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Aussie Apparel Group, Ltd.
One World Trade Center, Suite 800
Long Beach, California 90831
Phone: (562) 983 - 8045 Fax: (562) 498 - 2228
www.aussieapparelgroup.com
February 7, 2003
Dear AAPG Shareholders:
I am extremely pleased to have signed the closing documents with Federation
Group last month pertaining to our acquisition of the HOT TUNA, XISLE, PIRANHA
BOY and PIRANHA GIRL brands. We are now working diligently to launch these
brands in the United States as well as endeavoring to work with foreign entities
on finalizing distributorships in various countries where interest is strong.
These four brands form the basis for an extremely strong platform for the launch
of Aussie Apparel Group, Ltd. ("AAPG" or the "Company").
AAPG is a Southern California based company that we are seeking to introduce our
well established Australian based extreme sports apparel lines into North
America's estimated $17.4 billion annual sports apparel market.
We will target the global board-sports apparel industry through a multi-branded
and multi-distribution channel approach. I firmly believe that the non-reliance
on one brand or one channel of distribution will allow AAPG to be more flexible
in reacting to the market trends within the boards-sports apparel industry.
Additionally, we are currently in conversations with multiple entities with the
objective of making further acquisitions from within the board-sports industry.
Specifically, we are seeking established board-sport brands in the skate or snow
categories. These strengths will compliment the considerable strength that we
already have in the surf category with Hot Tuna, Xisle and Piranha.
MANAGEMENT:
I would like to take a minute now and introduce you to the world-class
management team we have assembled at AAPG. It is an unusually savvy and
experienced group for such an early stage entity. I believe this management team
gives us a tremendous competitive edge over the majority of our competitors who
generally managed by action sports participants/enthusiasts rather than by
experienced business managers.
Bruce MacGregor: President/CEO
Mr. MacGregor brings over 20 years of sporting goods experience in both the
apparel/footwear and action sports segments including both high growth and
start-up entities. Mr. MacGregor's experience includes Avia where as part of the
original management team (VP of Marketing) he helped grow the brand from $3.0
million in revenue to $200 million within five years. As President/COO of L.A.
Gear, he is credited with restructuring the company to allow for the successful
sale of the business. At Razor USA LLC, Mr. MacGregor, as COO, led the scooter
company from $15 million to $200 million in revenue.
Rod Williams: Senior Vice President of International.
Rod Williams joined HOT TUNA as CEO under Federation. In moving to AAPG with the
brands, Mr. Williams will take on responsibility for all of AAPG's revenue
growth outside of North America. Mr. Williams brings long established experience
in the apparel/footwear industry, particularly as it pertains to international
sales. During his distinguished career, Mr. Williams has led the international
sales effort with prestigious brands such as Timberland and most recently Rip
Curl, where he served as International Sales Manager before joining HOT TUNA.
Read Worth: Senior Vice President/General Merchandise Manager
Mr. Read Worth comes to the Company from RLX Polo Sport where he served as
Senior Vice President/GMM. Mr. Worth brings over 15 years of apparel
merchandising experience to AAPG. This includes time with such venerable brands
as Nike, Patagonia and Polo. Mr. Worth also spent three years as Senior Vice
President at Champs (Foot Locker division) where he built their private label
business from zero to $485 Million.
David Lasell: Chief Financial Officer
Mr. Lasell brings a plethora of action sports industry experience to AAPG as a
result of his 27 years of experience. Mr. Lasell has spent the last seven years
as a financial/management consultant. Prior to his consulting efforts, Mr.
Lasell served as the Corporate Controller at Bugle Boy Industries. His previous
experience also includes C&C Traders (licensee for Gotcha, Redsand, & Rusty)
where he served as CFO and Ocean Pacific where he was the VP of Finance. Mr.
Lasell began his career in public accounting with Ernst & Ernst.
Stuart Kawamura: National Sales Manager
Mr. Kawamura brings 15 years of sales management expertise within the surf
apparel industry to the Company. Mr. Kawamura was the driving force behind the
sales success of Redsand, one of the original surf brands out of the US in the
late 1980's. Since then, he has held the National Sales Manager's positions with
various surf apparel concerns including Town & Country Surf, Inc. and SMP USA,
Inc.
