Analysts: Reef Faces Obstacles Ahead

LOS ANGELES — New Reef President Jeff Moore, who began work at the brand last month, could have his work cut out for him, market watchers said.

“The brand has struggled a bit,” said Jim Ragan, an analyst at Crowell, Weedon & Co. “They still have a pretty good franchise in the core sandal business, but they really haven’t been able to build anything around that.”

Mitch Kummetz, an analyst at Robert W. Baird & Co., said that while the brand maintains a leadership position in the flip-flop category, competition is increasing and cutting into Reef’s business.

“The first half of this year was strong for [Reef and] sandals in general,” he said. “With that said, they have lost some market share, and it’s really come from two different areas.”

Kummetz noted that Reef is increasingly being challenged by Sanuk and its hanging footwear program, as well as premium sandal brand Olukai.

Still, Kummetz said, he liked what Moore could bring to the business with his experience in action sports. Prior to heading Reef, Moore was VP of sales in the Americas for Vans. Both brands are owned by VF Corp.

“I like the fact that Jeff Moore understands the action-sports world,” Kummetz said. “And he knows the closed-toe business, coming from Vans.”

Moore replaced Jim Gerson, who left the company in July after a year in the top seat to become president of the swimwear division at The Warnaco Group, which owns the Speedo label.

For his part, Moore said he hoped to firm up the operations by shifting the at-once business to a futures strategy. “An opportunity for growth for us is to partner with our better [retailers] to [transition into] a forward model,” he said. “Obviously, we’re going to have some challenges, especially for those mom-and-pop stores Reef has sold to since we launched in 1984. However, with the business becoming a bit more sophisticated on the national level, I don’t think we’ll get much push back.”

Moore said he hoped to entice surf shops with special product that will be available only through pre-orders.

Also, Moore said, the company would be working to increase its hanging footwear program, its premium leather offering and its closed-toe product assortment. Also, men’s apparel will be a big focus for the brand going forward.

“Reef is in a position of strength to see some great growth,” Moore said.

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