Update: Authentic Brands Group has signed a definitive agreement to buy Boardriders. The deal is expected to close in the third quarter of 2023.

Hurley owner Bluestar Alliance is a hot topic these days.

Reports from inside Boardriders indicate that Bluestar is seriously considering buying the company.

Business leaders in the surf industry have also taken note of what Bluestar has achieved with Hurley, which had roughly $300 million in sales when Nike owned the brand. By signing many licenses in a wide range of categories and widening distribution both domestically and globally, Bluestar has grown Hurley’s sales substantially at the retail level.

Bluestar Partner and Chief Operating Officer Ralph Gindi told SES in an interview Tuesday that Hurley’s global total retail value through any point of sale totaled $900 million in 2022, which is significantly more than the $600 million estimate people in the industry have been talking about. (Editor’s note: Because Bluestar is a private company, revenue figures are not reported publicly.)

While here at SES we have seen Hurley dropped at some important core stores – which is also reflected in ActionWatch panel data –  Bluestar executives say the brand is performing well in the 1,000 specialty surf stores it sells to around the world, including accounts like HIC, HSS and Jack’s.

Gindi also said that Hurley’s success in other distribution channels and categories is allowing Bluestar to invest more in the surf market, including sponsorship of athletes and contests, including the WSL 2022-2023 TUDOR Nazaré Tow Surfing Challenge.

We spoke with Gindi about Bluestar’s strategy with Hurley, including its relationship with core retailers and with more value-oriented chains such as Kohl’s, and about Bluestar’s potential acquisition of Boardriders.

“It would be an amazing set of brands to have alongside us,” Gindi said when asked about a potential Boardriders acquisition. “If we ever had the chance, we would buy them of course, but you’d have to speak to Boardriders to see what the plans are.”

Below are highlights of our talk with Gindi, who owns Bluestar Alliance along with CEO Joseph Gabbay.

BLUESTAR AND HURLEY

How has Hurley’s strategy changed since Bluestar acquired the brand?

Bluestar Partner and Chief Operating Officer Ralph Gindi: The core strategy really has remained true to the original Hurley vision. We continue to build on the Hurley brand – all things surf, skate, snow, art, music – and you’ll see that reflected in all the product that we bring to the market.

We’ve evolved a sustainable business model that has really helped Hurley grow. We’ve expanded beyond surf, we’ve broadened the appeal of the men’s business, the women’s business and the kids’ business, and Hurley has become a true lifestyle brand for many customers.

How have you broadened the appeal?

Ralph Gindi:  We’ve broadened the appeal by expanding some of the categories.  When we originally took on the brand, the women’s business was a small part of the overall business. Today, the women’s business, the swim business, is very, very strong. The active business has gotten stronger in both the men’s and the women’s side, and we’ve expanded the brand into snow and we’re really truly excited about that. The product is amazing, and we’ve expanded the athletes there as well as in other areas.

When we first took on the brand, we sponsored athletes in the surf area, but we’ve expanded into skate with Elliot Sloan. Elliot’s an amazing skater, and we’re so proud to have him on the team. We’re expanding on the women’s side – we have a huge women’s team. We’ve continued to grow with the youth, both on the East Coast and the West Coast. I think we have over 4,000 kids in our groups between Will Skudin’s program on the East Coast and Huntington Beach High School as well as the Hurley Surf Club, which we’ve expanded.

We continue to really focus on all age groups. We’re bringing a lot of youth to the athlete community that we either sponsor or we really challenge them. Brett Simpson is the head of the athlete team and oversees the marketing of that to really get the youth out there and really build a surf community.

How many licenses has Bluestar signed since you’ve acquired Hurley?

Ralph Gindi: Franchisees and licensees make up the overall strategy of what we’re doing with the brand. I would say we have over 40 partners, which would be considered franchisees and licensees. The franchisees have expanded with us in Spain, South Africa, and all over Europe. The brand has expanded quite a bit.

Our licensees in particular have grown the wetsuit category significantly as well as the rash guard business for us. I mentioned to you earlier on the women’s business that you’ll see a lot of accessories as well coming down the pipeline like backpacks and surfboard bags and other accessories that relate to the surf community.

The brand is going to evolve beyond just the core apparel that you’ve seen in the past, but we’re going to stay true to the brand and we’re going to stay true to the surf community.

HURLEY REVENUE GROWTH

I keep hearing that you guys have grown Hurley’s revenue at retail to the $600 million range.  Is that true?

