Headquarters: 15202 Graham St., Huntington Beach
Employees: 8,000; 975 in OC*
Business: clothing maker
Market value, as of April 1: $170 million
Revenue for 12 months ended Jan. 31: $2.2 billion, up 0.5%
Loss for 12 months ended Jan. 31: $399 million, widened from a loss of $145 million
*
estimated
Year in review: 2008 either was the beginning of the end or the start of an incredible comeback story for Quiksilver. In November, Quiksilver sold struggling ski maker Rossignol for $50 million to Australia’s Macquarie Group Ltd. and Rye, N.Y.-based Jarden Corp., a maker of outdoor products. The sale price was about 40% of what Quiksilver had hoped to get just months earlier and a fraction of the $560 million it paid for the French company in 2005.
The fire sale came after years of losses at Rossignol, despite Quiksilver’s attempts to right the ski maker.
But Rossignol continues to haunt Quiksilver. The company had $1 billion in long- and short-term debt at the end of January, much of it from borrowing to buy Rossignol and keep it afloat.
In early 2008, Quiksilver let go former president Bernard Mariette, a Frenchman who was instrumental in the Rossignol buy.
By late 2008, Quiksilver’s troubles were compounded by the severe retail downturn. The company laid off some 400 workers with more cuts this year.
What’s ahead: Quiksilver is racing against the clock to deal with $316 million in debt coming due this year and in 2010. The company widely is expected to sell its growing DC Shoes brand to pay off near-term debt. A sale of DC Shoes would be a reluctant necessity: The brand is the fastest growing part of Quiksilver and one of the “best at retail,” Chief Executive Bob McKnight said. Possible buyers include VF Corp., owner of Cypress-based Vans Inc.
European lenders recently extended the due date on a $70 million line of credit from March to June based on what Quiksilver called “a potential transaction.”
Longer term, Quiksilver has hired boutique investment bank Peter J. Solomon Co. to help raise money or to find an investor. An outright sale of the company remains a possibility. Without an investment or sale, analysts have raised concerns about bankruptcy.
The company closed a few stores as part of a plan to shutter 25 out of some 460. But the closures have stalled as Quiksilver doesn’t have the cash to buy out leases.
It had cash and untapped credit of $120 million at the end of January.
If Quiksilver can sell DC Shoes and the retail market picks up this year, the company could start generating enough cash to make debt payments. The company’s brands remain among the strongest in the industry.
Wall Street’s take: In a phrase, cautiously guarded. Quiksilver’s shares are down by 90% in the past year to a recent market value of about $170 million. Analysts are more concerned with the company’s efforts to rework its debt than near-term sales and losses. For the 12 months through October, analysts on average expect to see an 11% yearly drop in sales to $2 billion. They expect a profit of $33 million, down 72%.
,
Michael Lyster
WHO’S IN CHARGE
ROBERT McKNIGHT
Chairman, chief executive, Quiksilver
Education: bachelor’s in business from University of Southern California
Career: Founded company in 1976 with Aussie Jeff Hakman
Notable: This year, appeared in Microsoft Corp. commercial for business software, talking about “economic tsunami” and staying ahead of “the wolf pack”
