Yep… you heard right. Quiksilver’s bankrupt. The Quiksilver bankruptcy filing hasn’t really come as a surprise to a lot of people in the business world.
I know very little about the inner workings of Quiksilver…. but (and what I’m about to say applies to most of the big surfing brands) if you’re overpriced on the very basics of of what your target market needs, then maybe you’re not setting yourself up for a sustainable future.
Quiksilver has been on a rocky road the last few years when you consider the massive levels of debt the company has been carrying. Add to that the severe reduction in earnings in recent times and it’s not unexpected news that Quiksilver’s bankrupt.
It should be noted that the Quiksilver bankruptcy filing only involves the US subsidiaries. Both the Asia-Pacific and European arms of the business seem to be in good health.
With the protections afforded by the Bankruptcy Code and the financing provided by Oaktree, we will not only be able to satisfy our ongoing obligations to customers, vendors and employees, but we will also have the flexibility needed to complete the turnaround of our U.S. operations and re-establish Quiksilver as the leader in the action sports industry. Our fresh capital structure, with a very low level of debt for our industry, will enable us to invest in and reinvigorate our brands and products. We are confident we will emerge a stronger business, better positioned to grow and prosper into the future.
So what will Quiksilver look like after Bankruptcy? Oaktree Capital Management will be taking the reigns and apparently Quiksilver post bankruptcy is going to undergo a massive re-organisation. A meeting was held at Huntinton Beach Town Hall today to inform the Quiksilver employees of what they can expect.
They’ll be reducing the number of physical stores, which makes a lot of sense in the age of e-commerce. They’ll be considering transitioning to a private company as opposed to the current public structure and they’ll cut ties with discount distributors like Costco.
So what caused the iconic surf company that sponsored Kelly Slater for 24 years to come crashing down. There’s a lot that could be said about why but only those on the inside really know.
Was it purchasing ski company Rossignol in 2004 thereby increasing it’s debt holding to over $518 million in one financial year? Was it loosing touch with their customer base? Is it the incredibly high price tag on a pair of boardies?
If you are to believe the press that Quiksilver is putting out, it’ll be business as usual and their current roster of athletes won’t be going anywhere. But to be honest if I was Dane Reynolds, I’d be considering my options. Just saying.