Oaktree Capital Management LP really cleaned house at Quiksilver Inc. in Huntington Beach.
Some 12 months after the apparel manufacturer and retailer emerged from Chapter 11 bankruptcy, all that Oaktree deemed as excess is gone, along with the surf wear icon’s corporate name—the Los Angeles-based private equity changed it last week to Boardriders Inc.
“The costs of the organization weren’t in line with the sales,” said Oaktree Managing Director Dave Tanner, who currently serves as chief turnaround officer for the firm and has been overseeing the retailer since the bankruptcy acquisition. He will likely move on to new restructuring projects in the near future.
Boardriders posted a $124.7 million loss on revenue of $161.4 million in September 2015, its most recent quarter as a publicly traded company. Restructuring cuts have included jobs, stores and the size of headquarters for the company, which is now privately held and doesn’t disclose financials.
“The company during the high-growth period got bloated and slow, and we’ve now done a lot of work around that—anything from closing 50 retail stores in the U.S., getting leaner in our logistics and distribution spend, and rationalizing the number of distribution centers we have, to buying or computers in a smarter way,” Tanner said. “We are in a place where we feel like we have our cost structure at the right size for the type of business we are. … We thought it was a good idea to signify this by changing the name of the company and showing the world we are in a new place, and really embracing all of our brands and board-riding culture that we support.”
Management also spent the last several months researching its customers and those of its competitors, both in and outside the action sports segment, to better understand “what are their needs and wants and what affiliations they have with brands, and what they like about us and dislike about us.”
The findings, Tanner said, will be used to “align what we’re actually producing to what marketplace needs are,” and to “deliver [products to consumers] through the right distribution channels and with the right marketing support behind it.”
“If we have a better understanding of end consumers, our retailers will be able to have higher sell-through on the product we put through their channels,” he said.
‘Defense to Offense’
Adopting the Boardriders name—now an umbrella for the Quiksilver and ROXY apparel and hard goods lines and the DC Shoes brand—is part of “pivoting from defense to offense.”
It’s also the name of a 14-store chain that management plans to bring to the U.S. this fall and which focuses heavily on shopper experience—think in-store barber shops, music shows and yoga classes.
“The platform showcases our three brands but also involves ability to have a bar, a cafe—it’s a lot more experiential,” said Greg Healy, who took over as president two years ago when Pierre Agnes was promoted from president to chief executive, succeeding former Nike Inc. executive Andy Mooney. “We see it as a way to entertain our customer … Retail is now very much living or dying by experiences that customers see within stores.”
The company has about 600 bricks-and-mortars globally, including 50 U.S.-based Quiksilver shops. The multibrand Boardriders store concept, which “has had success globally,” will debut in Malibu followed by more Southern California locations.
“Given where the retail landscape in North America is, we have no desire to plow into a bunch of new retail,” Tanner said. “We want a handful of select iconic, experiential, magnet flagship stores that amplify what our brands are and that build community.”
New Partnership
The effort to get back on track after restructuring includes a new partnership with Paris-based AccorHotels Group, which will “integrate the Quiksilver and ROXY brands into its new Jo & Joe hospitality concept,” which is “focused on millennials and has a more down-to-earth, interactive feel,” he said, adding that the joint effort will debut at a venue in Hossegor, France, near its European headquarters. “We would have our [bands] in there in multiple ways—not just selling product but interacting with the consumer.”
Quiksilver Generations
The new corporate name didn’t transfer over to the upcoming marketing campaign—Quiksilver Generations—which “celebrates the past, present, and future” of the brand, which is approaching its 50th anniversary in 2019.
“We thought that it was really important that we speak loud and proud the fact that we were one of the pioneers in this industry, and we got a lot of history and a lot of stories to tell behind the Quiksilver brand,” Healy said.
The company, which employs about 300 in Orange County and some 4,000 globally, was however tight-lipped about 2016 revenue.
Tanner said the management team’s strategy for the past 18 months was to “intentionally bring the top line down further in order to get it stabilized.
“Looking to this fall, we are in a situation where our order books are positive and strong and holding across the world,” he said. “Particularly in the U.S. … Quiksilver is up by the high single digits, and ROXY is up double digits. We got a lot of progress and are starting to move the top line in the right direction.”
