Quiksilver Inc. has emerged from a two-year cost-cutting quest as a global company with a streamlined operational structure that straddles the Atlantic Ocean.
The apparel and footwear manufacturer last year moved its creative, product design, marketing, wholesale production and sourcing teams for Quiksilver and Roxy to Aquitaine, France. Personnel for corporate finance, information technology, human resources and management of its retail business remain in Huntington Beach.
A third prong of Quiksilver’s business—DC Shoes—is also here. The shoe brand’s continued presence is perhaps a result of Andy Mooney’s two-year tenure as chief executive. The 20-year veteran of Nike Inc. was anchored at the company’s headquarters before getting fired in March.
Quiksilver still calls Huntington Beach its official home, although it’s shrunk a bit after a series of layoffs here and elsewhere. The company consolidated its headquarters space and moved some of its warehousing operations to a distribution center in the Inland Empire. It’s now looking to sublease a 121,120-square-foot office building.
The downsizing has sharpened the focus of the remaining members of the OC group, according to Josh Rush, who recently added the role of creative director to his title as global design director.
“Direct managers are sitting with their key reports, and there is a lot more communications,” he said. “Everyone is working together in one key building.”
Rush is based in France with Chief Executive Pierre Agnes, a 27-year Quiksilver veteran who spends much of his time on the road.
“He is part of all of us,” Rush said. “He’s got a good team surrounding him, an international group of people.”
The operational structure fits with Quiksilver’s new global design strategy, which replaces a regional approach that had separate mixes of merchandise for the Europe, Asia-Pacific and Americas markets.
“I don’t want to say they are designing a third as much product, but they practically need half of the people they needed before, because they are not designing three lines, they are only designing one line,” said Mitch Kummetz, a senior analyst with B. Riley & Co. LLC who’s been following Quiksilver for 17 years. “There are still people doing it in Huntington Beach, but there are just fewer [of them]. Before, they were designing their own line, and now they are collaborating with people in France and other people in Australia to come up with a global line that meets the needs of a global consumer.”
New Line
The Quiksilver brand introduced its men’s spring collection at the Agenda Trade Show in Long Beach this month, a global effort that Rush spearheaded. He started out with Quiksilver as a 13-year-old surfer sponsored by what was then “the coolest brand in action sports.”
“It had attitude, it was youthful looking, it took risk,” Rush said. “We are in the process of getting back to that … The last two years were very challenging, we learned a lot, and now we are starting to lead again and be confident, and I haven’t seen that from Quik in a long time.”
The approach, initiated about a year ago, was to “fix the product side of things first” he said, and then follow through with a new brand campaign called “Stay High” that focuses on “keeping that stoke and the outlook for the brand.”
Australian creative shop Urchin, Quiksilver’s longtime partner, helped revamp the look of the men’s collection.
The company’s new boardshorts line pays homage to Quiksilver as the originator of several style features—the V-shaped waistband, the scalloped pant leg, the arch side panel, and The New Wave, a pyramid-shaped piece of technical fabric—all which have been “innovated for the future.”
Quiksilver apparel is split into an “a.m.” collection—go-to-beach, bright and fun pieces—and “p.m.”—evening and street wear inspired by Rio de Janeiro’s neighborhoods.
“Brazil and Rio are a cultural mecca for inspiration,” Rush said, adding that his team partnered with Void, an ad agency in Brazil, to scout the best spots to explore and develop marketing materials featuring team surfers Dane Reynolds and Craig Anderson, among others.
“[Quiksilver] needs culture, it needs faces, it needs people, because that’s what makes the brand interesting,” Rush said.
Media placements for the “Stay High” campaign include several publications that cater to actions sports industry fans, including Surfing Magazine, which is published by San Clemente-based TEN: Action/Outdoor Group. The brand also will focus heavily on making its social media presence more “instant” and relevant to its target audience of men ages 16 to 21.
“You have to reignite the core to generate profit in the majors, our mainline traditional accounts which drive high volume, your Macy’s or your Intersport in France,” he said “[They] want to see a youthful relevant brand with energy and noise around it. We are recreating our feel now.”
Quiksilver’s women’s brand, Roxy, also has adopted global design and product organization, led by the division’s global brand manager, Emilie Souvras. Roxy’s spring 2016 collection at Agenda was laden with retro prints and designs and drawing inspiration from coastal Australia.
This year, the brand celebrated its 25th anniversary by highlighting achievements of its “most iconic” athletes—Lisa Andersen, Kelia Moniz and Stephanie Gilmore—who have collectively won 12 world surfing titles. The Roxy surf team also will be featured in its upcoming campaign, “Heart Breakers. Wave Chasers.”
Turning Point
Quiksilver has a lot riding on the new collection. The New York Stock Exchange on July 10 notified the company that its stock isn’t in compliance with the continued listing standard that requires a minimum average closing price of $1 per share over 30 consecutive trading days. Quiksilver now has six months to bring its share price back above $1 or face possible delisting—a first warning for the company, which went public in 1986 and whose stock traded as high as $9 in 2013.
It’s second-quarter revenue also dipped to $333 million—it chalked up a loss of $88.9 million on 2014 sales of $1.57 billion—and pulled guidance for the rest of fiscal 2015. Last week, its market value dipped to $96.2 million.
The recent performance and operations shakeup come as the company approaches a likely turning point.
“I think that with new management in place, they are in a better position to regain lost market share, and at some point they are really going to need to show that,” said analyst Kummetz. “They’ve talked about the [spring 2016] line being the inflexion point in their business in terms of the sales trend. They had issues with delivery and supply chain problems partly because of all of the transformation they are going through, so it’s clearly important that they deliver spring 2016 pretty complete and on time. If they are able to do that, then that would bode well for the stock.”
Kummetz also noted, however, that “based on limited liquidity and substantial debt payments looming,” Quiksilver “doesn’t have much time to improve performance, so we’re also encouraged that the company appears willing to explore all strategic alternatives.”
It recently appointed Peter J. Solomon Co. in New York as an adviser, according to Debtwire. The same firm helped it raise funds in 2009 for additional liquidity and to pay down existing debt.
“I think there is clearly a concern relating to a potential bankruptcy because they do have a fair amount of debt, and some of those debt payments come due in two and a half years or so,” Kummetz said.
Quiksilver, aside from staff and inventory reductions and a consolidation of office space, also is looking to potentially spin off a “part of the business, whether it’s a brand or potentially selling and leasing back their European headquarters,” he said. “We think they are in a position to improve their business and their sales trend, and we think they are doing everything they can from a liquidity standpoint to stay in business. And if those two things work out together, then we think the stock takes care of itself.”
