ROTH CAPITAL PARTNERS: Hosting 27th Growth Stock Conference March 8-11 in Dana Point, Calif.
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Contests aren't my area of expertise but it was fun to see the skateboarders in action and to learn more about that side of the industry.
Pierre and Don were good sports and also let me ask a bunch of questions about the subjects I usually write about: sales, margins and growth. I also asked about the reaction to Sole Tech pulling out of ASR in September.
First, a little about the Maloof Money Cup. On Saturday night the stands were full and it seemed to bring a different demographic to the fair.
In the afternoon, there were lines for tickets to get into the contest, and the athlete signing booths, below, were crowded.
I asked Pierre why Etnies decided to sponsor and help organize the event.
Pierre: It was a good opportunity to raise the awareness of skateboarding. A lot of people come to the Orange County Fair. The Maloofs know a lot of people, and they could do it in a way that respected skateboarding.
They had the resources to do it right. They are involved in the NBA...and brought in (sponsors) like Wells Fargo - they could bring another level to skateboarding, but in a family way. They have the resources of a big company but a sense of authenticity.
A lot of other contests are made for TV, not for the riders. This was made for the riders.
Don: I think this will go down as one of the best events in skateboarding history. They spent millions and millions to get everything perfect. They listened to everything the riders had to say...There's even real grass (on the course).
I asked Pierre if Sole Tech's been able to make up the lost sales to PacSun, which previously accounted for approximately 5 percent of Sole Tech's estimated $200 million in annual sales.
Pierre said some of those sales have been made up in Europe, where Sole Tech has been buying its distributors and taking those operations in house. Three years ago, Sole Tech bought the Netherlands distributor. Last year, it was UK and this year, Spain. Sole Tech just opened a Barcelona office.
Pierre said they are looking at other distributors but aren't sure which ones will be next. First, they are concentrating on the ones that need Sole Tech's help the most.
The other way Sole Tech is making up the lost sales is "more innovation" throughout the company - in product or production or sales or logistics. "We are paying attention to every detail," Pierre said.
Don said sales in other areas of the world are also growing quickly, including Eastern Europe and South America. It also helps that Sole Tech has multiple brands that address different niches, he said.
Pierre also sees a big opportunity in apparel. "There's a lack of true skate apparel. Surf companies were there earlier and have taken a large part of that market. But true skate apparel that is very authentic - there is not that much."
Next, I asked about how Sole Tech is faring against two of its biggest competitors - DC Shoes and Vans, both of whom are owned by publicly-traded companies. It seems like it would be hard to compete against those resources and that level of infrastructure.
Pierre: We have the infrastructure. What they have is a path to retail and more direct distribution. We are doing more direct distribution. And we have decided to focus more on helping our retailers. We don't want to open retail and lose focus.
I spoke with Don a bit before Pierre arrived and asked him the same question.
Don said an advantage Sole Tech has as a private company is that it doesn't have to show big growth quarter after quarter. "We're not here for the short term. We know there will be ups and downs along the way. We have a long term vision."
I also asked Don about the reaction to Sole Tech's decision to pull out of ASR in September because the show doesn't match with footwear production calendars, among other reasons.
Don said a lot of skate shoe companies were on the same side because the dates don't work. He said it is also opened other companies up to doing things differently. ASR is working with the International Association of Skateboarding Companies on creating a show that works for skate companies, Don said. "ASR has been great. They understand the importance of skate companies," he said.
Sole Tech is reaching out to its retailers in a more personalized way to show the spring lines, Don said. The company is flying in 60 retailers during the last two weeks of July in staggered visits to hang out with the company, skate at the Etnies skatepark and see the product and lines up close, Don said.
"At Sole Tech, we like to think of ourselves like a family, that family vibe is important," he said. "We want to share that with our retailers and bring them over to our house to hang out, so to speak...It's a bigger investment in time and money (than ASR), but it was time to try something new."
Sole Tech's presence will still be felt in downtown San Diego during ASR, however. The company has booked a conference room at Agenda to meet with retailers. While the company will not bring its full staff to run the conference room, look for some big Sole Tech parties downtown during ASR.