Altamont Acquisition of Hybrid; the Plot Thickens
When Altamont bought Fox Head in early December, I wrote this article, reporting what little we knew about the deal and speculating on what Altamont was up to strategically, if anything. Here’s, in part, what I said.
“Altamont now owns or at least has investments in Brixton, Dakine, Fox Head, HUF and Mervin Manufacturing. That is quite a gaggle of action sports/outdoor/street wear/fashion businesses. Are these just opportunistic buys or is there a plan here? That is, will each continue to run independently, or is there enough overlap in markets and manufacturing to justify some coordination? Maybe Altamont is looking to build the next VF. I hasten to add that’s complete speculation on my part. Still, it does feel like there’s been a recent focus on this market by Altamont.”
Now, Altamont has gotten itself a Christmas present, investing in “Hybrid Apparel (Hybrid), a leading supplier of branded, licensed and private label apparel.” On its web site, Hybrid describes itself as”… a complete and vertical operation; designing, merchandising, developing, sourcing, producing and distributing branded, licensed, generic and private label apparel to all tiers of distribution.”
The Altamont press release continues: “Hybrid’s partnership with Altamont will allow Fox, the number one global motocross apparel brand and a recent Altamont and Hybrid investment, to benefit from Hybrid’s product development and supply chain expertise as well.”
Hybrid, then, invested in Fox Head along with Altamont.
Feel now, with the investment in Hybrid, that Altamont has a plan. In the last couple of years, we’ve watched pretty much every large brand or retailer improving manufacturing and logistics. They want to minimize SKUs, control inventory, and reduce time to market. There’s too much money on the table to not do that well and it’s an important attribute of brand building.
Altamont now has a partner that specializes in exactly those areas. I can’t for the life of me imagine that Altamont won’t ask Hybrid to take a look at Brixton, Dakine, HUF and Mervin. I’ll take a shot in the dark and guess that all those brands make t-shirts. Can you think of a reason Altamont wouldn’t “encourage” consolidation and coordination of those orders through Hybrid? I’m thinking you could take some significant cost out of each of those brands, not to mention get better pricing by increasing volume.
I suggested in the quote from my earlier article above that Altamont is thinking about building the next VF. If you follow VF at all, you know one of the things they do is bring a rigorous manufacturing and logistics process to their acquisitions.
Maybe Altamont started out making opportunistic buys, but it now looks like they are creating a package of related and coordinateable brands all of which have some growth potential that can improve their financial performance even before Altamont, through Hybrid, takes some significant costs out.
Okay, now let’s take the next step in speculation. Again, I’ll remind you that I have no actual information.
With some revenue growth and cost control over the next year or two, (and other acquisitions?) what an interesting group to take public as an exit strategy. The tag line would be something like, “Just like VF, only our brands are cooler!”
Just an idea. Go back to enjoying the holidays.
Jeff….a little known fact about Hybrid is that they have been financing the start up brand Ourcaste for a couple years now. My guess is they also see this as a benefit to help get that business over the hump by leveraging relationships the Altamont brands have in place.
people at Hybrid have said that they want to get into the branded business…I see this as another step to do just that
Hi Arch,
Thanks for the good info. For those who might be interested, here’s the link to Ourcaste. How do you see that working exactly? Ourcaste, I guess, becomes another brand in Altamont’s stable. Knowing nothing about Ourcaste except what I’ve seen on their web site, I guess I can imagine that the brand isn’t very competitive against other Altamont brands.
Thanks,
J.
Could be. Maybe that is what part of Altamonts investment into Hybrid is. The OurCaste business is small so there is little to no equity and definitely does not compete with Altamont brands. If any of this is true it makes sense from a branding point of view. Gets OurCaste financing without being in the headlines, keeping “independent” spirit in tact and allows Hybrid to focus on what they do best….manufacturing, not brand development
Arch,
I guess I’m wondering if OurCaste needs financing if it’s small and Hybrid is doing okay. Until I have better information, I’ll stick with my original hypothesis that Hybrid can help with logistics and supply across all of Altamont’s brands.
Jeff all very interesting. From what I know, all Hybrid brings is access to shelf space downstairs. That does not seem to be the route for this basket of brands other than maybe Fox. Something else may be helping to drive this.
Hi Chuck,
As usual, all I know is what I see that’s public. Hybrid’s description of itself certainly suggests it can help in other areas.
Thanks,
J.