Huntington Beach-based Quiksilver Inc. has been moving on changes to improve its operations and refocus on the brands that made it king of the beach.
The surfwear maker said it is closing its screen printing facility for T-shirts and shifting distribution for a few of its brands to a new warehouse in Mira Loma.
The operational shifts, which will result in layoffs, had been planned before the economic slowdown and Quiksilver’s struggles with its Rossignol unit, Chief Operating Officer Greg Ziegler said.
“The Mira Loma strategy has been something in place for the last four years and the screen printing (shift) has been in the process for the last two years,” Ziegler said. “It’s all in an effort to reduce expenses and become more efficient.”
It’s good timing.
The moves might ease some pressure coming from Wall Street analysts, who want executives to refocus on the company’s core brands, such as Quiksilver, Roxy and DC, and unload Rossignol, which was bought in 2005 and has been a drag on profits.
Quiksilver posted a $21.9 million loss for the three months ended Jan. 31 on higher costs and weak sales of skis and related gear, which fell 2% to $104.8 million.
Clothing sales, which include Quiksilver and Roxy, remained strong, jumping 19% to $500 million.
The company continues to hunt for a buyer for Rossignol, Chief Financial Officer Bill Bussiere said.
Quiksilver is in the middle of phasing out its T-shirt screen printing operation, which is used for Quiksilver, Roxy and DC T-shirts. It’s housed in a 100,000-square-foot building at the company’s Huntington Beach campus.
That lease is up in October, when the operation officially will close and Quiksilver will vacate the building, Ziegler said.
Afterward, the company will have about 500,000 square feet of office and warehouse space remaining on its campus.
About 115 workers will be laid off, with 38 leaving in early May and 77 set to leave at the end of August. All were given the opportunity to apply for open spots at the Mira Loma center, Ziegler said.
The company plans to keep a research and development team of about 12 employees to work on samples in a 15,000-square-foot space in another building, Ziegler said.
Quiksilver started doing its own screen printing about eight years ago, when it could buy blank T-shirts in the U.S. and make profits detailing them here, Ziegler said.
DC, Roxy and Quiksilver previously had been handled at the headquarters, with other brands’ T-shirts done by outside screen printers under contract.
But the past few years has seen things change, with rising costs for screen printing.
The “light went on” a few years ago and Quiksilver realized it could save money by shifting its screen printing to a “lower cost country,” Ziegler said.
The company hooked up with textile mills in Central America and Mexico, where the T-shirts were made and started screen printing there.
The move is expected to save Quiksilver “several million dollars a year,” Ziegler said.
Quiksilver also expects to cut some costs with its 683,000-square-foot distribution facility in Mira Loma.
The building opened about a year and a half ago, with Quiksilver shifting its wholesale shoes (those sold to retailers other than the company’s own stores) for DC, Quiksilver and Roxy into the first half of the warehouse.
During the past six months, the company has shifted the balance of its wholesale apparel and accessories business into the rest of the space.
The operation, outfitted with new technology, “is all about improving costs and improving efficiency,” Ziegler said.
Among the gadgets: a tilt tray sorting system that lets you sort and pick up orders faster.
Quiksilver spent about $27 million on the building and technology, Ziegler said.
The setup also allows Quiksilver to cut down on labor costs.
Quiksilver had about 650 workers for its wholesale distribution in Huntington Beach.
Mira Loma will be staffed with about 500, Ziegler said. So far, there are about 400 workers there. Some shifted from OC.
The company also plans to keep about 100 workers in Huntington Beach to help with distribution for its retail division, which will take over the bulk of the 223,000-square-foot warehouse used for wholesale distribution.
Meanwhile, Quiksilver is considering relocating and consolidating operations, possibly in Irvine, Tustin, southeast county or Huntington Beach. The company could take as much as 500,000 square feet.
It also is looking at ways to cut some $20 million this year by trimming travel and holding back on some hires and store openings.
Chief Executive Bob McKnight also is back in the role of president after the resignation of Bernard Mariette, who spearheaded the Rossignol buy.
“We’re glad that Bob’s back in the saddle,” Ziegler said.
