Stussy, Inc.

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Stussy, Inc.

17426 Daimier Street
Irvine, California 92614
U.S.A.
Telephone: (949) 474-3253
Fax: (949) 474-8229
Web site: http://www.stussy.com

Private Company
Incorporated: 1984
Employees: 80
NAIC: 315220 Men’s and Boys’ Cut and Sew Apparel Manufacturing; 315230 Women’s and Girls’ Cut and Sew Apparel Manufacturing

Stussy, Inc., is an Irvine, California-based apparel company that has managed to stay on the cutting edge of urban street fashion for 20 years, combining a number of influences, including surfer, skatewear, hip hop, reggae, surplus, as well as classic preppy wear. Stussy has a celebrity following and an international reputation, despite spending no money on promotion. From the start, the company has limited its production to a level far below the demand for its products, a strategy that while limiting profits has created an air of exclusivity about its apparel and accessories. Stussy products are found in a variety of outlets, with some sold in skate, surf, and snowboard shops, and other items sold in department and specialty stores. In addition, the company has licensed the Stüssy name to some 50 stores located throughout the world. A handful of boutiques launched in the early 1990s by co-founder Shawn Stussy are owned by the corporation. In recent years, Stussy has expanded beyond men’s clothing and now offers a complete line of women’s clothing. It also designs and sells such accessories as sunglasses, hats, and backpacks.

Making Surfboards in the 1960s

Stussy, Inc. bears the name of designer Shawn Stussy, who grew up in Southern California. In 1965, when he was ten years old, he took up surfing just as the sport was gaining wide recognition in popular music and movies. By the age of 13, Stussy began to design and shape his own surfboards in the family garage. He was so talented that as a 15-year-old high school student he was hired by a surfboard manufacturer. After graduating from high school in the early 1970s, he lived a free lifestyle, spending the winters living in a trailer and working as a ski instructor at Mammoth Mountain and summers making surfboards at Laguna Beach. Aside from his interest in surfing and skiing, Stussy was further influenced by his love of punk rock music, which led him to wear orange-spiked hair and affect what he called an “anarchic, do it your own way” attitude that spilled over into his approach to fashion design as well as business practice.

In 1979, when he was 24 years old, Stussy gave up his itinerant ways and settled in Laguna Beach to establish a regular surfboard business. To brand his handiwork he took a large marker and scrawled his signature on the finished boards. It soon became his trademark and logo. In a 1993 interview with WWD Stussy recalled, “It was seen as ‘new wave,’ anarchic. I had the logo screen-printed on T-shirts and sweatshirts, but it had nothing to do with producing clothes. I was trying to promote the boards.” During this early period of his career, Stussy shaped surfboards in his Laguna Canyon studio during the days and at night boxed his T-shirts for sale in area surf shops. He drifted further into the apparel business by simply being involved in finding clothing that he and his friends liked to wear. As he explained to The Orange County Register in a 1989 profile, “We’ve always worn interesting clothes, but it’s not like I’m from a garment-family or anything like that.” After T-shirts and sweatshirts, Stussy began producing Bermuda shorts, as he explained to WWD): “A couple of my buddies and I used to go to the Army-Navy surplus stores and buy size 40 khakis and cut them off way up at the knees. Everybody used to say, ‘Those are so fly!’—so we started making them. My mom made a pattern off of them. We started taking orders.”

While Stussy may have viewed his clothing ventures as a sideline that helped spur the sale of his surfboards, an old friend named Frank Sinatra, Jr. (no relation to the family of the famous singer) saw greater potential. They had surfed together as teenagers, but now Sinatra was an accountant and possessed the business expertise that Stussy lacked. Sinatra convinced Stussy that his nascent apparel business held much promise and offered to invest $5,000 to become his partner. In 1983, they joined forces and in 1984 established Stussy Inc. with Stussy handling design and Sinatra shouldering the business responsibilities. It was on March 27, 1986 that the company registered the Stussy trademark in the United States.

