Longtime store Manager Jason Watson and Owner Eric John at the original Laguna store.

On July 21, Volcom announced plans to acquire Laguna Surf & Sport from longtime Owner Eric John. Days later in the company’s Q2 conference call Chairman/CEO Richard Woolcott told investors “The multi branded concept of the LS&S stores is a little different for us, but we believe it helps diversify our retail business by providing us with greater insight about our customers and market trends.” Woolcott also says the stores will keep the same product mix and employees.

To read the entire Q2 Conference Call CLICK HERE.

Here is some background information about the 25 + year history of LS&S with in an exclusive interview with Owner Eric “E.J.” John. Stay tuned to Transworld Business for up-to-the-minute updates and the latest details on this story.

Transworld Business Exclusive Interview (conducted 11/06):

More than 30 individual coves and beaches carve along the eight-and-a-half miles of shoreline that's Laguna Beach. Once a 1970s hippie enclave, the town's bohemian past is still just visible in its art galleries and craft fairs—but you have to look closely. Laguna Beach has gone upscale. Multi-million dollar houses and the latest German automobiles crowd out remnants of a tie-dyed, bygone era.

But one storefront has remained a constant through the decades of change and still stands for the community it serves. Laguna Surf & Sport has occupied the same location on the corner of Oak Street and Pacific Coast Highway for nearly 25 years. It's a true surf shop: clubby, not overly polished, and somehow more pure than some other shops.
Over its history, the store has acted as an incubator for some of the most talented pro surfers on the planet—and turned a profit every year since it opened its doors in 1982. It's also witnessed a fundamental shift in what being a surf shop is all about.
The store opened its second location a few miles inland in Aliso Viejo eight years ago. It's more polished and more apparel driven, but it's found a strategy for success. But Owner Eric "E.J." John says his shops' growth hasn't come by making profit-driven business decisions, but rather by focusing on serving the communities where they reside.

The Shop’s exterior is pure Laguna Beach

What did you do before you became a surf-retail mogul?

Eric John: I was 22 and going to Long Beach State. I was about to go to law school when Aaron [Pai, Huntington Surf & Sport Owner] asked me if I wanted to open up a store in Laguna and go in halves with him.
Back then this was Oak Street Surf Shop, and it was going through a really hard time where they had hardly any inventory.
Tim Burnardy was the O'Neill wetsuit rep back then. He was pretty much the czar of surfing in Southern California. Whether or not you were viable as a surf shop depended on whether you had O'Neill wetsuits. So when Tim backed the idea, I knew it was a real thing.
I was going to see if it was successful for a couple years. If it wasn't, I'd cut my losses and go to law school. That was in 1982. It's been one long ride since then. It's going to be 25 years next April.

So did you start making profits right off the bat?

As far as a guy coming in from Huntington Beach and starting a surf shop here, the reception from the locals wasn't very warm. There was some strife with some of the strong personalities in town. We worked all that out, and I moved into the building of my competitor here all over the course of that first year. Business was always good here. We've been through several wide-open times and several market contractions over the years. Fortunately, the early 80s was one of the wide-open times.

So how do you feel about things now?
It's good. It's a more competitive environment. Back in the day, our competitors were farther away. We'd have kids drive here from Mission Viejo to buy a wetsuit. They'd drive here from Dana Point and Lake Forest, all kinds of inland places like that. In the last fifteen years, there've been places opening like Becker in Mission Viejo and Jack's coming back to Dana Point. That's one of the ways that business has changed over the years.
When people think about coming to Laguna from out of town, they think about parking problems, traffic, and localism. You really have to motivate them to come out. Access is still difficult. There are only three access routes into town: PCH North, PCH South, and Laguna Canyon Road.

So who are your customers?
I see kids all the time who have graduated college who, when I first met them, were infants in their mother's arms. So there's definitely a devoted clientele. We've never been overly driven by profit here. We have a sense of community and serving the community. We've sponsored everyone. Our first employee was Mike Parsons. He was also a teamrider, and over the years we've sponsored guys like Jeff Booth, Jack Denny, Steve Clark, Hans Hagan, Jon Rose, Mikey Todd, and Mike Morrissey. There's a high degree of loyalty from the community to us and from us to the community.

Back in the day, Laguna Surf & Sport had a strong vibe as a place grommets learned respect—sometimes with a good rousting. Does that legacy live on?
To a large extent, no. Grommet abuse doesn't happen anymore. One, you can't get away with grommet beatings anymore or you'll get in trouble and be out of business. To a certain extent, you also have to be sensitive to how society is changing the norms and rules.
I mean, we have stories. You can look at the pictures on the walls and see grommet beatings all over the place. It's part of our legacy. But you can't hold a kid down and color all over his face in Sharpie anymore. We won't throw a kid in a board bag and drag him down the stairs. It doesn't happen anymore—but it used to.
It isn't a reality in the current retail landscape. But we still have the right guys working in the store, the guys who own it in the water. That still creates that vibe in the store to the younger kids who come in. The respect structure in the water is in place in Laguna and it shows in the shop, too.

What's your staff like now?
We have eight to ten employees here in Laguna and fifteen to twenty in Aliso Viejo.

What about square footage?
Here in Laguna there's 1,250 square feet up here on the floor and the same amount of storage down beneath us. Our other store is around 3,000 square feet.

