One of the most incredible things about the skateboarding industry is how well it has insulated itself from all traditional forms of media. It took me at least 15 minutes to convince myself — combing through forums, Instagram posts, tweets and the like — it was true: Alien Workshop (and Habitat) went out of business. For non-skaters, it’s difficult to draw a comparison; there aren’t professional sports franchises known for their graphic design sensibilities, 16mm montages and commitment to East Coast grittiness. In fact, one episode of “The Osbournes”
is probably Alien’s biggest contribution to pop culture at-large in its 24 years in business.
So, it’s perhaps appropriate that MTV fits in, at least obliquely, to the best narrative I can put together to explain how Alien Workshop went out of business so suddenly — and without explanation.
Rob Dyrdek, Alien Workshop’s first rider, has aged out of skateboarding and done quite well for himself. He’s been a fixture on MTV since around 2008, graduating from “Rob & Big” — a “reality” show based on a skit in a DC video — to “Rob Dyrdek’s Fantasy Factory,” the latter of which is in its sixth season. MTV must have paid him well, because in early 2012, he bought DNA Distribution, the company that owns Alien Workshop, from the snowboarding company Burton.
He held onto it for just about 20 months, before selling DNA for $1.5 million and some stock options to a Carlsbad-based firm called Pacific Vector Holdings
, which is described in the press release
as “a premier action sports retail and consumer brands company.” This is, if you can’t already tell, where things start to go wrong.
PVH owned some No Fear clothing outlets and Gatorz sunglasses, and, by October of last year, one of the most storied brands in skateboarding history. Dyrdek, in a prepared statement, said that “The DNA brands are in great hands.” The CEO of PVH, Robert Reynolds, called DNA ”a foundational piece of our brands division as we continue to execute on our growth strategy.”
Fortunately for us, dissecting Alien’s death, PVH was — for reasons I can’t pretend to fathom — a publicly traded company listed on the Toronto Stock Exchange. As such, it must file earnings statements, which it did, through most of 2013. From these, we can learn what that “growth strategy” was — and what happened to Alien because of it.
PVH’s last full report available on its website, for Q2 2013, shows that it was borrowing lots of money to acquire companies. In early 2013, it borrowed a few million to buy Ryderz Inc., which owns the No Fear stores. PVH was turning these into Prime Ride Shops, one of these pan-action-sports joints you get sort of used to seeing in Westfield Shopping Centres all over. In all likelihood, the company took out third-party loans to acquire DNA in similar fashion. Their cash holdings were just $800K in the middle of 2013.
But the CEO, Reynolds, was comfortable with that, at least according to prepared statements. A statement in early 2014 shows Reynolds triumphant, if cautious. He had reason to be proud: PVH’s revenue was up more than twentyfold over last year. But, of course, all the revenue was the result of leveraged buyouts. He was saddled with debt, and needed to restructure his portfolio (and debt) in order to survive. He acknowledged as much, though maybe he was overconfident.
In March, this would seem to be going according to plan, even if the plan had ugly logic. PVH announced it
would close 14 of the Ryderz shops in its portfolio as part of a “turnaround effort.” Though PVH is, by definition, not a private equity firm, this is right out that playbook: Cut costs on the low performers, invest in the good stores, increase revenue, service debts — all sounds good. So long as your cash flow doesn’t get fucked up.
Which appears to be exactly what happened.
Recently, PVH announced it wasn’t able to file its 2013 earnings statements
. Why? “The Corporation is currently not in a position to…file its 2013 Annual Financial Statements, primarily as a result of additional time required to secure financing and, subsequently, for its auditors to be compensated in order to complete the audit of the Corporation’s financial statements.” If I understand that correctly, that doesn’t sound good! That was May 1st.
By May 8th, the company released another statement
saying basically nothing, other than that it wasn’t insolvent — we swear! — and that it’d get its financials out by June 13, with three press releases between.
The first of those
came on May 15, last Thursday, and it didn’t have good news: the company was $7 million in debt, but had convinced its debtors to convert their debt to equity in stock, at $0.12 CAD per share. It would close four more Ryderz stores and PVH employees agreed to take a pay cut. Also, it’s looking to sell Gatorz sunglasses — and seeking a bridge loan of $300,000.
I’m not qualified to say what happened to Alien Workshop, because I don’t sit on the board of PVH, and PVH’s filings don’t mention DNA. All I know is that by Monday the company was toast. Well, at least according to Instagram, the Slap forums and Twitter. So if you want to talk shit about corporate money ruining skateboarding, maybe go ahead?