Swimwear firm Lunada Bay Corp has successfully manoeuvred through turbulent seas of change with a focused balance of creativity and business acumen, plus a strong team spirit. By Julie McElwain.

The life of an apparel company is often a challenging one. It can be filled with more gut-wrenching twists than a roller-coaster ride, ranging from the everyday headaches of not getting fabric delivered in a timely manner to serious production flaws to missing out on major fashion trends.

While all of these problems may have a manufacturer reaching for a bottle of Maalox, it is rare to see one of them raising the white flag of defeat. So it goes without saying that manufacturers are a tough lot.

And probably one of the toughest manufacturers around is Susan Crank, CEO of Lunada Bay Corp, the $40m swimwear licensing company which celebrated its 21st anniversary last month.

Crank, a swim industry veteran with a delightful sense of humour and a keen business acumen, has not only faced the typical apparel trade angst since she took over the Anaheim, CA-based company 14 years ago, but also weathered a cataclysmic event which could have sunk Lunada Bay like some sort of mythical Atlantis.

The event in question happened last year - on March 28, to be precise - when designer Mossimo Giannulli announced that he had inked an exclusive licensing deal with discount retailing giant Target. Up until then, Lunada Bay produced both Mossimo Swim and Mossimo Body, which accounted for roughly 75 per cent to 80 per cent of the company's production. The other 20 per cent to 25 per cent was given over to producing the juniors surf/swimwear label, GirlStar, and a better juniors/contemporary swim line with the XOXO brand (which Lunada Bay has since stopped licensing).

While Crank eventually negotiated with Target to continue the Mossimo licensing arrangement she had begun 12 years ago (two years after joining Lunada Bay), the impact was still jarring, with the Mossimo business reportedly shrinking from 2,500 stores that the company had previously dealt with to the less than 1,000 Target stores.

"Normally when you're at the top of your game, and things start going [down], you get other things going [to bring it up]," Crank says. "But we were at the top of the game, and we were taken out of the game. It's a real tribute to the team of this company that we were able to make that large of a transition and stay 'steady as she goes.' "

At the time of Mossimo's Target announcement, Crank was already negotiating with the contemporary retailer Bebe to produce its swim label, which the firm launched this year. Still, without the Mossimo brands, there was a huge void in Lunada Bay's production. Mossimo's alliance with Target meant that Lunada Bay could no longer sell Mossimo brand swimwear to such large customers as Federated and Nordstrom, or the specialty store marketplace.

As the company searched for ways to fill the gap left by Mossimo, it arrived at a momentous decision that would affect its future business course. "We knew that it was time for Becca to make a debut," Crank says.

A new brand balancing act
Unlike Bebe or GirlStar, the Becca Swim brand is not a licensing deal, but Lunada Bay's very own label - the brainchild of the company's head designer Rebecca Virtue, whom the line is named after. The plunge into creating one brand wasn't enough, however. Directly on the heels of Becca Swim, the company also introduced Rebbeca V (a pricier swimsuit collection that retails from $150 to $250, compared with Becca's $40 to $80 price points), and Becca Sport (an active wear line that retails from $40 for a cute little T-shirt to $90 for a sexy catsuit). The company also licensed out the Becca and Rebecca V names to accessories manufacturers, with sunglasses, beach towels, hats and bags co-ordinating back to the swimsuit line.

The company also backed its Becca launch with a strong advertising campaign. Lunada Bay's advertising and marketing director Sherri Buchalter describes how the firm blanketed the US market with advertising. "We chose our favourite regional magazines and ran an ad 12 months out of the year," she explains. "We wanted to capture those readers and reinforce the Becca name."

Also, during the key swimwear sales months, Lunada Bay advertised in InStyle and Shape magazines, which generated up to 200 phone calls from eager shoppers. And for that extra buzz, Buchalter worked closely with fashion editors and celebrity stylists to communicate the message about the line.