So how do you position your stores and how do you handle competition?

Our values are to serve the community. In that regard, we are who we are. We don't always make the best profit decisions, nor do we have a big profit expectation on this place. We make a profit, but it doesn't matter. What this place has meant to the community is bigger than the profit it brings me. That stuff can all fall to the wayside. It doesn't matter. We sacrifice all the time around here in order to help our friends.
You could write a giant, abstract article on the cultural aspects of a community surf shop. Kids come in here and their parents come in here, and young people and aficionados of the sport come in here, and we all just hang out together and rap. We watch surf videos and talk about life. It's as simple as that. In a lot of ways, it's like a bar. We just don't serve alcohol yet.

What's your take on the larger chain stores and how does your store compare?

They're like mini department stores, and their overriding motive is profit. Honestly, I don't know what's going to happen. I think the community support for a place like this [LS&S] is strong—especially in a community like this one. However, you can liken it to the days of the old hardware stores, where guys would come in and talk about how to fix things, pick up some nails, talk about how to fix your car, and whatnot.
Those were places of community interaction, and they all got blown out by Home Depot and Lowe's, which offered a bigger selection, lowered prices, and less service. It'd be a shame to see the same thing happen to our industry, but ultimately it's in the hands of the manufacturers. Those guys all used to surf once, and they just need to make the decisions on an individual basis whether or not they want to let that happen. Those are my thoughts on it.
We're on a different deal. We don't have people pay for their own buildouts in here. We don't ask anybody for any money with anything we do. When we built all these cool wooden racks, we paid for them ourselves and we own them. I don't go out and invoice Volcom or whoever like a lot of people do. It's mine and I decide what goes on it. If I want to switch it around, I'm going to switch it around. That way, nobody is going to come in here and say that they paid for that rack and they reserved some of that space. Every bit of space in here we own.
We look at the lines. We buy what we like and we don't buy what we don't like. That way this store keeps its own unique personality versus just becoming an extension of the trends of the brands.

Do you guys do mostly hardgoods or softgoods? How are shoes, eyewear, and accessories moving?
We might do 65-percent softgoods, twenty-percent hardgoods,
fifteen-percent accessories—including eyewear and watches. It's something like that. It might be a little bit more since Electric is going so nuts for us right now. It helps the eyewear category.

What about with other categories? What are your best brands?

Volcom is still super strong. There are a lot of people looking to ride on Volcom because they're public now and they're making business decisions, but they rule. Their stuff is tight. It sells well and their rep for us is super cool. So they're going the same direction we are and we support them 100 percent. We also have a great business partnership with Hurley. All summer long we do a free Tuesday movie night with Hurley for the grommets. Also, it wouldn't be right if I didn't mention Billabong. They had a great season this year, and we just looked at their line and it looks awesome. Their boardshorts are just off the hook, and we've sold the crap out of them.

Does the fact that a lot of the CEOs from the major labels live right up the hill affect you guys?

Yeah, they come in [to the Laguna shop] all the time. I feel like they respect what we're doing. Even if they came in here and they thought their brand had a poor representation, they wouldn't say anything. The only time we get any grief is when some company hires a new guy. They don't realize that we have our own identity. They don't get it. But most of the time people appreciate what we are up to.

Aliso Viejo Shop Manager Jimmy Quintana says that local skate parks fuel a healthy skate business in his store.

We haven't really talked much about the Aliso Viejo store. What are the major differences with the roles of your two different stores?
The kind of stores we have are defined by the communities that they serve. When we open a store we say, 'Okay, we've identified this community and we want to serve its needs.' This store evolved to specifically serve the needs of the Laguna surfing and beach community. The store in Aliso opened with that premise but evolved into a store that serves that community—a high-pace, skate-oriented community. So that one has changed over the years.
I'm not some eggy old surf guy who's going to bum out on some skater who has passion. Those guys have the same kind of passion as surfers when they talk about dropping twelve stairs. I want to support that as much as I can, the same way I do for some grommet talking about making the semifinals of an NSSA contest.

If you could be king for a day, what would you have the surf industry do a better job of?

I think it'd be if everyone, including myself, could just refocus on why they got into this industry—think about the magic involved in your first job at a surf shop. The problem is, it's been more than fifteen years for a lot of us and we've become jaded businessmen getting pushed around by investors.
You lost focus of your roots and where you came from. It's a magical life we have. But through all the business and policies and formulas and stringent stuff you have to put everything through, it's like you strain out all the magic. It's the same with me. Now I've got a son who's fifteen and he's surfing. We're going on surf trips, and the world is huge to him. He's stoked. That allows me to revisit why I got involved in all this in the first place and didn't go to law school.
With a lot of these guys, the business takes over what it really is. The surf industry should be different from the paper industry or the plastic industry or whatever. The surf industry should be different.
If you go into some of the most prolific surf shops in the United States, there are guys in there wearing name tags. How anti-establishment is that? It's almost like a push back the other way. They have these policies and handbooks. It's exactly the opposite of the legacy of Greg Noll or Gerry Lopez.
So if I were king for a day, I'd have everyone revisit why they got involved in this business and help them find a refocusing point.

—Interview by Josh Hunter, November 2006