Bob Hurley Explains Why He Sold His Brand To Nike

Bob Hurley, President of Hurley International, today confirmed the rumor that has swept through the surf industry this week: his namesake brand will become a wholly-owned subsidiary of Nike.

In the summer of 1998, Bob shocked many in the surf world when he announced that he would give up the lucrative United States license for Billabong clothing in favor of launching his own label.

And since the Hurley brand launched in 1999, it has been an intriguing success story within the apparel industry. Through its partnership with music acts such as Blink-182; its sponsorships of a broad range of athletes in the surf, skate, and snow markets; and its deep relationships with retailers in the action-sports market, Hurley quickly gained traction not just as a “surf” brand but as a “youth lifestyle brand.” According to the L.A. Times, this year Hurley sales are expected to top the 70-million-dollar mark. While some say this estimate might be on high side, all agree that Hurley has become a solid business in the short time since its launch.

Around the same time as Hurley’s launch, Nike was also trying to make inroads into the surf and skate markets. It opened a Southern California ACG office and debuted a line of “surf- and skate-influenced” apparel at the September 2000 ASR show in San Diego.

But the line suffered from a lukewarm (at best) response from retailers and by November of that year the brand had pulled the plug on its Southern California ACG experiment. The story was much the same for Nike’s skate shoe line, which failed despite being supported by a clever and far-reaching television campaign.

Back then more than a few in our industry chuckled at the repeated missteps Nike, a company with 9.5 billion dollars in annual sales, seemed to be making in our tiny vertical sliver of the 375-billion-dollar apparel-industry pie.

But the announcement today seems to be good news for Hurley’s international prospects and appears to give the Nike business the type of authentic toehold in the action-sports market place that it seemed unable to achieve on its own.

But don’t expect much to change with the Hurley brand, Bob Hurley told TransWorld SURF Business this morning. “It will be the same old Hurley, with the same management team in place,” he says. “It does mean communicating our brand message worldwide, and that’s exciting because we aren’t in any other countries besides the United States at the moment.”

Hurley says the first international market the brand has its eye on is Japan. “This really is great news for us,” says Hurley. “In our industry the way most brands get international distribution is by licensing their name out. When they do that, a lot of times they lose control of what the brand stands for and that really takes the fun out of it.”

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Some of Hurley’s competitors say they’d be surprised if Nike will remain satisfied with the brand’s current sales figures and assert that distribution will have to be opened up here in the United States. But Hurley says the deal will actually allow the brand to tighten up its distribution here in the U.S.: “We’ll be cleaning it our distribution up.”

So will Hurley — both the man and his namesake brand– be able to survive within the corporate culture at Nike? “I don’t think it’s going to survive,” says Hurley, “I think it’s going to flourish.” He goes on to say that as a wholly owned subsidiary, he doesn’t expect much to change. “There was a rumor that I’d be moving to Oregon,” he laughs. “That’s just not the case. It will be the same team and out of the same offices. We aren’t going to change direction. We’re Hurley and that’s not going to change.”

Hurley says that he’ll be working with Tom Clarke, Nike’s President of New Business Ventures. “Our partnership with Hurley is the right choice because Hurley is a strong brand that is uniquely positioned in t marketplace and relevant to a broad group of teen consumers,” says Clarke in a press release. “We’re looking forward to helping Bob fulfill his vision of building a truly international brand.”

Hurley says he has no plans of leaving the company. “If that was the case, I wouldn’t have done the deal,” he says. “I have big career goals and so does my staff, and I think everyone sees this as an exciting opportunity.”

Hurley says the deal has been in the works for the past nine months. “It’s personally satisfying because I have a lot of respect for Nike,” he says.

Of course, it’s bound to be financially satisfying as well, as this deal no doubt allows Hurley to gain some liquidity from his company. “The financial aspects are great,” he says. “But they weren’t the reason for the deal. I’m already a wealthy man — I have a great family, wonderful friends, and an exciting business.”