As the apparel side of the company began to grow, the surfboard business faded in importance and was ultimately turned over to a licensee for small-scale production. Around two dozen surfboards were produced each month, retailing at a much higher price point than other quality boards—in keeping with the exclusivity approach that Stussy would take in marketing his apparel. Shawn Stussy continued to shape boards in his spare time for himself and friends and was known to cancel a business trip should the wave conditions prove too irresistible, but increasingly the ex-punk rocker, now turned designer, was busy developing a full line of young men’s clothing as well as moving beyond the beach market. He drew inspiration from sources around the world rather than the nearby surfing and skating scene, although his clothing was embraced by the skating and beach markets. His approach was to take a classic item and apply a twist. For instance, according to The Orange County Register, “A Stussy oxford button-down shirt could pass for Brooks Brothers, except for odd buttons sewn down its front. A knit polo top could be a Ralph Lauren, except for graphic squiggles around the collar.” Shawn Stussy’s goal was simply to produce a “wearable classic.” He described his look as “prep meets punky meets b-boy [beach boy].”

Stussy Hits Europe in 1988

The Stussy formula proved sufficiently successful so that in 1987 the company moved into a 4,000-square-foot office in Irvine, California, while Shawn Stussy also maintained a design studio in the garage of his Laguna Niguel home. In 1988, the company introduced its clothing line in Europe, where it became immediately successful. By the end of the 1980s, the company was generating in the neighborhood of $5 million in annual sales. Its apparel was not only carried in local surf shops but also in upscale stores in New York, England, Australia, and Japan. A designer growing in recognition, Shawn Stussy traveled around the world, connecting with trendsetters and building a following for his clothing.

With the start of the 1990s, the company reached a new level when Shawn Stussy’s designs began to reflect a hip-hop influence that was embraced by musicians and their fans, transforming Stussy into “the tag of the moment.” Nightclub-goers around the world began to collect Stussy hats, T-shirts, jackets, and anything else that boasted the designer’s trademark signature, which also resulted in a market for vintage Stussy designs. Shawn Stussy’s approach was very similar to that of many musicians who were building songs by “sampling” bits and pieces of well-known music. Stussy designs drew on images and graphics from a variety of sources, making his apparel seem fresh as well as classic. What started out as beachwear had by now morphed with skatewear, work clothes, surplus, and preppy to produce contemporary street fashion. Regardless of his method, Shawn Stussy and his apparel clearly connected with the youth market. Annual revenues reached an estimated $17 million in 1990 and $24 million in 1991. The appeal of Shawn Stussy’s apparel was so strong that it spawned the rise of what The Los Angeles Times described as the International Stussy Tribe: “ ‘Tribe’ members include disc jockeys, musicians and artists who begin as fans of Stussy’s collections and eventually get to know the designer personally. Consumers who may never become official members of the ‘tribe’ are still drawn by the basic human instinct to belong to a clique.” The company was able to project a strong international presence without resorting to advertising or giving away apparel to celebrities for promotion. Nevertheless, Stussy clothing appeared in music videos and fashion magazines around the world.

Shawn Stussy and Sinatra resisted the temptation to cash in on the Stussy phenomena by increasing production or licensing the Stussy name to any number of products. The partners, uninterested in a quick payout, opted to follow their strategy for maintaining long-term viability based on restricted growth and never supplying the demand for Stussy products. In this way, Stussy items were not seen everywhere and remained fresh to consumers. Aside from the business argument for this approach, it was a question of lifestyle as well. As Shawn Stussy explained to The Los Angeles Times, “We have no desire to get bigger, no desire to open new accounts. And we feel we could continue doing business for many more years, sleep at night, enjoy kids growing up and not be a victim of our business. You’ve got to look 10 or 20 years down the road, and nobody in America does. They just want the money now. They want instant gratification. But then they burn themselves out. This happens especially in the fashion industry.”

Company Perspectives:

We are proud that after twenty years of creating what street wear is, we ‘re still recognized and respected by the cultures we flourish from. From skate to surf, to reggae to hip hop, to electronica to preppy, to surplus and everyone in between, Stüssy still makes its mark.

