Maria Contino of Rosenthal & Rosenthal sat down with Mac Beu, president of Katin, a surf brand with a lot of momentum in the industry. The two talked about weathering economic uncertainty, how brands can succeed in retail right now, and why brands should collaborate – not compete – in specialty channels.
Maria Contino of Rosenthal & Rosenthal: Like Rosenthal, Katin is a family-owned legacy brand that’s been around for decades. As a 70-year-old brand, your company has seen and experienced every type of economic cycle, from market upswings to recessions and everything in between. What are your thoughts on the current market environment and how it’s affecting surf and skate brands?
Mac Beu of Katin: The current market environment has definitely changed, and we’ve seen a substantial reallocation of brands. Mid-level brands are retailing better than ever, which is proving that today’s consumer is a bit savvier and enjoying the fresh perspective these brands have brought to the market. Katin has been experiencing solid growth because of all these factors. We’re pretty excited about the future!
Maria Contino: How do you balance your position as an established, well-respected heritage brand with innovating, staying fresh, and competing with younger, popular up-and-coming brands in the industry?
Mac Beu: Internally, we describe Katin as a heritage brand with contemporary sensibilities. We have an amazing internal team here that loves the product and the culture. Our program has been to stay on top of fabric development, sustainability, comfort, and fit, and understanding that not everything needs to change. As far as competing, we view it a bit differently. In the specialty channel we live in, you need several like-minded brands winning together. We support these brands and want to see them succeed. At Katin, we just need to put our best foot forward and never get complacent.
Maria Contino: You’ve said in the past that “product leads the way” in your business. Can you talk more about that and how you’ve been so successful in retail channels, especially at a time when other brands seem to be struggling?
Mac Beu: It’s no secret that consumer spending is down, and that is affecting us in the same ways it affects other brands. That being said, I believe there is growth to be had, even in a down market. Listening to our retail partners and being viewed as a resource is key. We try not to make decisions that negatively affect our partners. Product-wise, we know shops need deep assortments, dependable evergreen styles, and fresh color palettes, so we invest heavily in these areas.
Maria Contino: What’s your secret to sustainable, manageable growth over the long term?
Mac Beu: Our goal is not to sell the brand but to operate it for years to come. This goal allows us to live within our means and minimize bad financial decisions. Over the past 12 years or so, we’ve had pretty consistent but manageable double-digit growth. Last year was the first year our growth trend slipped to single digits, but we still had growth! Considering the down market last year, I was most impressed with those results over previous years, which were a bit more on fire.
Maria Contino: In what ways do you think having the right financing partner in place can benefit a legacy business that is looking to continue to grow?
Mac Beu: Before partnering with Rosenthal, cash flow was tough. Traditional banking loans weren’t enough to carry the load or were difficult to get. Factoring our receivables and utilizing an inventory line has afforded us the opportunity to focus on other areas of the business that needed attention. Rosenthal has been a reliable and consistent partner for many years now and I really can’t say enough good things about the team over there. I feel like they’re an extension of our business. One of the better decisions I’ve made along the way.
Maria Contino: What do you think has changed the most in the surf and skate community in your time at the helm of Katin, for better or worse?
Mac Beu: I was asked to help launch Katin into the wholesale market in 2005, with 2006 being our first full year working together. Before that, I worked at my family’s manufacturing business, OceanAire Sportswear. OceanAire is a screen printing business that produces and ships for all sorts of brands, music labels, retail private label needs and more. Needless to say, my introductory years with Katin were challenging, with the recession hitting pretty much out of the gates. Marketing strategies were dramatically changing, and a handful of brands owned the action sports space. I believe the current playing field is more level. Although spending is down, I feel that exciting times are ahead. Consumers are more focused on what they’re buying rather than who they’re buying from, which is exciting. I couldn’t wait to shop for new clothes as a kid. My favorite spots, Shore Shop in Seal Beach (which is sadly no longer there), Jack’s in Huntington and of course the Katin Shop had all my favorite brands – brands that I could only find in these types of shops. I feel specialty is becoming special again.
Editor’s Note:
Maria Contino is the western region sales manager at Rosenthal & Rosenthal, a factoring, asset-based lending, PO financing, d2c, and e-commerce inventory financing firm in the United States.
