Quiksilver grabs more of the action


Quiksilver grabs more of the action - 10th March 2004
(Credit: The Sydney Morning Herald)


The niche world of action sports just got a little bigger. Surfwear company Quiksilver, founded at Bells Beach, Victoria, in 1970, said it would acquire skateboard-shoe maker DC Shoes for about $US87 million, plus assume $US10 million in debt, in a move to compete with heavyweights such as Germany's Adidas-Salomon and Nike of the US.

Primarily known as a surf-apparel company with a roster of athletes including surfer Kelly Slater and skateboarder Tony Hawk, Quiksilver hopes to use DC to bulk up its shoe business, which accounted for about 5 per cent of company sales last year.

Closely held DC, which is based in Vista, California, said its line of skate shoes, snowboard boots and other gear for action-sports aficionados generated $US100 million ($131 million) in sales last year.

After the deal, DC's footwear and apparel will make up about 10 per cent of Quiksilver's annual sales, which amounted to $US975 million in the year ended October 31.

"The name of the game has changed," said Quiksilver president Bernard Mariette.

"We're expanding our brand around the world, so now we're competing against Nike and Adidas, Abercrombie & Fitch, even Pacsun [Pacific Sunwear of California] in a way."

Founded as a maker of surfboard shorts and wetsuits, Quiksilver has since expanded its image and gone after customers who want to tap into the California surf-and-sun lifestyle, even if they don't participate in sports like surfing, skateboarding and skiing.

Since 2000, the firm, now based at Huntington Beach, California, has acquired all international rights to use the Quiksilver and Roxy trademarks, as well as buying back licences in Australia and Japan.

Company executives say the next step is to reach consumers with little or no knowledge of action sports, citing areas like eastern Europe, parts of the midwestern US and China.

Quiksilver's repositioning as an action-sports lifestyle company with a diverse array of brands has been in the works since the early 1990s, said chief executive Robert McKnight, when surf-influenced fashion trends like neon-coloured shorts and T-shirts started to give way to grunge.

"When there's too much emphasis on one brand, you end up doing funny things to it like changing price points, over-distributing or just changing it in ways that don't work," Mr McKnight said.

In addition to the Quiksilver and Roxy brands, the company has since developed smaller lines such as Hawk Clothing for boys, Leilani swimwear and Fidra golf apparel.

The acquisition price of the deal includes $US56 million in cash and 1.6 million restricted shares of Quiksilver common stock. The price may also include up to $US57 million that will be paid over the next four years if DC meets certain performance goals.

Quiksilver said it expected the deal to add about US6c a share to per-share net income in 2005, the first full year after the proposed combination. The agreement is expected to close by the third quarter of fiscal 2004.

Links:

Quiksilver official website

Australian Surfing Portal

Media Man Australia - Sports