So what’s the industry’s reaction? According to Dave Hollander at Becker Surfboards, “I’m thrilled for them that they can take their money and see a return on all their hard work. I’m really not that worried about it. Dean Quinn, Hurley’s Director of Sales called me today and said they were using the alliance to expand into the international market — and I have no reason not to believe him. I think they’ll keep it pretty locked down in the core Southern California market.”

“On the production side,” continues Hollander, “I think it’s great news. Hurley has always been a bit behind the curve when it comes to sourcing and production. Now I’d imagine they’d have some of the best sourcing and cutting tables in the world. I think they’ll have shoes too, and will have all sorts of new opportunities. I’m really curious to see what Nike does with the brand.”

Rob Chalfant at Clairemont Surf Shop in San Diego says he hasn’t heard many details yet, but he’s wondering how it will change the brand. “I think they’re trying to take the brand to the next level with this deal, but that’s surprising because they’ve turned their back on a lot of bread-and-butter pieces lately,” he says. “It seemed to me that they were tired of doing the same ol’ stuff and had a much more street-fashion emphasis compared to the clean surf look they had when they first came out.”

“It will be interesting to see how it all pans out,” Chalfant continues. “If you look at Op and Gotcha, they were once small brands who wanted to take it to the next level. Now they’re hardly in any surf shops. I think there’s a danger if they really open up distribution or start making shoes or swimsuits just because they now have the resources to do so. Plus having a company own you doesn’t give you 100-percent control. It will be interesting to see what demands are placed on them that are above and beyond what they’re doing now.”

“I’m so stoked for all the the people who make up Hurley,” says Eric ‘E.J.’ John, owner of Laguna Surf And Sport. “This is a great thing for our industry and a great thing for the many owners of Hurley. Can you imagine having one, two, or three percent of that deal?”

“Both Hurley and Nike know the value of athletes, innovative marketing and taking risks,” continues E.J. “I think it’s a great marriage. Imagine the creativity at Hurley comboed up with the resources of Nike. I guarantee that the public’s perception will not be affected in the slightest. They love Hurley and will continue to love it. Probably in a bigger way.”

So what does EJ think Hurley gives to Nike that it didn’t already have?

“A new market unreachable to them through their ‘swoosh’ brand and the potential for tremendous global growth,” he says. “I also hear Tiger digs the brand. Seriously, those guys at Hurley — Bob, Leanne, Bill, Mr. K, Mo., Gomez and all the others — have always had my back. So now when something great happens for them (both as a company and personally) I’m not going to say anything negative because I’m jealous (and I am). Our industry has been in the doldrums since September 11 and when a multi-billion dollar company wants to chunk down that kind of scratch into it, it creates hope in me for the future of our industry in general. It creates energy, it gives us something positive to talk about and it will probably indirectly foster two or threee badly needed start ups.”

Of course, the news makes Hurley an easy target for some good-natured jabs from competitors as well. “It the Nike deal comes as a surprise,” says Billabong U.S.A. President Paul Naude. “I always thought those Hurley guys were doing it for fun.”

Jurgen Schulz at K-5 Boarding Company says, “If it doesn’t change the brand, then more power to them. What are they going to do, open more people? I mean, who’s left? I’ll only be worried if we start seeing a tiny Nike swoosh in Hurley’s H logo. But it will be interesting to watch what Nike does. You never know with those guys, they either kill it or fail miserably.”n the doldrums since September 11 and when a multi-billion dollar company wants to chunk down that kind of scratch into it, it creates hope in me for the future of our industry in general. It creates energy, it gives us something positive to talk about and it will probably indirectly foster two or threee badly needed start ups.”

Of course, the news makes Hurley an easy target for some good-natured jabs from competitors as well. “It the Nike deal comes as a surprise,” says Billabong U.S.A. President Paul Naude. “I always thought those Hurley guys were doing it for fun.”

Jurgen Schulz at K-5 Boarding Company says, “If it doesn’t change the brand, then more power to them. What are they going to do, open more people? I mean, who’s left? I’ll only be worried if we start seeing a tiny Nike swoosh in Hurley’s H logo. But it will be interesting to watch what Nike does. You never know with those guys, they either kill it or fail miserably.”