TORQUAY surfing industry giant Quiksilver is mired in financial quicksand and will be bankrupt within months, according to a private investment management firm.
In a lengthy analysis of the troubled surfwear company, Hadrian Capital Management said Quiksilver’s demise was “inevitable”.
“We strongly believe that Quiksilver’s demise at this point is inevitable, it’s likely only a matter of months now – not years.”
Published on investor website Seeking Alpha, Hadrian’s analysis said alternative business models could have saved the company two years ago.
But implementing rescue measures now was too late in light of Quiksilver’s recent financial reports, Hadrian said.
The investment firm said wholesalers would turn to better-selling merchandise and Quiksilver’s base of specialty stores would “shutter or avoid stocking shelves with Quiksilver brand merchandise”.
“Quiksilver’s primary business segments have faced significant brand equity erosion and market share losses over the past 12 months, particularly across Roxy and Quiksilver brands.”
Hadrian noted that Quiksilver’s share price had suffered a 76 per cent year-on-year decline.
Following what he called Hadrian’s “virtual obituary” for the company, former Quiksilver executive Phil Jarratt said the last financial year had been an “unmitigated disaster”.
Writing on surfing website Swellnet, Jarratt said the recent retirement of Quiksilver co-founder Bob McKnight would not change anything for the company.
“Aggrieved shareholders would like to breathe a collective sigh of relief and wait for the new broom to sweep the once-great brand back to profit. But it ain’t gonna happen,” Mr Jarratt said.
“He leaves behind a legacy of directionless paper-shuffling and a management team in total disarray.
“Management morale (is) at an all-time low after mass sackings across the board and all three core brands suffered major losses in all markets.”
Mr Jarratt said the Hadrian analysis “produced compelling reasons why bankruptcy was not just an option for Quiksilver, it was the only way forward”.
However, Torquay’s other surf wear giant, Rip Curl, has avoided a similar fate, riding a wave of climbing sales in the past two years since a restructure.
Rip Curl reported a 63 per cent increase in profit to $23 million last financial year as revenue rose 7.8 per cent to $429.58 million.
The turnaround followed a board decision to drop a planned $400 million sale of the business last year.
Like Quiksilver, the publicly-listed Billabong suffered a loss of $233.7 million for 2014, following a $859.5 million loss the previous year.
