ROTH CAPITAL PARTNERS: Hosting 27th Growth Stock Conference March 8-11 in Dana Point, Calif.
Details on Industry Insight.
Charlie, left, answered some questions via email for me Friday about how his team is trying to rejuvenate the brand on the clothing side.
What has been your biggest accomplishment since the La Jolla Group took over the Rusty Clothing license?
"There have been so many accomplishments. One year ago, no one worked for Rusty North America other than me. Since then, we've built a great team of talented individuals. From a design and product standpoint, we've gone from utilizing Australian product exclusively for Spring 08 to establishing our own flavor for Spring 09.
"With time being our biggest challenge from the outset, we've have some very interesting samples lines that we've shown retailers. We have definitely put our sales force to the test and had to make some promises that ‘samples do not reflect actual production quality,' which everyone knows translates to ‘Our production will be good - just trust us.'
"Well, I think we've built trust in the fact that we have delivered product that has been far superior to anything we've shown.
"We've had success with our tees, which is a testament to how relevant and meaningful the Rusty logo is to our consumer. Also, Rusty being named Shaper of the Year for 2008 has had a big impact for our apparel business. There are more surfboards on the floor and in the water than ever which brings more awareness to the brand and translates into better retail for us."
What has been the biggest challenge?
"Time has been our biggest challenge. From the time the LJG got the license on Aug. 14, 2007, we literally had less than four weeks till ASR. In that time, we put a spring men's, boys, and junior's and junior's swim line together, got salesmen samples, hired 18 sales reps, put together 2 trade show booths and had color catalogs ready in time for the show.
"Then, right after the September shows, we went into designing Fall to have ready for the January shows, and actually designed and sampled Fall in time. That's design, develop and sample in less than 90 days. It was crazy!
"Another challenge was the fact that Rusty did not ship a Holiday 07 line. So there were at least 3 months where the previous licensee last shipped product. So there were some retailers that had to fill their Open To Buy elsewhere and walked away from the brand. And to our sales team's credit, we've gotten a lot of those retailers to come back over the course of the year."
How are the clothes different? What has been the reaction from retailers?
"We've taken advantage of Rusty's heritage and the fact that Rusty exploded onto the scene in the mid 80's right in the middle of the color/neon craze. So with that heritage and more acceptance of what is coming out of Australia, the intent was to take Rusty younger and more colorful and fun.
"For years, Rusty was in a color story of brown, olive, khaki and tan and it was time to spice it up. Overall, the reaction from retailers was great and they embraced this new direction.
"Of course, there were some that thought the direction was a little too forward. But it's about balance and I think we did a pretty good job of balancing the lines over this year and turning the ship a little younger. We've definitely taken more chances."
How have the products sold through at retail?
"Our boardshorts and walkshorts were good. What really surprised me is our tee sell through was strong especially in the more forward graphics. The R dot logo is a lot stronger that even I realized. The logo has a lot of equity and value."
What does the next year hold for Rusty?
"By the middle of next year, I'm hoping that everyone will be familiar with our new Global Cooling Boardshorts Series and Rusty's exclusive trademarked fabric called ECOSTRETCH. Rusty is, first and foremost, a surf brand with heritage firmly rooted in surfboards. With that, it is imperative that we have a strong boardshort collection. And to provide a point of difference, we wanted a new fabric that is just plain great to surf in. Something that is incredibly light, dries faster than anything out there and has 4-way stretch.
"The fabric is (also) recycled and 100 percent recyclable. Everything in this series, from the fabric to the trims, to the hang tags, to the poly bags that it is shipped in (which we're trying to work around) is recycled. We brought in Mark Machado, who presented at the SIMA Green seminar earlier this year, to help Rusty do this right. It has been an amazing educational experience.
"A little more about Global Cooling - this is a concept within Rusty Worldwide and has been an internal philosophy for well over a year. We all know as manufacturers that we need to be better stewards to our environment. And the Global Cooling Boardshort Series is our first step in sharing this philosophy with the world. This is a part of the DNA of the brand and will slowly be expanded through products from here on out.
Our Junior's Swim line has also been very well received and we had a great Miami Swim show. We introduced a new fabric in swim that we're really excited about. It is a sand free fabric. Sand literally does not get stuck in the fabric. It is UV protected, does not fade, is chlorine resistant and does not pill. And it is naturally reversible due to the nature of the fabric and the way we have to construct the suit. Its incredible! The mill that is producing this fabric has been working on it for years and it is exclusive to Rusty.
So, for 2009 - we want to have fun and provide products that will hopefully drive consumers into stores and get the retailer excited."
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