Shareholder blasts Quiksilver turnaround plan
Quiksilver's stock price has fallen around 80% this year
Ryan Drexler, president of private equity firm Consac and Quiksilver shareholder, has blasted the surf wear firm's turnaround plan as "a failure" and called on the board to consider a sale.
Drexler, who owns in excess of 2m shares in Quiksilver, wrote an open letter to the board yesterday (8 October), explaining that the group's 11-point Profit Improvement Plan (PIP) has had "a profound detrimental effect on the company's financial position and operating performance".
Quiksilver unveiled a multi-year plan early last year to try and return to profit by focusing on its three core brands - Quiksilver, Roxy and DC - globalising key functions and reducing costs. However, the company has continued to report losses and falling sales.
Drexler said: "I believe that to continue on the present course would not be in the interests of shareholders based on the company's deteriorating performance since the PIP was announced."
He noted the firm's stock price had fallen around 80% this year, and the US$42.2m operating loss for the first three quarters of fiscal 2014 is "a significant deterioration" from $11.4m recorded in the prior year.
Drexler also pointed out that revenue in the company's three core brands, Quiksilver, Roxy and DC, was down 17%, 9% and 34%, respectively, in the same period.
"The revenue decline by brand indicates to me that the company's fashions have fallen out of favour, its targeted advertising is out of touch with today's consumers, and it has failed to take the necessary steps to maintain market share and profitability," Drexler said.
"I believe that to continue on the present course would not be in the interests of shareholders based on the company's deteriorating performance since the PIP was announced, and, quite frankly, in my opinion, to continue on this path would be the height of folly."
He said the company's well-known brands, global retail and wholesale presence and supply chain still have "value that should be unlocked and maximised" for shareholders with the sale of the company through a competitive process.
Quiksilver did not return a request for comment at the time of going to press.
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