Earlier today Tracks reported that Quiksilver, Inc, was mobilising to file Chapter 11 bankruptcy in the US as early as tomorrow. This afternoon Quiksilver issued a press release confirming the surfwear giant had followed through and officially filed for bankruptcy.
Newly appointed president of Quiksilver US, Greg Healy, has outlined that the Australian-based Asia-Pacific business will be unaffected by the Chapter 11 filing in the US of, Quiksilver, Inc.
“It is important to emphasize the Company’s European and Asia-Pacific businesses and operations remain strong and are not part of this filing,” said Greg Healy, President of Quiksilver Inc. “The financial position in these regions is solid and they have the necessary liquidity to continue operating as the robust and sustainable businesses they are.”
“This means we will be running our business as usual – Australian, New Zealand and Asian customers will have normal access to the full range of our iconic brands, Quiksilver, Roxy and DC Shoes, and all that they offer to our consumers and the market place.”
To understand how Quiksilver arrived at such an undesirable situation you need to go back to 2005 and their ill-fated acquisition of ski company, Rossignol. Quiksilver purchased the French, winter sports equipment maker for about $320 million in cash and stock. Then three years later in 2008, after failing to make inroads in the winter sports market, Quiksilver sold its flagging winter sports equipment division, in a deal valued at $147 million. That was less than half what Quiksilver paid just three years earlier to acquire Rossignol. Although hugely successful through the late 90s and early 2000s in the surf and skate industries from which it had evolved, it seems Quiksilver bit off more than it could chew with the fickle snow market.
In his revealing and entertaining 2010 commentary on the surf industry, Salts and Suits, Phil Jarratt concluded that, “In just three years, Rossingol had cost Quiksilver more than half a billion dollars, and all but destroyed the surf industry leader, built from nothing over almost forty years.”
According to Quiksilver, “The US business had acquired too much debt, and more recently had pursued strategies to maximise sales volumes that put at risk its cornerstone relationships with its core accounts and its youth customer.”
In 2014 Quiksilver parted ways with Kelly Slater. Over a 23-year relationship Kelly had been a one-man marketing miracle for Quiksilver and also become the athlete most synonymous with the brand. Slater has since started his own brand, Outerknown, under the Kering Group. Earlier this year Pierre Agnes, a longtime company insider, replaced CEO Andy Mooney who was at the helm when Slater announced his departure from the brand.
For Quiksilver, the Chapter 11 bankruptcy is vastly different to liquidation and has the potential to offer a clean slate for the US arm of the business.
“Chapter 11 is generally not a path to liquidation, unlike a formal Administration in Australia which often leads to the sale of assets and the break-up of a company,” said Healy.
“This is going to be a positive step for the business as a whole – for the US where hard decisions need to be made and for the successful European and Asia Pacific businesses which can continue to perform and grow without the constant drag of the US business.”
It remains to be seen what impact the move in the US will have on the broader surfing community. In 2013, then CEO, Andrew Mooney, announced major culls to their surf team on the eve of the Quiksilver Pro Snapper Rocks. Quiksilver currently sponsors two events on the Samsung Galaxy World Championship Tour and have confirmed their plans to continue to support top athletes, headlined by Australian and 6-time world champ Stephanie Gilmore.
