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Quiksilver
grabs more of the action - 10th March 2004
(Credit:
The Sydney Morning Herald)
The
niche world of action sports just got a little bigger.
Surfwear company Quiksilver, founded at Bells Beach,
Victoria, in 1970, said it would acquire skateboard-shoe
maker DC Shoes for about $US87 million, plus assume
$US10 million in debt, in a move to compete with heavyweights
such as Germany's Adidas-Salomon and Nike of the US.
Primarily
known as a surf-apparel company with a roster of athletes
including surfer Kelly Slater and skateboarder Tony
Hawk, Quiksilver hopes to use DC to bulk up its shoe
business, which accounted for about 5 per cent of
company sales last year.
Closely
held DC, which is based in Vista, California, said
its line of skate shoes, snowboard boots and other
gear for action-sports aficionados generated $US100
million ($131 million) in sales last year.
After
the deal, DC's footwear and apparel will make up about
10 per cent of Quiksilver's annual sales, which amounted
to $US975 million in the year ended October 31.
"The
name of the game has changed," said Quiksilver
president Bernard Mariette.
"We're
expanding our brand around the world, so now we're
competing against Nike and Adidas, Abercrombie &
Fitch, even Pacsun [Pacific Sunwear of California]
in a way."
Founded
as a maker of surfboard shorts and wetsuits, Quiksilver
has since expanded its image and gone after customers
who want to tap into the California surf-and-sun lifestyle,
even if they don't participate in sports like surfing,
skateboarding and skiing.
Since
2000, the firm, now based at Huntington Beach, California,
has acquired all international rights to use the Quiksilver
and Roxy trademarks, as well as buying back licences
in Australia and Japan.
Company
executives say the next step is to reach consumers
with little or no knowledge of action sports, citing
areas like eastern Europe, parts of the midwestern
US and China.
Quiksilver's
repositioning as an action-sports lifestyle company
with a diverse array of brands has been in the works
since the early 1990s, said chief executive Robert
McKnight, when surf-influenced fashion trends like
neon-coloured shorts and T-shirts started to give
way to grunge.
"When
there's too much emphasis on one brand, you end up
doing funny things to it like changing price points,
over-distributing or just changing it in ways that
don't work," Mr McKnight said.
In
addition to the Quiksilver and Roxy brands, the company
has since developed smaller lines such as Hawk Clothing
for boys, Leilani swimwear and Fidra golf apparel.
The
acquisition price of the deal includes $US56 million
in cash and 1.6 million restricted shares of Quiksilver
common stock. The price may also include up to $US57
million that will be paid over the next four years
if DC meets certain performance goals.
Quiksilver
said it expected the deal to add about US6c a share
to per-share net income in 2005, the first full year
after the proposed combination. The agreement is expected
to close by the third quarter of fiscal 2004.
Links:
Quiksilver
official website
Australian
Surfing Portal
Mediaman - Sports
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