Skullcandy’s brand was initially built around the core. Then distribution went broad, and it stumbled to maintain those specialty relationships.
Now the consumer audio company under new CEO Brian Garofalow is refocusing Skullcandy’s efforts on the channel as key to finding a path back to the brand’s roots.
“2023 is a special year. It’s the 20-year anniversary of Skullcandy existing,” Garofalow said. “When Rick Alden started the brand, it was really built in partnership with specialty retailers based mostly in the U.S. The company matured very, very quickly, even to the point of going public, and lost sight of the relationships that were built with specialty retail and how those were managed.”
Skullcandy, in a bid to show how serious it is about the core, on Tuesday evening opened the doors to its newest satellite office, on Randolph Avenue in Costa Mesa, California. The invite-only event for retailers and athletes offered a preview of a limited-edition collection made exclusively for the core and available for holiday. Exclusive artwork, colorways, packaging, point-of-sale materials, and marketing just for boardsport retailers are all a part of the collection and its launch.
It marks the first step in a multi-pronged approach to regaining ground within the channel.
Added to that is the 4,500-square-foot Costa Mesa office, aimed at being a community center and boasting a podcast studio, video editing bay, content creation room, and video gaming suite that are free for anybody within the action sports industry. The space will also serve as a showroom and could eventually see a retail component added to the mix.
“Orange County was certainly top of the list (for a satellite) based on where a few of our new staffers are based and also where we know there is a big hub of community and industry. It’s also a fun place with the history and heritage of our company here,” Garofalow said.
Costa Mesa joins Skullcandy satellite offices in London, Vancouver, and Shenzhen, in addition to the company’s Park City headquarters.
Skullcandy’s new satellite office in Costa Mesa. Photo by Morgan Rindengan.
Adding Industry Veterans
The conviction behind the company’s desire to re-establish itself at specialty rests partially on what’s occurred internally over the past eight months, beginning with Garofalow’s appointment in January. He brings to Skullcandy heavy marketing experience – key for a consumer products company built around an edgier brand than many competitors – as the former CMO of Igloo Products Corp. Prior to that, Garofalow handled marketing for Element, DC Shoes, and RVCA.
New to the advisory roster are former Vans Global Brand President Doug Palladini and former Mad Engine, Fox, and Billabong Americas CFO Bill Bussiere. Meanwhile, the board added Steven Scheyer, a former Igloo board chair, and Michelle Stacy, former Keurig CEO.
Other recent hires include former TravisMathew CFO Adam Ainbinder to chief financial officer; Jonathan Downer as senior vice president of sales; Vice President of Specialty Sales Jeff Shine, formerly of Boardriders; Vice President of Product Dave Appel, who joined from DC Shoes and has also worked at Oakley and Burton; Vice President of Marketing Justin Regan, formerly of Vans and Sole Technology; and Vice President of DTC Evin Catlett, who joined from Solomon.
The hires are on top of a number of promotions of Skullcandy employees, including Chief Information Officer Mark Hopkins, Senior Vice President of Operations Andrew Carter, and Director of HR Chris Donnell.
“The team is built, so I’m very excited about that,” Garofalow said. “We’ve had a lot of changes with the team in the past eight months.”
Skullcandy previewed product made especially for the specialty channel during an event celebrating the opening of its new Costa Mesa office on Aug. 29, 2023. Photo by Morgan Rindengan.
Right Product, Right Channel
Initial feedback to the specialty strategy has been upbeat so far, but the team knows there’s work ahead.
“We’re not expecting carte blanche, ‘welcome back to the community,’ with open arms and excitement just because we’re showing up,” Garofalow said.
Instead, he and the team realize it will take time to show retailers the company’s serious about investing in research and development, branding, and marketing relevant to the core.
“What I know is going to be challenging is you can’t predict the future,” Garofalow said. “We have to make sure the consumer is excited about the brand, they want Skullcandy, and we build a product that functions extremely well. We have to deliver an amazing product experience and we’ve got to do it at a fair price. And we’ve got to do it in a way that’s more exciting to the boardsports community than with one of our competitors that might be more vanilla or boring. We think we can do that well.”
The key to all of that is not so much a complete overhaul of distribution but of product segmentation, a framework that had largely been ignored in more recent years.
“We’re not looking to put the same product in a specialty retailer that we are in a mass, big box retailer as Skullcandy has done in the recent past,” Garofalow said. “Where we have misstepped is trying to offer the same thing to everybody and we want to make sure we’re delivering the right product at the right price in the right channel at the right time.”
The Skullcandy Outlook
On top of Skullcandy’s ambitions in specialty, management’s focus has been on profitability this year.
The privately-held company, owned by Greenwich, Connecticut private equity firm Mill Road Capital, doesn’t disclose financial performance. However, Garofalow pointed to the company’s disclosures when it was publicly traded as a good read on the size of the business.
Mill Road bought the company in 2016 in a transaction that took Skullcandy private after five years of being publicly traded.
The company in 2015 had net income of $5.9 million on net sales of $266.3 million. That compares to 2014 net income of $7.6 million on net sales of $247.8 million.
“This year’s focus has been all about profitability, so we’re performing to plan and we’re excited about that… This year’s really about setting the table, building the foundation of the business, and executing on the segmentation play,” Garofalow said.
As he looks out to the near term, the CEO said he’s bullish on holiday, even with the headwinds some brands and retailers are seeing among some consumer groups.
He pointed to Skullcandy’s diverse distribution, ranging from mass and discount to premium as a hedge against macroeconomic challenges. Larger retailers the company works with have reported confidence in their inventory levels after a broader reset to clear excess product from the marketplace and there’s been healthy demand from the middle to upper middle class, making Garofalow “cautiously optimistic” on holiday.
He added: “We’re doing well across the board, so very excited about that.”
Kari Hamanaka can be reached at kari@shop-eat-surf-outdoor.com.
See who else was at Skullcandy’s preview party:
Editor’s Note: For more on recent industry executive hires, check out our coverage on Roark’s latest moves here or Evan Slater’s move to Sun Bum here.
