New Xcel Owner Wedge Brands Looks to Expand Portfolio

Feb 13, 2023

Wedge Brands is a relative newcomer among multi-brand portfolio operators, but it’s gotten off to a nice start with a more than 40-year-old heritage wetsuit brand and an executive team of industry veterans.

Wedge, a reference to both the popular Newport Beach bodysurfing and surf spot and to the challenges that can come with scaling a newly acquired brand, got its start in 2020 with the acquisition of Xcel Wetsuits from Boardriders.

Xcel, sold in nearly 700 doors, has roughly doubled its business since the acquisition, according to Jarka Duba, the CEO of Wedge and Xcel. He thinks another doubling is possible over the next few years as the company looks to make inroads with more casual surfers and surf-adjacent product.

“Xcel was the one that worked perfectly for us,” Duba said of why Xcel fit the bill for being Wedge’s first acquisition. “It was a good size. It has a great staff, the heritage was there. The fact that it’s technically driven and that everybody within the organization is constantly trying to build a better wetsuit matched up with exactly what we were looking for.”

Duba, who also sits on the board of ski brand Alps & Meters, started and ran sporting goods company POC’s U.S. business until its sale to Black Diamond in 2012 for nearly $45 million. (Black Diamond sold the brand to Investcorp three years later for $65 million.)

Since buying Xcel, Wedge has worked on several new initiatives for the brand including increasing speed-to-market and cutting shipping costs for East Coast retailers via a regional distribution center that opened about six weeks ago, and expanding into boardshorts, which launched a little over a year ago.

Now, Duba and team are focused on growing internationally, scaling U.S. wholesale through the specialty channel, improving direct-to-consumer, continuing product innovation, and releasing more “wetsuit-adjacent” items in the next six to 12 months.

Jarka Duba, Ian Stewart, Lance Varon, and Coutney Kincaid at Surf Expo in January 2023. SES file photo.

Expanding Xcel’s brand awareness to a broader consumer base is also a major area of focus, and the company has hired a new executive to help the effort.

Ian Stewart joined in September as CMO of Wedge Brands and Xcel. A former chief marketing officer for Toms, Stewart has also served as Ugg‘s vice president of marketing, head of marketing at The Surfrider Foundation, and held several marketing positions at Converse.

“We have a very lucky opportunity because, being 40 years old and focused on surf, all core surfers know Xcel and we’re lucky that our reputation has maintained all the way through those 40 years as a high-end, performance wetsuit,” Stewart said.

Plans call for leveraging that core awareness and expanding it to what Stewart called “the occasional surfer.”

“Without giving numbers, we have a lot of room to grow just by catching up to where a lot of our peers are in the industry,” Stewart added.

While Xcel wants to expand its reach beyond hardcore surfers, Wedge has no plans for Xcel to stray too far from the core, both from a product standpoint but also when it comes to distribution.

“I think that the brand is in the correct doors,” Duba said. “I think that the core surf consumer rolls into their door – whether that’s Frog House or Cinnamon Rainbows on the East Coast – they roll into that door and they know what they want. They want a very specific product; they want it from Xcel and they go in and they purchase it. The casual surfer, the person that comes from inland and they surf once or twice a month, they surprisingly have never heard of Xcel. And they walk in and there are two brands that they know off the top of their head, and that’s what they gravitate towards. So we just have to figure out how to tell this story and really get that across that we’re making a premium product at every level.”

“Xcel was the one that worked perfectly for us,” Wedge Brands CEO Jarka Duba said of the reason for acquiring the brand. Photo courtesy of Xcel Wetsuits.

Wholesale continues to account for the majority of Xcel’s revenue, with the international and domestic businesses about evenly split. While the company has plans to make improvements in direct-to-consumer through its website, Duba sees the web as a vehicle to drive consumers into core stores.

“I have a slightly different view on what a healthy brand should be doing to work with a core retail base,” he said. “I think it’s incredibly important to tell your story on the web and make all those products available to the consumer. But if you’re looking for a wetsuit, you’re going to start online to get the most information, but then you need to seek out your surf shop and try that wetsuit on and purchase it.”

He views the strategy as being a way to “protect the core retailer” and said it’s applicable to any brand Wedge might buy.

“Direct-to-consumer is great; people don’t talk about the fact that it actually costs quite a bit of money to run direct-to-consumer, so it’s not like it’s just grabbing money out of the sky,” said Duba, whose first job in the outdoor industry was at a store.

Other executives on the Wedge team also had similar starts, he pointed out, including the head of sales, Courtney Kincaid, and the head of product, Lance Varon.

Duba said Xcel is in a good position with its approach to retail against the backdrop of the current operating environment. He pointed to operating in the pandemic as an example. Xcel, unlike some brands, did not parse off some of its assortment for direct-to-consumer. Instead, it operated with a “serve the retailers first” strategy, selling anything left over through its DTC channel.

“The market’s a little bit of a mess right now,” he said. “If you look at the top six surf brands, and the top six brands of wetsuits, you’ve got some with supply chain issues. You’ve got some brands that are in the middle of being bought and moved around. We think that we’re in a pretty good spot to continue to serve the retailer in the best way that we can.”

Xcel offers a case study in what Wedge aims to do with any brand that’s added onto its platform.

“The goal there was to build a global platform – to buy, build, and grow brands that we believe in, within the surf and snow sports space,” Duba said of the driving force behind starting Wedge. “Super simple. We have a staff that understands all sides and all aspects of that space.”

The CEO said the company hopes to close on two more purchases this year.

Duba declined to cite specifics on the possible acquisition targets, but noted Wedge’s focus on surf, snow, and outdoor brands. Wedge is interested in iconic, technical brands that are “pushing the boundaries of improving their sport.”

Wedge’s pitch to potential acquirees is backend support in the way of shared logistics capabilities, finance, legal, HR, warehousing, marketing, and sales.

“Our intention here is to be able to allow smaller brands, or even midsize brands, once they’re within the ecosystem, to act like a huge brand by having access to the HR, the finance, the warehousing, the marketing that goes beyond just having a creative human in the room,” Duba said. “Everybody’s creative, but how do you make that creative work not just in Southern California, but work on the coast of New Hampshire or the coast of Florida?”

Xcel is sold in nearly 700 doors. Photo courtesy of Xcel Wetsuits.

Duba’s seen the acquisition market change in the last 12 months. Where the outdoor market was once hot with high multiples and plenty of suitors, that’s now changed in response to the broader economy. That leaves room for Wedge and its management team.

“The market has turned a bit. What we’re seeing is people coming back to reality,” Duba said. “At the end of the day, it almost hasn’t changed for us because we’re always looking for brands that we can help.”

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