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Quiksilver Cuts Mooney, Likely to Keep His Strategy

Quiksilver Inc.’s board of directors fired Chairman and Chief Executive Andy Mooney late last month, according to its filings with the Securities and Exchange Commission.

But it’s unlikely the Huntington Beach-based apparel and footwear manufacturer and retailer will do away with changes Mooney brought during his two-year tenure.

Quiksilver founder Bob McKnight, who reassumed the post of chairman with Mooney’s departure, credited the former Nike Inc. executive with “driving the organizational changes that were essential to restoring our product design leadership and globalizing many of our key functions.”

McKnight said Mooney set the stage “for the next phase of Quiksilver’s progress.”

Some observers took McKnight at his word.

“I don’t think that’s a throwaway line,” said Jeff Harbaugh, a Bellevue, Wash.-based analyst who’s been following companies in the action sports, outdoor and youth-culture industry for the past 20 years. “When Andy came in…there were some pretty difficult changes that had to be made, that people weren’t going to like, and that were going to cause some chaos. I doubt Bob McKnight will come and reverse those things because most of them made sense.”

Mooney is credited with reducing the number of Quiksilver’s product lines and suppliers. He also pushed for improvements to supply chains and a move from regional planning to global strategy. The shifts came with reorganizations and some job cuts as Mooney aimed to “to take care of the overall workload with the more efficient headcount base.”

Sell-Offs

Quiksilver also divested “non-core businesses” under Mooney, who put a priority on its three mainstay brands—Quiksilver, Roxy and DC Shoes. Among the sell-offs were snowboard maker Mervin Manufacturing Inc. in November 2013, for $58 million; Hawk Designs Inc. in January of 2014, for $19 million; and a majority stake in U.K.-based e-commerce retailer Surfdome Shop Ltd. in December for $16 million.

Shares of publicly traded Quiksilver—which ranked No. 41 on the public companies list (see page 10)—climbed steadily early in Mooney’s tenure, reaching a high of about $9 apiece in November 2013. The stock price, though, has generally fallen over the past year or so. It was around $2 at the time of his dismissal, with a market capitalization of about $311 million.

The company’s latest earnings report showed a narrowed loss of $18 million for the January quarter, thanks in large part to a $33 million reduction in expenses. The loss came to 11 cents per share, better than the 14 cents analysts had expected.

The narrowing of the loss partially offset the effect of a 13.4% year-over-year decline in revenue to $340.8 million, which came despite a rise in the company store count to 713 from 645 a year earlier.

This now becomes Pierre Agnes’ fight, a Quiksilver veteran who was promoted from president to chief executive.

Mooney sounded committed to the company during an earnings call less than two weeks before he was fired.

“Overall I am pleased with the performance in [the first quarter] particularly given the challenges we faced in the retail business in Europe with the late onset of winter and coping with the port slowdowns in Long Beach [and] Los Angeles,” he said at the time. “With the restructuring of the company essentially completed, I am looking forward to now spending time with core surf and skates specialty accounts around the globe, and we continue to allocate the lion share of our company’s marketing resources to the specialty channel. … We are very focused on growing our e-commerce businesses, re-engaging our core wholesale customer. Longer term, we continue to see robust growth opportunities for all of our brands, particularly in developed markets.”

Not everyone at Quiksilver saw Mooney as a part of the ongoing solution, according to analyst Harbaugh.

“A new executive in a turnaround is hired to do hard things the old executive couldn’t or wouldn’t do, and he has to do them with a sense of urgency,” Harbaugh wrote in a blog post. “Sometimes, that just doesn’t win you friends or supporters. Sorry. Cutting expenses, letting people go or changing their roles, revamping organizations, processes and procedures is usually unpopular no matter how necessary. .. I’ll go one step further. Just maybe it was his job, or the job of anybody in a similar situation, to do the … stuff that had to be done and then move on. Not that he expected that outcome, and he clearly didn’t get a gold watch and told ‘job well done’ as he rode off into the sunset, but it wouldn’t be the first time a hired gun in a turnaround did the tough stuff and left.”

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