While Crank admits that most companies would have waded more carefully into developing their first collection - much less three collections - she says Lunada Bay decided the brands deserved a big push on the retail floor. As Virtue puts it: "We wanted to go out as an established brand that had a well-rounded approach to things."

That well-rounded approach is scarcely surprising coming from Lunada Bay, which originated as Ocean Pacific's licensee (they parted company about five years ago) and has honed its reputation both among retailers and the industry at large as being a quick and capable company. Lynn Miller, merchandise manager of swimwear for Directives West, an LA-based trend service, points out that "retailers have a definite comfort level dealing with Lunada Bay, with the GirlStar package," which automatically puts the company in a better position than a fledgling designer who is slapping together a swimsuit line in his or her garage (like, for instance, Mossimo did when he first started).

For Crank, adding an in-house label to the Lunada Bay roster wasn't much different than adding another license. Her primary goal is to make sure all the lines compliment - rather than cannibalise - each other. Still, to eliminate any worry from its licensors that Becca, Rebecca V or even Becca Sport might push them out of the water, Crank says she gave her licensors the "heads up" early on. "We like to have great communication with our licensors ... [and] I think they very much respected the fact that Lunada Bay should have its own brand, and we're in control of its distribution and its destiny," Crank notes. "They know it makes sense, so they were very supportive."

Even so, Lunada Bay's history of being a supportive licensing company - Crank stood steadfastly by Mossimo when he tried to catapult his image to that of a high-fashion company and was drenched in a tidal wave of bad publicity - helped with the good karma. Says Crank: "Our licensors know that Lunada Bay is dedicated to the success of our brands, and we'll go to the ends of the earth to make sure that the business is run, not just properly, but the best that it can possibly be."

The constant connection with retail
The success of the company's brands (both its own as well as its licensed lines) has a lot to do with Lunada Bay's operations, which are run out of the firm's 42,000-square-foot headquarters. More than five years ago Crank recognised that the swimwear business was rapidly changing into one that relied heavily on replenishments, so she began implementing technology, including EDI and other quick response capabilities (all goods are labelled with UPC barcodes), which allowed Lunada Bay to partner more efficiently with the retailer. "Our software packages are very complete in regard to giving me the production planning and the sales planning [functionality], and [the ability to handle] all those other issues ... that the retailer is now asking for," says Crank.

Thanks to that technology, communication between Lunada Bay and its retailers is swift and strong. Retailers supply the company with a steady stream of information that allows Lunada Bay to be aware of what's happening on the retail floor. "We're aware of what's selling - by size, by colour, by style," Crank explains. "Every week, we know what has sold the prior week so we can understand and focus and hone in on those top-selling styles."

The Lunada Bay team also visits stores on a regular basis, observing shoppers and checking out displays and dressing rooms. As Crank says: "We like to have our retailers understand that we're interested in their business, not just their orders."

As the season progresses, Crank says Lunada Bay will "keep stocking the best styles and let the other styles sell down. The stores can then match up their tops and bottoms, finish off their business and move on to the next [trend]."

Unleashing new levels of creative freedom
For their part, Virtue and the other designers at Lunada Bay are responsible for discovering and designing that next trend in swimwear. To keep abreast of the market, the designers travel to Europe, shop cutting-edge boutiques in LA and Orange County, CA, and generally scour magazines for ideas, which will then be reinterpreted into the next itsy-bitsy, teeny-weeny, yellow polka-dot (or stunning blue or sexy black) bikini.

While design ideas for licensed lines may have to follow a certain fashion philosophy or be routed for approval to the owners of the label, Virtue operates with a lot more freedom in designing Lunada Bay's brands, with Becca and Rebbeca V breaking twice a year and Becca Sport about four times. "Rebecca can't address all the trends that she may want to cover in the Mossimo line, which has a clean, concrete-and-steel kind of perspective," Crank points out. "With Becca, she can go flirty, exotic or girlie ... She can take her feminine wiles and go crazy - anything she wants to if that were her whim. And with Rebecca V, the sky's the limit. Since price point is no object, she can use these amazing fabrics, and outrageous trims."