Advisory Board Members:
Scott Battenburg:
Mr. Battenburg is the Chief Financial Officer at Razor USA LLC. Mr. Battenburg
also served under Mr. MacGregor at L.A. Gear. Mr. Battenburg brings 12 years of
experience in financial and operations management in both the consumer products
and financial services sectors. Prior to Razor, Mr. Battenburg served as the
Vice President of Financial Planning for the Money Store. Mr. Battenburg is an
alumnus of KPMG Peat Marwick.
John Kraus:
Mr. Kraus has 20 years of experience in sales management in the footwear and
apparel industry. His storied background includes Avia, where he served as
Director of Sales, and Pacific Trail, an outerwear division of London Fog
Industries, where he was Vice President of Sales. Mr. Kraus' experience also
includes Doc Martens USA, where he was Vice President of Sales & Product for the
youth oriented footwear concern.
Board:
It is my intention to create an experienced board that will provide the ultimate
in pertinent advice and counsel on the business side while simultaneously
serving as strong, independent shareholder advocates.
Beyond myself, the board presently has one other member, GiGi Carrano, who also
serves as Company Secretary.
GiGi Carrano:
Ms. Carrano's vast retail experience is extremely helpful to both the Company
and myself. Ms. Carrano has ten years of experience on the retail side dealing
with customer and vendor relations, merchandising, brand promotion, inventory
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control and sales performance. She is also a surfing enthusiast in her own
right, making her very familiar with the Southern California surf culture.
HISTORY/BACKGROUND:
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AAPG, through the acquisition of the HOT TUNA (surf), XISLE (skate/surf) and
PIRANHA BOY & GIRL (surf) brands now own a diverse range of products designed
for the action sports arena. We develop high tech garments for athletes and
participants in these sports as well as designing more casual lifestyle clothing
aimed at a wider range of consumers.
The Company currently maintains brand awareness in Australia, New Zealand, and
other core surf communities such as Southern California, Hawaii and Florida with
the Xisle and Hot Tuna brands. These product lines cater to both male and female
consumer audiences and continual design and development for both of these
markets is ongoing. We also have an established clothing line directed to
capturing market share in the children's apparel space, ages 2-11. This line is
represented under the labels PIRANHA BOY and PIRANHA GIRL.
Hot Tuna has maintained a major presence in Australia as an authentic surf brand
through its 33-year participation with the surfing community and the endorsement
of world-class surfers such as Lee Winkler. Hot Tuna's innovative and surf
inspired cutting-edge designs further contributed to the brand's authentic
reputation.
The Piranha brand is an offshoot of the Hot Tuna brand, originating as a label
with which to penetrate the children's mass-market retail channel with surf
inspired apparel. The brand utilizes both the Piranha Boy and Piranha Girl
labels in order to effectively market to both genders.
The Xisle brand was born through the Sea Level Surf and Skate chain based in
Victoria, Australia. The retail chain built the brand internally as a private
label vehicle. With the success of the Xisle label came demands from other
retailers that they be allowed to purchase the brand on a wholesale basis. In
the Victorian region, the Xisle brand went on to claim the number three position
in market share for wetsuits. As a result, the Xisle brand, while maintaining
its authentic roots, expanded into lifestyle apparel reflecting the taste and
needs of surfers and skaters alike.
SALES/PRODUCT INTRODUCTION:
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Fall 2003:
We received a very enthusiastic responses from many action sports and surf shops
at the recent Surf Expo regarding the availability once again, of the HOT TUNA
brand in the U.S.
We are in the process of finalizing our independent rep sales forces for both
the HOT TUNA and XISLE brands. I am extremely encouraged in that we are
attracting some the best and the brightest in the industry. Our HOT TUNA sales
samples will be in the rep's hands by the last week of February, while our XISLE
reps will receive their fall 2003 samples by the second week of March 2003. We
plan on delivering the fall 2003 product lines by August 2003 for the all
important back-to-school selling season at retail. We are targeting core
specialty shops and chains with our authentic HOT TUNA line. This includes very
successful entities such as Zumiez, Pacific Sunwear and Tilly's. With the XISLE
brand, we are pursuing mid-tier retailers in both the department store (Kohl's,
JCPenney's) and sporting goods (Gart's, Galyan's) distribution segments.
