I stopped by the Rusty offices in Irvine to see how things are going three months after parent company the La Jolla Group secured the apparel license.

Let’s just say the team has been busy. Rusty Clothing North America President Charlie Setzler had to hire a staff and pull together a spring line in about six weeks to show at the September trade shows. Since then, the group’s been refining their goals for the brand, creating a fall ‘08 line, rebuilding relationships with retailers - basically starting from scratch.

Setzler knows it will be a challenge to turn Rusty around. “The industry’s been going up - on a rocket ship,” he said. “Rusty’s been going down. ... The product has been pretty good, but it hasn’t stood for anything.”

But Setzler also sees a lot of opportunity. Rusty surfboards have a lot of brand equity, buoyed by Surfing Magazine naming Rusty Preisendorfer Shaper of the Year in its upcoming issue. The boards are also being remerchandised and relaunched for fall ’08 so they are easier to market globally.

Setzler’s apparel group plans to build on the success of the surfboards. He describes Rusty’s positioning for apparel this way: If you have the mainstream on one end, and Volcom on the other, Rusty will be somewhere in the middle.

“It will be surf with an edge,” he said. “We’ll still have the basics, but we will push things a little more.”

The juniors line will move from “bubble gum” and “sweet” to a little older and more contemporary.

“Juniors was a disaster,” Setzler said. “It was $20 million at one time. Let’s just say it’s not that now.”

Rebuilding relationships with retailers will also be key. Setzler said the previous regime did not produce a holiday ‘07 line, so some store owners are using that as an opportunity to drop the struggling brand. But Setzler also sees opportunity for smaller brands to bubble up as some retailers grow disenchanted with the powerhouse brands and their distribution strategies.

Setzler said 2008 will be a rebuilding year. The plan calls for sales to be on the upswing in 2009.

“In five years, we want to be in the top five brands in every store we sell,” he said.

He believes it can be done. He points to sister company O’Neill Clothing, which struggled through several licensees before the La Jolla Group came aboard in the mid-1990’s. The group built on the brand equity of O’Neill wetsuits and hasn’t looked back.

Setzler remembers being in an O’Neill sales meeting in 2001 and announcing to the group the next brand O’Neill wanted to surpass. That brand was Rusty.