On Wednesday, international surf, skateboard, and snow wear brand Quiksilver declared bankruptcy after what was a big down year for the company based out of Huntington Beach, California.
So far, executives have described an overreaching brand strategy as the main problem facing Quiksilver. Since its inception, the company originally focused on wet suits and helmets for surfing and has since moved into larger retail markets that include winter-based clothing, skateboarding, and casual wear.
That inconsistent branding is mainly due to an overstretched marketing strategy applied to a largely international market. “This framework created a fragmented enterprise with regional brand inconsistencies,” said CEO Andrew Bruenjes in court filings in Delaware this past week.
Right now, a plan is in the works for Oaktree Capital Managment LP to acquire a majority in the company once the bankruptcy case is closed and debt relinquished.
“Under a proposal announced Wednesday, senior lender Oaktree Capital Management LP will swap its debt claims for a majority stake in the reorganized company. Quiksilver will seek court approval of that proposal and a related plan to borrow $175 million from affiliates of Oaktree. The new loan will be used to finish the company’s restructuring and cover the cost of the bankruptcy.”
Part of the “brand inconsistencies,” which Bruenjes claims were the majority reason behind the company’s decline in sales, include snow sports. Currently, some of the biggest stars in skiing and snowboarding are sponsored by the brand.
Travis Rice and Candide Thovex are both sponsored by the brand
“The chain suffered a 13 percent decline in sales last year, with its net loss widening to $309.4 million. It listed total debt of $826 million and assets of $337 million in its bankruptcy filing in Wilmington, Delaware. About $500 million in debt would be cut under the proposed restructuring plan, according to a regulatory filing.”– Bloomberg Business