, and pack stuff. We can invest in product development and R&D facilities much like we built Craig’s for the board thing—we want to add in to Craig’s the capability to make prototype bags—same day like we do with boards, and take things in that direction. Having those other brands that were not making money—it wasn’t like I was all stressed solely about having to make money—but in the longer term it was money that could have been spent in other areas.
The philosophy of focusing on what you do well and pouring your energy into that is a serious reality in today’s economy.
Yeah, exactly. We have a board of directors—they’re pretty financially oriented and capable people. They’re more advisors because we’re privately held and can do what we want, but the message from them was that this economy is very much rewarding those who focus on their core business. To hear that repeatedly, I guess it finally sunk in.
Take a look back at the Burton timeline:
As far as The Program brands, the release says your transitioning out of them. What does that mean? Are you planning on selling them or are you putting those to bed?
We’ll probably, to use your words, put them to bed. I don’t see us selling them. I think we will retain the trademarks should anything ever develop in the future, but it’s part and parcel of the philosophy of looking at what we do best. We have looked at opportunities to target those brands towards specific opportunities that might exist in the marketplace at different levels of distribution or price points and it seems like the message we get from people is “we want Burton.” So we’ve got to be responsive to that.
Do you see launching a different line under Burton to better target The Program customer?
For sure. I think that the Burton brand is pretty encompassing, but this is an opportunity for us to expand our core business as we know it and seize on opportunities that exist.
On to the Gravis front, how much of the market share of Gravis has been in the Asian market? I’m guessing that’s why you’re shifting it there.
I don’t have those numbers, but it’s probably been close to, or more than, half. Even in the early years when Gravis was wildly successful, so much of the business done in North America and Europe was being diverted to Japan. Japan has always had this very genuine affinity towards the brand and I think our people over there were very anxious to give it a shot and felt they could succeed. I think in many ways it will be cool to have the brand rooted where it is virtually adored.
So it will be headquartered out of the Burton Japan office?
Yes, for sure.
With funneling more resources into the Burton brand, do you foresee launching Burton footwear with that product knowledge from Gravis?
It’s not on the table. We really want to focus on our snowboard boots and products.
On the anon side, it definitely makes sense to roll helmets up with that and move away from RED.
That’s something we’ve been talking about and it had been in process. It almost felt a little bit awkward lumping it in with this other news about other decisions that were made more recently, but we felt it was logical since this was going to be happening to announce them all together at the same time.
The anon thing is interesting. It’s different logic that pushed that decision, but when you look at it in and of itself it’s sort of the same philosophy.
Will the design direction be similar to RED or will it be a big departure?
I think it’s an opportunity for different identity on the helmets in the context of logo-ing, and we’re putting more resources into it. There were also a lot of efficiencies right there just with the expenses of running two brands. The efficiencies of making it one brand gives us more money to invest in R&D, design, marketing, team, and so forth.
What does that mean as far as RED having limited availability going forward?
We want to support the riders—there are some team riders on RED…
So they’ll stay on?
Will product still be available at retail?
I don’t know if we’ve decided the exact scope, but for sure in our retail. Beyond that, I’m not sure. It probably depends a lot on what the demand is.
With focusing most of your efforts back on snowboarding, why did you guys decide to leave Channel Islands unaffected?
Channel Islands is very independent. It’s not any kind of a distraction for us and it’s something we’re very proud of and it’s viable in the long term.
And performing well financially?
It’s not the size of Burton and I wouldn’t say it’s making money hand over fist, but to a certain extent it’s a labor of love. It’s such a good thing and I feel a commitment to Al [Merrick] and a commitment to the people there to perpetuate it. It’s very independent and doesn’t have the end result of taking our eye off the ball in any way.
What would be the take away message for your retailers? What does this mean for the relationship and for your brand?
Just like it’s tough for myself, I think it will be tough to a lot of retailers who have shown commitments to these brands. I don’t want to minimize that. I get it and I understand it and I feel the same way, but I am confident that this is the right move in the long term for us and our retailers. I don’t think that there is any conflict of interest there. I think we are very aligned and I think they will see that and see our increased commitment to our core business and I think we will all benefit in the long run. Hopefully they have confidence in our ability to make the right decisions and I think by and large we’ve done that in the long term. We’ve been in this business for over 35 years and a lot of our retailers have been in it damn near that long themselves. It’s a tough period of time and I don’t want to minimize the severity of what’s going on, but I think that it is a decision that has been agonized over and debated and very thought out and I think that they need to trust us on that and those that do I think will be rewarded in the long run.
Anything else you’d like to add?
I just wish the best for the people affected.