California Apparel News

Andy P. Mooney, the former chief executive officer of Quiksilver Inc., has left the company. Mooney, a former Disney and Nike executive, joined Huntington Beach, Calif.–based Quiksilver in January 2013 to help reform the ailing surf apparel company.

Mooney will be replaced by Pierre Agnes, who until recently served as president of
Quiksilver. The longtime Quiksilver executive also worked as the company’s global head of apparel and as president of Quiksilver Europe. Greg Healy, another Quiksilver veteran, was appointed to be president of Quiksilver. Bob McKnight, the founder of the company, is coming back from retirement to serve as the company’s chairman.

Dave King, an analyst at Roth Capital Partners, headquartered in Newport Beach, Calif., reiterated his “buy” rating for Quiksilver.

In a March 30 research note, King wrote that “investors may be somewhat disappointed by CEO Andy Mooney’s perceived termination, given his ability to make tough decisions and attempts to drive cultural change. Still, new CEO Pierre Agnes should help to restore core wholesale relationships amidst already-improving near-term fundamentals noted by strong recent sell-through and improving Fall order books. We reiterate our ‘buy,’ which reflects seemingly overblown bankruptcy fears and increasingly achievable estimates.”

Jeff Van Sinderen, a senior analyst with B.Riley & Co., wrote in a March 30 research note that the company should explore strategic alternatives.

“Regarding strategic alternatives, the board’s perspective appears not to have changed [will do what is right for shareholder value but not actively pursuing]. [Quiksilver] is not proactively looking to sell the company but will entertain anyone who makes an advance. All things considered, we feel that it is time to explore,” Van Sinderen wrote.

In a company statement, McKnight said that the times called for a leader with Agnes’ perspectives. “His primary focus will be on improving operational execution and efficiencies and identifying growth opportunities, especially in the U.S. wholesale channel,” McKnight said.

“On behalf of the board, I want to thank Andy Mooney for his leadership in driving the organizational changes that were essential to restoring our product design leadership and globalizing many of our key functions. This work provides the foundation for the next phase of Quiksilver’s progress.”

Van Sinderen spoke to the new management team the morning of March 27. Agnes seemed to indicate that there would be no dramatic changes for Quiksilver’s chain of Boardriders Club stores. Going forward, the company would place a focus on wholesaling to core action-sports shops, such as Zumiez Inc., which runs a fleet of 604 stores, to high-profile independent retailers and Jack’s Surf in Huntington Beach, Calif.

Quiksilver stock declined during the day of the announcement. A share sold for $1.90 toward the end of the trading day on March 27. The stock had opened at $2.23 per share. Toward the close of the market on April 1, a share of Quiksilver stock sold for $1.78, according to Yahoo Finance.

Mooney left a company that had issues with financial reporting and had been encountering difficulty in returning to profitability.

On March 4, Quiksilver postponed the release of its first-quarter earnings for 2015 due to problems in reporting company business. It described the problem as “a revenue cut-off issue identified by management.” In a financial document dated March 26, the company conceded there had been “material weakness in internal control over financial reporting.”

On March 17, Quiksilver reported its first-quarter 2015 earnings. Net revenues were $341 million during the first quarter with a $10.7 million net loss. The company reported that its net revenues were down 4 percent. Net revenues in the company’s Americas region were down 8 percent to $148 million compared with $175 million the same time in the previous year. Net revenues were down 3 percent in its European region but were up 4 percent in its Asia Pacific region.

In a March 18 research note, Van Sinderen said sales had come in above consensus. However, the company was continuing to sail in rough seas.

Mooney had received some praise from analysts recently. In a March 27 research note, Jeff Harbaugh of Jeff Harbaugh & Associates wrote, “Andy Mooney was driving some critical operating improvements. I hope they continue to be driven.”

Mooney had only recently wrapped up a major initiative to turn around Quiksilver’s business. It was unveiled as a “profit-improvement plan” on May 2013.

Among its programs was improving the company’s supply chain, boosting e-commerce efforts and increasing Quiksilver’s presence in emerging markets.