The Becca Swim line is extensive, running about 150 pieces, which are broken into seven or eight groups. Because the Becca consumer is more fashion forward, the line skews heavily (about 95 per cent) to two-piece coordinated swimsuits, which are treated as separates and can be mixed and matched. Says Crank: "We ship the tops separately from bottoms, and our customer can design her own suit and fit her own body type. She can buy a small top and a large bottom, or an underwire bra with a boy short ... She can use her own creativity."

For 2002, swimsuit shoppers will have plenty of creative styles to mix and match, including an African safari-flavoured group detailed with oddly shaped metal ornaments; a dainty group done in fresh ice-cream hues, featuring a spongy crepe fabric with Japanese-looking floral sequins; and a scenic Hawaiian-inspired print group done in sophisticated washed colours and embellished with wooden beads and plaid ribbons.

The smaller Rebecca V collection, which includes 50 to 60 pieces, features such fashion-forward styles as striped suits updated with layers of mesh, and bikinis detailed with kimono-inspired embroideries, sassy cut-outs and swanky jewelled broaches.

Meanwhile, the Becca Sport line, which also hovers at about 60 pieces, offers one major colour story that ties the collection together. "[Becca Sport] has a little bit of a swimwear mentality regarding separates, where you can wear a top with four different fabrications in the line," Virtue identifies. "You can really start mixing and matching in different fabrics, putting different groups together."

From concept to reality: pulling it all together
Fabric, not surprisingly, is a key component in designing swimwear, followed closely by fit. Virtue works with both textile and trim companies to create exclusive prints and colours. "Swimwear is such a small industry, you have to make sure the person next door to you doesn't have the same thing," says the designer. "That's what we really strive for - making it different and unique and all our own."

Not necessarily an easy task. "Fabric takes a long time to develop and the strike-offs take forever to get. To gray a screen for a print can take eight to 10 or 12 weeks," Crank reports. "That's not turning on a dime, so there is some premeditation there, so swimwear will never parallel sportswear in production."

And that's not counting the tests swimwear fabric has to undergo to make sure it can withstand the very brutal environment of the beach or poolside, where sun, sand, saltwater, tanning lotion and chlorine can all wreak havoc on the textile.

Because fit, like fabric, is so important in designing a swimsuit, pattern making and grading are essential. Lunada Bay's five pattern makers are linked electronically to the firm's grader via a pattern design system from Gerber Technology. After the patterns are made, three cutters manually spread and cut the fabric, sending sample pieces and small production bundles to 17 in-house sample makers. Once the sample suits are finished, they are sent to the fitting area. There, Crank reports: "Our designers and fit models spend probably three to four hours a day ... just checking styles."

The process can be tedious, but it's essential, Crank insists. "The [stretch] nature of the fabric can be very different," she says. "We want to make sure the cutting is as it should be, and it's our last opportunity, [for example], to adjust the armscye just ever so much to make it the best fit possible."

Fitting is also done during major production runs, which are sent out to local contractors that Lunada Bay has worked with for more than a decade. "Our contractors don't like to do those try-ons because it slows them down," Crank admits, "but it gives us the opportunity to make sure our products fit the way we want them to."

To ensure products meet its standards, Lunada Bay employs three in-house quality control people who randomly check measurements and eyeball products for defects, as well as five quality control experts who are in the field, working with contractors to make sure production hums along smoothly. "There are a lot of things you have to keep in mind before you can have a [swimsuit]," says Crank. "Building a swimwear line is different than [building] a sportswear line. I think that's why so many companies come to a swimwear specialist to license their swimwear, because it's a very unique product."