On the PIRANHA side, AAPG management will deal directly with the targeted
mass-market retailers such as Wal*Mart and Target.
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Spring 2004:
While we start selling the various product lines representing all four brands
for Fall, 2003 delivery, we have simultaneously started the design process for
Spring, 2004 delivery. This will be the first product range fully designed and
developed completely under your new management. We are extremely excited about
what we are putting together and will introduce these lines at three shows. We
will start with the MAGIC show in Las Vegas in August, where we will introduce
the Spring 2004 ranges for the XISLE, PIRANHA BOY and PIRANHA GIRL brands. The
spring 2004 HOT TUNA range will be introduced at SUF EXPO and ASR (Action Sports
Retailer) shows, both of which are scheduled in September 2003.
MARKETING:
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The successful implementation of the Company's marketing strategies will be
based upon management's efforts to address core differences in each brand's
targeted consumer audience. I am confident in our ability to effectively manage
a multi-branded entity. In order to foster the type of brand image that is
attractive to each consumer group, each cross-section requires that they be
communicated to through specific channels to ensure receptivity, e.g. print-ads,
event sponsorship, department store presence, specialty store presence, etc.
The benefits of selling and marketing multiple brands are tremendous as we are
not reliant on any one brand or channel of distribution to create revenue.
Therefore, AAPG will not be restricted to any one brand's market acceptance. It
also allows us to react to market and/or fashion trends more readily without
sacrificing the integrity of any of our brands, either through inappropriate
distribution and/or product.
I am extremely happy to announce that we have engaged the services of A.D.D.
Marketing in Los Angeles to manage our marketing and promotional efforts. A.D.D.
Marketing is nationally recognized for their knowledge and expertise in youth
markets where the firm utilizes creative guerrilla or counter-culture marketing
to create greater brand awareness and demand. A.D.D. specializes in the
entertainment, music and action sports industries. A.D.D.'s clients include but
are not limited to: Proctor & Gamble/Tremor, Airwalk, ABC Entertainment, Game
Show Network, Nike, Sony Computer Entertainment, Interscope Records, Disney,
Columbia TriStar, EA, Toyota, Vivendi Universal, Fox Sports Net, Gravity Games,
Dreamworks, etc.
We believe they are extremely well suited to communicate the Aussie Apparel
story to the relevant target consumers of each of the respective brands. We are
pleased to have added a firm of A.D.D.'s reputation to our team.
SOURCING/MANUFACTURING:
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AAPG's management collectively has a vast amount of experience in the design,
development, sourcing and production process, both overseas and domestically. We
feel confident in our ability to source the finest product at the best possible
cost and delivering it on a timely basis. Presently, Hot Tuna, Xisle and Piranha
utilize separate sourcing entities. We plan to consolidate such efforts in order
to bring an economy of scale to the process, including the ability to gain
greater leverage in dealing with our sourcing partners on the cost of product.
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CONCLUSION:
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We know that as Shareholders you are focused not only on our corporate
initiatives, but also on steps we take to increase the awareness of the company
among the Wall Street community. We take shareholder value seriously, and will
continue to take action to broaden our Shareholder base. Ultimately, our
objective would be to obtain a listing on a National Exchange.
I look forward to communicating further with you in the future regarding
additional progress. To that end, I also encourage you to periodically check out
our web site at www.aussieapparelgroup.com. Our site houses the latest press
releases and provides you with the ability to check on your company.
We know that our employees, customers and shareholders remain our most important
constituents. We will continue to work everyday to justify your confidence in
us. On behalf of our management team and employees, let me thank you all for
your continued support!
Respectfully,
/s/ Bruce W. MacGregor
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Bruce W. MacGregor
President/CEO
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