Ralph Gindi:  Hurley’s global revenue at retail is actually much larger than that. We’ve successfully grown the business closer to around $900 million in 2022 and we’re hoping to grow the business to over $1 billion in 2023. This has really enabled us to invest back into our brand, into our athletes, and to deliver all these new experiences that we’re talking about for the Hurley consumer.

In our industry niche, Bluestar has really caught everyone’s eye because on one hand people see that Hurley has been dropped from a lot of important surf stores. But then people, especially high level leaders, have noticed how Bluestar has been able to grow this business. Does it matter to you that Hurley does not have the presence it used to have in core surf stores if you’re having this much success on a wider level?

Ralph Gindi: It really depends on who’s giving you that data. I consider our retailers to be some of the best retailers in the surf core world, like Hawaii Island Creations, Ron Jon Surf Shops, Huntington Surf and Sport, Spyder and Jack’s. I think nobody could say anything different than that. Those are, I believe the top retailers out there. At Huntington Surf and Sport, we were the No. 1 brand for 45 out of the 52 weeks last year so when you talk about the core surf group, I don’t know if I agree with that.

But I think you guys are paying for that space at HSS, that’s like a rental space. You or the licensee?

Ralph Gindi: No, no, no, no, no. I don’t think that that’s the way it works. We’re sitting there, we work with them and we support the stores in ways that we need to to get the brand out there and other marketing initiatives, but it’s nothing that any other brand can’t do.

Do you think you have proven that these brands can have wider distribution while still selling at Huntington Surf and Sport, which is a premium core store? For example, Kohl’s has had high praise for the Hurley brand and how it’s performing on earnings conference calls. If you’re also selling well at Huntington Surf and Sport, have you proven something with this model that you created?

Ralph Gindi: I look at it this way. We love and support the core specialty store retailers, especially because we love the true surf customer. But post pandemic, we went with the retailers that had the strongest balance sheets where we felt that we had an opportunity for long term growth. I mentioned a bunch of core specialty retailers that we are doing extremely well with, and we continue to do well with.  We have over 1,000 core specialty retailers that we sell to around the globe.

So, a small group of retailers that you’re talking about doesn’t really relate to the overall core specialty retailers around the globe. They’re a subset of it and they subscribe to a service (ActionWatch) maybe where they provide data. We may or may not be in those stores.

HURLEY AND KOHL’S

Ralph Gindi: Specifically about Kohl’s: Moms shops at Kohl’s. We have a huge initiative to grow with the youth, and that’s where moms shop.

We have strict guidelines around how we want the product presented at retail. But at the end of the day, the consumer, whether it’s the adult consumer that’s shopping at a lot of the surf stores or the youth consumer that would be shopping with their mom in the Kohl’s of the world, we want to make sure that the brand is out there.

And when you look at industry data and you look at where the brand is around the world, Hurley still ranks high.

If you go to Verified Market Research, Hurley’s No. 5. All you have to do is search on the internet to see where Hurley lies in terms of brand recognition against other brands. We’re No. 1 with Rookie Road. Ranker, we’re number three. Surfd, we’re in the top 10. Lush Palm, we’re No. 1 in the OG surf brand list. Surf Hungry we’re in the top 10.

So this business has grown quite a bit and we want to support the core specialty retailers and we do support them. We’re going to continue to support them, but not everybody can make it to one of those stores by the beach.

We’re going to make sure that the customer that wants to shop for our brand can find it. For example, we opened up a beautiful store in Asbury Park, New Jersey, which on the East Coast is like the mecca of surf.

KEEPING RETAIL AND E-COMMERCE IN-HOUSE

I remember that when you guys first took over Hurley, retail and e-commerce were separate licenses. Is that still the case or have you brought any of it in-house into Bluestar?

Ralph Gindi: Retail and dot com we fully control. The dot com uses a third-party service system to manage the actual site for us but all the product is bought and sold through a Bluestar entity.

In retail, we have over 300 employees managing the stores today. We’ve grown quite a bit since we’ve taken over from our predecessors. We’ve increased the store count to over 40 and we’ll be hopefully adding another five to 10 stores over the next 12 months.

It wasn’t something that we originally imagined doing, but through the pandemic we realized that we really need to have control of it.

BLUESTAR AND BOARDRIDERS

I hear you’re deep in Boardriders due diligence and maybe have been visiting some international territories looking at the Boardriders business. Are you interested in making a play there?

Ralph Gindi: Boardriders has some fantastic brands that we sit alongside in many, many stores around the globe. I can only say great things about their company and their brands. It’s nice to be alongside them wherever we see them at retail.

And are you guys looking to buy them?

