Over the past two months, prAna has seen some turbulent times with two
successfully implemented long range growth plans colliding with a major
reorganization at its parent company, Liz Claiborne. This
reorganization brought in new leadership in the senior management team
at Liz, and saw the departure of Paul Charron, the chairman and CEO of
Liz Claiborne that headed the acquisition of prAna. This shift at the
upper levels of management will also push the prAna business onto the
auction block once again. Sources close to Liz told BOSS that the
company is taking its time with the sale and looking for the right
partner for the brand.

While this convergence of growth and restructuring spells a serious
increase in workload for prAna’s senior management team, they have
still been able to pull off two major initiatives for the company’s
future growth – acquiring a brand that will put prAna in the outerwear
category for the first time, and opening their first two retail stores
in Boulder, CO and Santa Clara, CA.

prAna CEO Beaver Theodosakis told The B.O.S.S. Report that he and his
design team thought “this is prAna outerwear” as soon as they saw
Scapegoat at OR Winter Market last January. The integration appears to
be moving ahead without a hitch and the new Scapegoat by prAna will be
launching its first women’s line in fall 2008. Similar to prAna’s style
and brand position in the climbing community, Scapegoat is designed for
a younger consumer who doesn't necessarily want to look like they just
got off the mountain; it has more of an urban, street feel.

While the Scapegoat acquisition helped push prAna into a new category,
the biggest initiative the brand has undertaken recently is its
owned-retail launch. Theodosakis said that the motivation behind these
new retail stores is to be able to tell the prAna story “in its
entirety.” He pointed to several other outdoor brands that have done
similar retail expansions and how these stores actually help local
retailers. He was also adamant that the company would do whatever was
needed to make sure these core specialty retailers continue to have a
solid relationship with the prAna brand.

“The intent with these stores is not to take business away from our
core retailers.” Theodosakis said. “We are really looking to expand the
reach of prAna and let consumers see the whole range product and really
understand what prAna is all about. If we do it right it will grow the
business for all of our retailers.”

When asked what he would do if evidence appeared showing that these new
doors were negatively impacting existing retailers, Theodosakis said,
“Whatever it takes to make their business stronger – early releases of
product, special product, marketing – whatever it takes to keep our
core retailers strong.”

The locations of these two stores were almost pre-ordained. Theodosakis
and his team looked at the strongest markets for prAna and opened their
stores there. Colorado is the most productive territory world-wide for
prAna and Boulder is essentially the hub of the outdoor lifestyle in
the area. The Santa Clara location will give prAna a retail presence in
their home state as well. For the past 50 years, Westfield Valley Fair
Mall has been the San Jose area's leading shopping destination and
prAna’s presence in this area is intended to raise brand awareness
among this demographic.

The Boulder store will serve as a main hub for education and
merchandising for prAna’s retailers, and will allow the brand to share
its sales and marketing techniques. The store will feature a 3,500
square foot selling area, with a downstairs showroom for internal
education and local community events. The Santa Clara space is smaller
at 2,200 sq ft, and will be closer to a pure retail store, though there
will be dedicated areas for education and community outreach as well.

On paper, the retail stores sound like they will have a similar
aesthetic to prAna’s trade show booth, with hemp rope, natural wood
fixtures, unique lighting and recycled materials.

With all of these business initiatives underway, prAna still has not
lost sight of its core business. According to management, the brand is
up in the “double digits at all of our core retailers.” In addition,
the brand has become the number one vendor for many outdoor shops. The
company is seeing strong growth in Yoga and running specialty accounts
as well. At the same time, the company plans to look at other new
markets that can compliment its existing distribution. Theodosakis
points out that prAna was never intended to be limited to outdoor and
yoga. He feels that “messages of wellness, sustainability, performance
and spirituality” can have positive impacts on other areas outside of
yoga and climbing. Specialty running is a first step, but with the
expansion of the health and wellness lifestyle, prAna has other
opportunities as well.

With hindsight always being 20/20, Theodosakis admits that going
through another change of ownership after only two years “is not
ideal,” but he says “We made the best choice at that time, and we could
not have foreseen changes in Liz upper management.”

At the same, the entire team at prAna learned a lot from their
experiences under a public company and Theodosakis feels good about the
direction the brand is heading. “We've learned a lot and made our
business better. We are not seeing any hurdles in front of us, only
amazing opportunities to share our brand with more like minded
consumers. No doubt, it's an interesting time, but prAna is a very
strong brand, our retailers support us and want us to succeed, we have
a dedicated team, a solid list of potential partners, and a clear
vision for the future,” he concluded.