It's also why many retailers didn't hesitate to book Lunada Bay's new brands. "I've been with [Lunada Bay] forever, and they produce the best-made swimsuits," enthuses Julie McMackin, owner of the ultrahip Newport Beach, CA, swimwear store Molly Brown's. "The fabrics don't fade like other swimsuits, and the fit is absolutely fabulous. Every swimsuit from them fits well, whereas with other swimsuit manufacturers, you usually end up returning a few because of fit problems."

Because Lunada Bay skews toward re-orders and replenishment, the company bags and inventories all products until an order is received. "If an order comes through on Monday, we ship [the product] by Wednesday, and it's on the [retail] floor the following weekend," Crank reveals. "That way a retailer doesn't have to make a commitment five months in advance. They've only got their model stock, and when that sells, they re-order and replenish."

It's this savvy approach to business that has earned Crank rave reviews among retailers like McMackin and industry veterans like Barbara Brady, director of the International Swimwear/Activewear Market (ISAM) swim association. "Susan is one of the smartest business people out there," Brady insists. "Whether it's licensing or launching her own brand - whatever she does, she does well."

For her part, Crank generously spreads the praise around, crediting Lunada Bay's 84 employees for keeping the company afloat, especially during last year's turbulence. "I've got to tell you that I believe wholeheartedly in the fact that this company has got a heart and soul ... It has a dedication to its product and its people," she stresses.

"And we've learned that we're a well-rounded business. We've been thrown into the deep end of the pool, and we found out we can swim pretty darn well. I know this is a cliché, but what doesn't kill you, makes you stronger. And actually it feels kind of good to meet those challenges. I feel we're empowered almost ... and instead of [fretting] about the next issue we have to face, our [attitude] is: Bring it on!"

Julie McElwain, Bobbin's West Coast contributing editor, has covered the West Coast apparel, textile and related industries for Bobbin for more than nine years.

Lunada Bay at a glance
Headquarters: Anaheim, CA
Ownership: Privately held by 12 shareholders, including CEO Susan Crank.
Retail Base: Overall, Lunada Bay works with 60 per cent better department stores (such as Federated and Dillard's) and 40 per cent upscale specialty chains (such as Nordstrom) and boutiques.
Licensing Arrangements: Depending on the contract, Lunada Bay, which pays the licensor a fee for using its brand name, is typically responsible for everything from designing the line to selling it to stores. "We have a pre-approved distribution pattern with licensors, so we're [selling to] the stores that they want their brand appearing in," says Crank. "It's a collaboration between us and our licensor, but Lunada Bay takes on the responsibilities of starting the creative process right down to getting it out the back door to retailers, and selling everything in between."

At the moment, Lunada Bay has licensing arrangements with GirlStar, Bebe, Mossimo Swim and Mossimo Body. However, Crank is currently negotiating with two more companies to bring them into Lunada Bay's licensing fold.


Merchandising Philosophy: Even though head designer Rebecca Virtue creates an extensive line in the Becca brand, Crank says Lunada Bay may show only a small group during markets and trade shows, such as the Action Sports Retailer (ASR), Miami Swim Show and International Swimwear/Activewear Market (ISAM) events. "Sometimes you have to be the rebel and ... not take the entire collection to Miami," she notes. "We recognise when our customer feels like she needs something new. By not doing everything all at once, but letting some newness and freshness come out to the retailers, we address that consumer's appetite as time goes on."

Teamwork: The company shuns a corporate mentality, with everyone, including Crank, pitching in if a deadline is approaching. "Everybody here does everything. When it's time to get the samples out, we'll all put them on a hanger, shoulder-to-shoulder, side-by-side, to make it happen," she notes. "That's what causes our success - the drive, the dedication, the teamwork … knowing that the person standing next to you will go as far as you will, and no one is shouldering a load alone."

Employee Incentives: Crank has set up employee programmes ranging from pension plans to college education funds for dependents to English-language classes to be taught on-site. "We know our asset here is our people," she maintains.