MANUFACTURING
Quiksilver Sets Three-Year Plan to Improve Profits
Quiksilver Inc., the surf brand based in Huntington Beach, Calif., has seen a trail of red ink on its books in the past few years.
Last year, the company experienced a $10.76 million net loss on $2 billion in revenues. That came on the heels of a $21.26 million loss on $1.95 billion in revenues in 2011.
To get back into the black, the company announced on May 16 an ambitious “profit-improvement” plan, said Andy Mooney, Quiksilver’s president and chief executive officer, who joined the company in January.
He replaced Quiksilver co-founder Bob McKnight, who was named the company’s executive chairman.
“Our plan is designed to enhance the performance of our three flagship brands—Quiksilver, Roxy and DC—and accelerate our path to sustained profitable growth,” Mooney said. “We expect that the plan’s initiatives will, over time, result in significantly higher profitability, enhanced working-capital efficiency, reduced overhead spending and an improved competitive position.”
Quiksilver executives will tackle a number of initiatives, ranging from improving the company’s supply chain to boosting e-commerce efforts and increasing Quiksilver’s presence in emerging markets.
The plan also will see cuts in what Mooney feels is company bloat. The company will “divest” in “non-core” brands. It will reduce SKUs by more than 30 percent, close underperforming stores, reorganize wholesale operations and implement greater pricing discipline, Mooney said.
Quiksilver has already worked on some parts of the plan. Earlier this year, it pulled the plug on non-core brands VSTR and Summer Teeth and shuttered Quiksilver's women’s lines. It also whittled down its roster of sponsored athletes.
The plan will be fully realized by 2016. Mooney forecast it will improve Quiksilver’s EBITDA (earnings before interest, taxes, depreciation and amortization) by $150 million.
One half of that sum will be the result of supply-chain optimization. The other half will be from corporate overhead reductions, licensing opportunities, net-revenue growth and improved pricing management.