Emulating other top-notched apparel designers, Shawn Stussy, using his own capital, opened a handful of signature boutiques, taking on sales representatives as partners in joint ventures outside of Stussy Inc. The first shop, 900 square feet in size, was established in the trendy SoHo section of Manhattan in November 1991. It was an immediate downtown hit, its success surpassing the designer’s expectations. In the spring of 2002, Stussy opened his second boutique, a 200-square-foot shop located in the unlikely venue of Laguna Beach, chosen because it was close to where he and his girlfriend and partner in the venture, Paula Henry, had just purchased a house. Several weeks later, a Tokyo boutique opened, followed by the October 1992 debut of a 800-square-foot shop located on La Brea Avenue in Los Angeles. Stussy, Inc. also made news in 1992 when its first licensee, Stussy Australia, began to produce a junior clothing line for women called Stussy Sista Gear. (The only other Stussy license was granted to Eyeking Co. in New York for eyewear.) The idea for the women’s line came from Australian designers Felicity Rulikowski and Bernadette Wier, who worked in conjunction with Shawn Stussy to develop an initial 25-piece collection that featured body-hugging apparel with a retro 1970s flair. As with the menswear, the line had limited distribution both internationally and in the United States, where the clothing was only available in the Stussy boutiques, starting in the spring of 1993. The Stussy Sista idea proved successful, and in October 1998 the company registered the Stussy Sista trademark.

New Leadership in the Mid-1990s

Annual revenues for Stussy, Inc. settled in the $35 million range, which appeared sustainable and apparently satisfactory to both Shawn Stussy and Sinatra. In late 1995, however, rumors began to circulate that Stussy was thinking about retiring from the company that bore his name. In January 1996, it became official when he resigned as president of the company, although he agreed to stay on as a consultant. There appeared to be no acrimony surrounding his departure. As Sinatra told the press, “This is not a hostile thing,” further explaining that Stussy’s “desire is to enjoy life and be free of the pressures of running a business day to day.” Although he planned to spend more time in his home in Hawaii with his wife and son, Shawn Stussy agreed to act as a consultant to Stussy, Inc. He also planned to continue operating the New York and Los Angeles boutiques. Sinatra subsequently bought out his partner’s share of the company.

Sinatra planned to continue running Stussy in the same manner as before, although observers questioned whether the company could retain its edge without the original designer’s active participation. The brand was well-entrenched in the marketplace, however, and Stussy maintained its niche in the fashion world, generating its usual $35 million in annual revenues. The company continued to eschew traditional marketing and promotion, although in 2000 it decided for the first time to sponsor a few skateboarders as a way to help strengthen the Stussy brand. In the meantime, Stussy Sista and women’s apparel began to take on more importance as it became apparent that fewer women were buying the company’s main line of clothing, which was geared more towards 20- to 30-year-old men. As a result, Stussy launched a full-fledged women’s collection for fall 2001, designed by Pauline Takahashi, a Los Angeles-born designer who had done previous collections for overseas’ retailers under her own name. Rather than the streetwear feel of Stussy’s menswear, this new collection, according to a company spokesperson, was “more of a fashion thing,” similar in feel to the work of designers Karyl K. and Katayone Adeli.

Also in 2001, rumors circulated that Sinatra was interested in selling the company, with Italian jeanswear company Diesel Jeans SpA named as the most likely buyer. With annual sales roughly ten times the size of Stussy, Diesel was in the market for acquisitions to fuel further growth. Its owner and CEO, Renzo Rosso, made it known that he was a strong believer in owning brands over licensing. The buyout rumors were fueled by Sinatra, who was an infrequent traveler yet flew to Italy to meet with Diesel executives. Moreover, his hiring of a former Diesel designer as well as other moves were seen by observers as window dressing in preparation for a sale. Whether Sinatra came close to selling the company to Diesel is not certain, but in the end he retained ownership of Stussy, which after 20 years in existence maintained its place with youth in worldwide fashion and continued to mix and match elements of standard dress with underground culture.

Principal Competitors

Billabong International Ltd.; Diesel Jeans SpA; Karl Kani Infinity Inc.; Mossimo Inc.; Skechers U.S.A.

Key Dates:

1979:: Shawn Stussy first signs his name on surfboards, creating a logo that is then transferred to T-shirts.
1984:: Stussy, Inc. is created with partner Frank Sinatra,
1991:: The company opens a New York boutique.
1993:: Stussy Sista line is launched.
1996:: Shawn Stussy sells out to Sinatra.
2001:: Stussy, Inc. is rumored to be for sale.