Huntington Beach surf apparel company Quiksilver Inc. said it sold its snowboard subsidiary, Mervin Manufacturing, for $58 million and plans to sell other non-core businesses as it refocuses its strategy on its top-selling brands.
Quiksilver Chief Executive Andy Mooney said the downsizing will enable the company to concentrate on its three core brands — Quiksilver, Roxy and DC Shoes. He said the planned unloading of Surfdome Shops Ltd., Hawk Designs Inc. and its Moskova brand are part of the changes.
Mooney said Quiksilver will use the proceeds from the Mervin sale to invest in its subsidiaries in Mexico and Brazil. The money also will help the company improve its financial flexibility, he said.
Quiksilver has lost money in each of the last six years and is on pace for a loss this year as well.
Analysts said the company has been hampered by a slowdown in the action sports industry, increased global competition and, perhaps, a loss of focus as the company's less successful brands hurt its performance.
Quiksilver sells its products at more than 800 company-owned or licensed stores worldwide as of April and through major retailers.
This year, Quiksilver unveiled what it called a multiyear profit improvement plan aimed at increasing sales and reducing costs mainly by focusing on its bestselling brands.
The company said it also intended to cut sponsorships of athletes, spend more money on conventional advertising and expand in Asia and Russia. It's also closing underperforming retail stores and eliminating jobs.
The promise brought on by a new management team has attracted investors, who have driven Quiksilver's shares up more than 100% this year.
Analysts have praised the company's efforts to turn profitable, saying a focus on its core brands should improve the bottom line.
Quiksilver shares fell 6 cents to $8.64 on Tuesday.
The last time Quiksilver posted a profit was 2006. A survey by financial services firm Piper Jaffray & Co. found that Quiksilver's brands trailed in popularity among teenagers, its core customer base.
"Management's plan to refocus on their three key brands is important to longer-term market share growth," Piper Jaffray analyst Erinn E. Murphy said in a research note.Copyright © 2015, CT Now