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Deckers’ new digs a highlight for the region

By   /   Friday, December 9th, 2011  /   Comments Off on Deckers’ new digs a highlight for the region

The entire region will get validation as a home for trend-setting companies in California-style design.

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When Angel Martinez, chief executive of Deckers Outdoor Corp., turned over the first spadeful of dirt on his company’s new headquarters in Goleta on Dec. 7, three significant things happened for the tri-county region.

First, Deckers cemented into place a corporate strategy that, if it all works out, will take it from a successful niche company into a diversified competitor at the upper end of the global market for footwear. Think about what Coach has done to leather goods or what J. Crew has done with casual wear.

Second, Cabrillo Business Park will get its long-awaited anchor tenant, vindicating a decades-long effort to create a master-plan for one of the most desirable corporate sites along the South Coast. Deckers will be purchasing 13.8 acres with in the park, building 150,000 square feet of offices in three buildings and eventually adding a fourth building to complete its campus.

And finally, the entire region will get validation as a home for trend-setting companies in California-style design, whether it is apparel, footwear or other gear. With Deckers firmly entrenched in the South Coast, it will join privately held Patagonia, based in Ventura, and smaller companies such as Horny Toad, that are pacing new trends in what we wear and how we look.

At the groundbreaking event, Martinez said that one of the advantages of the new headquarters will be an events center where the company can hold employee retreats and meetings with clients. “We will have visitors from all over the world,” he said, adding the project should be up and running by late spring of 2013.

He said that he looked at a number of locations and was wooed by cities ranging from Los Angeles to Dallas. But in the end, he saw the South Coast as a place where “young people can have a future. That’s at the core of where we are as a company,” he said.

In the 21st century, design may become the new manufacturing, attracting talented technically skilled people to higher paying jobs. Until Martinez and his team came along, Deckers was a nifty company with a niche sandal brand called Teva and a hot new product called Ugg. Skeptics thought Ugg boots would have the same boom-bust apogee as Crocs, a fad product that grew fast and faded.

But Ugg has had a lot more staying power than many of us suspected — it appears to have a new hit on its hands with Ugg boots for men now being advertised with NFL star Tom Brady as pitchman. With the men’s line and some luxury offerings, Deckers masterfully has ridden the Ugg wave to a market capitalization of $4 billion. Earlier this year it picked up Sanuk, an Orange County sandal company that Martinez told CNBC Mad Money host Jim Cramer is helping lead its growth in the world’s most lucrative market, China.

During the CNBC interview, which aired Nov. 30, Martinez described the opportunity that lies ahead for companies that can find a way to give global consumers cutting edge design at a price point that’s with reach of a middle class consumer but high enough to produce substantial profit for the manufacturer.

In Europe and increasingly in China, the Deckers lineup “has become a premium consumer brand,” Martinez said, with a lineup that goes from luxury goods to very casual and to a surf look. The Ugg men’s line alone, Martinez said, “could be bigger than a lot of other shoe companies altogether, just by itself.”

Now, Deckers is not necessarily a slam dunk. The shoe business is incredibly competitive, tastes are really fickle and its plans for building stand-alone retail locations could be an expensive flop.
Ordinarily, when a company announces it is going to build a fancy new headquarters, my antennae go up and I look for expenses to get out of whack and for the stock to crater. But Deckers is going to get a lot of efficiency from consolidating far-flung operations into a single campus. And it is going to be able to recruit talent a lot easier with some nice new digs to show off to potential employees.

In China, the burgeoning middle class wants to wear the same cool stuff they’re wearing in LA and New York.  In Europe and even in the U.S., the new normal for the post recession economy is that people will splurge on affordable luxuries, and Ugg boots or Sanuk sandals are right at the top of the list for aging baby boomers trying to look like their twenty-something kids.

No one can say for sure whether Deckers strategy will take it all the way to NikeTown or Starbuck-ville. But with a global headquarters and a global vision, Angel Martinez is going to give it a shot. So far, shareholders who bet on him and his brands have not been disappointed.

• Contact Editor Henry Dubroff at [email protected]

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