Zoot Sports Inc., a triathlon and endurance sports apparel company that also owns Zoic Clothing, a bike apparel company, has entered into a partnership agreement with Nitches Inc. (Nasdaq: NICH), a San Diego, Calif.-based, importer and wholesale distributor of women's garments and a manufacturing outsourcer.
Nitches President Paul Wyandt told SNEWS the company purchased all tangible assets of Zoot Sports, including inventory, and will continue to own all inventory of the company produced under the partnership. In return, Nitches will pay Zoot Sports a share of the profits. Nitches did not purchase the trademarks.
Julia Hansen, the company's CEO, has resigned her position as a result of the deal, but remains a shareholder in the company, she told SNEWS. Hansen also told us the investor and shareholder structure for Zoot Sports Inc. remains.
Thirteen employees have been let go, according to Hansen, as a result of the operations moving from San Francisco to San Diego. Nitches will be providing office space to house Zoot's sales and design team in San Diego and will distribute product based on the sales efforts of that team.
Hansen assured SNEWS that the move was made to build value in the brand for the creditors and shareholders and to allow the business to continue. Consumers, she asserts, won't notice a thing.
Wyandt told us that Nitches is actively looking for companies that might need the expertise it offers in sourcing, distribution and production.
SNEWS View: It remains to be seen if Zoot and Zoic can survive. Wyandt is no stranger to the brand, which is why the company became interested in the first place. The Nitches president is an avid mountain biker and an active triathlete and believes strongly in the unfulfilled potential of both brands. What is interesting to us is that the majority of Nitches' current sales -- over 90 percent -- are to three companies: Kohl's, Mervyns and Sears. Not exactly a specialty sporting slant, to be sure. Nitches is also an outsourcer, meaning all production, sourcing and quality control moves overseas. What that will do for Zoic and Zoot quality is an unknown at this time, though Wyandt asserts Nitches will only improve current quality of the brand -- which with Zoic is probably a good thing. What is relatively certain is that without Nitches, Zoot and Zoic would likely have shut down. Insiders close to the company tell us that following the acquisition of Zoic last year, the company had been in a downward spiral of bleeding cash to support slumping sales, mostly on the Zoic side of the ledger. The company had hoped to exhibit at Outdoor Retailer Winter Market this year to expand its market beyond just the bike world, but it's unlikely we'll see it there now.