Ralph Gindi: It would be an amazing set of brands to have alongside us. If we ever had the chance, we would buy them of course, but you’d have to speak to Boardriders to see what the plans are.

So if you were to acquire more brands in this space, would you use a similar strategy to the one you used with Hurley?

Ralph Gindi: Not necessarily. Some brands belong exactly where they are. It depends on where they are in their lifecycle, where they are in growth in terms of visibility and consumer recognition and what it means. Look, retail has shrunk over the years and the number of doors and good retailers where you can make a nice presentation of a brand has changed dramatically. So you’ve got to work within the retail landscape that exists.

We found our groove with Hurley and if we do acquire more brands in the future, we’re going to find a groove for each and every brand.

Every brand is like its own little baby. You have to really see what they need, see what they’re missing and see what you can improve and make better. Sometimes they’re good just the way they are.

And what about the international component if you were to make this acquisition. It’s complicated, right? Boardriders has the whole big operation in Europe, they’re so much more global than Hurley ever was.

Ralph Gindi: I’m not going to focus on the acquisition because I really don’t have any specific comment on the acquisition. You’re going to have to speak to Boardriders as to what’s best for them as a company and what they’re looking to achieve in 2023.

But as we look at potential opportunities on a global scale, we’ve grown our business internationally. Hurley’s been a big part of Bluestar growing globally, they have a nice footprint around the globe. Europe, Australia, Asia – all those areas are good foundations for us to build on what we started back in 2007 when Joey and I started this brand business. We focused originally on the United States because that’s what we knew. But we’re learning and growing, and I think you’re going to see big things coming from Bluestar in the future.

With any brand you look to acquire in the future, do you like this idea of keeping retail and e-commerce in-house? Is this something you guys want to build on with other brands, no matter the industry?

Ralph Gindi: We’re very comfortable with it now and we have the teams in place. It’s easy for us to plug and play throughout our current retail platform.

How does that work? Do you acquire product from your licensing partners at a wholesale cost to put on your website since you guys don’t make the product yourself?

Ralph Gindi: We work closely with our licensing partners and we purchase product through them, and that’s what sells.

And you get enough margin even though you have to pay for the product? It’s not that vertical margin that brands typically have with DTC?

Ralph Gindi: We work closely with them, and we make sure it makes sense for them and for us. It’s got to be a win-win for everybody.

MORE ON HURLEY

What’s been the biggest success since you guys acquired Hurley and what’s been your biggest challenge? What hasn’t worked that you had to adjust?

Ralph Gindi: On the success side, we’re really proud of the team that we’ve put together from all the athlete sponsorships that we have. We’ve had a lot of success with WSL the past year, we restarted sponsoring some of their events. We did the Hurley Pro last year in Hawaii, and we hope to anniversary that this year so that will be two years in a row.

We’ve signed on to co-sponsor the Nazaré event with Tudor. We’ll have Kai Lenny there and Will Skudin and Nic von Rupp, and several of our other big wave surfers.

We’re really, really proud of the success story of the athlete team that we put together. I think about the accomplishments last year with Filipe Toledo winning the world’s men’s championship and Carissa Moore being a gold medalist the prior year. And Hawaii’s Gabriela Bryan who won Rookie of the Year this year.

We want to continue to work closely with the athletes to make the team exciting, and to have the youth excited about our team and the product that we bring to the table for them.

As long as we continue to support the sport, which we continue to do both on the athlete level and on the core level, I think that we’ll grow with the sport and we’ll take it beyond just surf and go into snow and skate a little bit stronger and into other areas as well.

MORE ON BLUESTAR

What do you want our readers to know about Bluestar that they might not know?

Ralph Gindi: They don’t need to know about Bluestar. They need to know about the brands that we bring to the table. The brands need to speak for themselves, the brands need have their own DNA. The reasons that we usually buy a brand is because it has DNA and it’s got history.

We’re not looking to dismantle the history, we’re looking to build on it. Some brands grow to a point where they have a chance to launch in a bigger and better way and if we see that, that’s probably something that we’re interested in looking at in the future.

We don’t really get stuck in one particular territory with one specific retailer, we try and see where we can grow and our supplier partners are extremely important. You have to have the right product, they have to put the right teams on designing the product. We have to give them the core essence of the brand, and we’ve got to tie that thread together between one licensee and the next so it tells one story at retail.

If we do that, then we are successful at what we do. And when we don’t do that, you see brands that go sideways or down and that’s not what we’re looking for.

We’re in it for the long haul, we don’t need any overnight success stories. Our relationships with our retail partners are extremely important to us. We’re very, very true to the partners that have been with us for the long term.