Although the retail picture for many apparel companies has been a bit less encouraging then many would like, some have been riding a wave that has yet to crest. Playing to the tween and teen markets always seems to find that little extra disposable income as this demographic strives to stay in style. A company that can tap into this demographic is one that will find many sources of “way-cool” profit.
Volcom Inc., a retail brick and mortar/online marketer of young people’s apparel, works to serve an apparel lifestyle niche oriented toward board sports such as surfing, skate boarding and snowboarding. The company was founded in 1990 and has since grown to begin offering its products through various channels in Europe. The company made its first acquisition at the end of 2007 and currently carries $93 million in cash (and very little debt) on its books. Year-end figures for 2007 showed sales of $297 million and an annual growth of 30% over year earlier figures.
While many apparel retailers, at the mid-point of 2008, continue to find a weak market, Volcom Inc. continues to move forward. The economy has had its effect on the company, but not to the same extent that many other retailers have experienced. For the most part, this can be attributed to the niche that the company operates in. The company primarily serves the teenage coastal and mountain marketplace – a marketplace which historically commands a large piece of disposable income. Whether the consumer’s disposable income comes from parents or jobs, it is relatively stable in nature, especially when the lifestyle and style trend demographics of the brand are factored in.
The company is most certainly entering an expansion phase as it moves into Europe and entertains hopes of opening 10 retail stores by the end of 2008. It has found European strategies to be effective at this point and appears to be on-track for meeting its retail goals, primarily in Hawaii. New product line introduction has been a part of the company’s overall strategy as it completed its first acquisition in 2007. A “hip” sunglasses company oriented toward the company’s primary customer base was integrated into the company and appears to be a good fit in both fiscal and company culture. For now, Volcom appears to be sitting nicely in the sun and soaking up profits for investors.
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