Nike Buys Hurley

It’s a hard pill for a lot of skate-industry veterans to swallow,and perhaps even harder for apparel companies that now face acompetitor with access to unimaginable resources. Nike, themainstream sporting-equipment colossus, launched the Savierfootwear brand in 2000, recently reintroduced a line of skate-specific Nike shoes, and now owns one of skateboarding’s andsurfing’s homegrown apparel brands. Did Bob Hurley just take themoney and run? Not if you ask him.

The man who founded the company in 1998 says he signed thedeal because it’s the best thing for the company, for its athletes, andfor the cultures Hurley International caters to. After consideringseveral options and speaking to a few potential partners, Bob Hurleyand his staff were convinced Nike was the best option. “I presentedthem with our management team’s ten-year plan for the brand, andthey bought into it,” he says. “That’s our future, so we kind of havea partnership. I didn’t just sell them the name, and now we’re out ofthe picture. We’re in charge of building a worldwide organization,and now we have the funding to do it.”

He compares the change in ownership to the way other largeaction-sports brands have managed growth. “In the past there havebeen some amazing companies in our business that have gone publicto raise capital to do this,” he says. “There’s a next tier ofdistribution that we want to avoid, and we think this allows us theopportunity to do something unique in America. I decided not to usejust our resources to expand globally because I thought it wouldtake our ability to put value into our product to a lower level.”

Although the company is now a wholly owned subsidiary ofNike, Bob Hurley says it isn’t a division of the parentcompany, and the Hurley International staff will have administrativefreedom to grow the company as they see fit-without interferencefrom Nike headquarters: “They want to help us set up ourinternational distribution the way we want it, and along the waywe’ll be able to use some of their sourcing facilities. They havetremendous buying power, and hopefully that will help us add morevalue to our product. To me, it’s all about product design andinnovation. We think they can help us with that-they’re an amazingcompany in design and innovation, and understanding a brand.”

Hurley International’s expansion plan includes opening upoverseas markets while preserving the careful domestic distributionstructure it’s built over the past three years. While Hurley apparel isavailable in outlets as disparate as ‘core boardshops and someNordstrom department stores, Bob Hurley says every outlet isdeliberate, and the company will focus its growth abroad whilemaintaining its current distribution at home. “We want to keep theU.S. distribution super clean, even more than some of ourcompetitors, and get our dollar volume (growth) from othercountries,” he says. “Ideally, the U.S. will be a cornerstone for thebrand globally.”

Hurley International’s Nike connection raises obviousconcerns for skate-shoe companies like éS and Etnies that sponsorHurley teamriders. While future expansion may also include newproduct lines, Bob Hurley says those won’t include athlete-drivenfootwear and insists that Nike isn’t going to use Hurley Internationalas leverage to build its skate-shoe team: “We don’t believe in thatformula-one kind of sponsorship for our company. It’s not what ourbrand’s about-it’s inclusive, not exclusive. We want all of ourfriends (in the industry) to do well.”

So what changes will Hurley International’s retailers and endconsumers see in the coming seasons? Virtually none. “Samedistribution, same reps, no (overt) Nike affiliation whatsoever,”insists Bob Hurley. “The only way kids will know about it is if peopleare saying negative things to try and make an issue out of it. Someof our competitors have tried to do that already, unfortunately. Butthe consumer is only going to see a better product.”

Bob Hurley began as a surfboard shaper and retailer, andbecame an apparel mogul through a fifteen-year licensing deal withBillabong. His grassroots evolution into the action-sports apparelbusiness seems a stark contrast to the country-club persona ofmainstream corporate executives, but Bob Hurley says he and Nikemanagement not only share a vision for Hurley International, butthey have a few other things in common: “(Nike Founder) Phil Knightis a performance-oriented guy, and my background is in surfboards,which are performance-oriented as well. There’s some commonalitythere. He used to be a licensee for Asics, and I was a licensee, sothere are some synergies. I think they understand what we’re into.”