Huntington Beach surf apparel company Quiksilver Inc. has sold its snowboard subsidiary Mervin Manufacturing for $58 million and plans to sell some other non-core businesses as it moves to focus on its top-selling brands.
Quiksilver's chief executive, Andy Mooney, said in a statement that the downsizing will allow the company to focus on its three core brands -- Quiksilver, Roxy and DC Shoes. He said the Mervin sale, and the planned unloading of Surfdome Shops Ltd., Hawk Designs Inc. and its Moskova brand are part of a multiyear profit-improvement plan.
Mooney said Quiksilver will use the proceeds from the Mervin sale to invest in its subsidiaries in Mexico and Brazil. The money will also help the company improve its financial flexibility, Mooney said.
Quiksilver has lost money each of the last six years and is on pace for a loss this year as well.Analysts note 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 its own retail stores -- it owned or licensed more than 800 stores worldwide as of April -- and sells wholesale to major retailers as well.
Earlier this year, Quiksilver unveiled a "multiyear profit improvement plan" aimed at increasing sales and reducing costs.
The company said it intended to cut sponsorships of athletes, spend more money on conventional advertising, focus on its bestselling brands and expand in Asia and Russia. It's also closing underperforming retail stores and eliminating jobs.
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Analysts have praised the company's efforts to turn profitable, saying a focus on its core brands should improve the bottom line.
Quiksilver shares were down 5 cents, or 0.6%, at $8.65 in early trading Tuesday. The company's stock has gained more than 100% this year on hopes for a turnaround.
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.
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