Quiksilver surfing chain files for bankruptcy
QUIKSILVER‚ the Californian surfwear chain that lost 79% of its market value this year‚ has filed for bankruptcy with a plan to hand control over to lender Oaktree Capital Management.
Under a plan announced yesterday‚ affiliates of Oaktree will supply the chain with the $175-million (R2.4-billion) financing it needs to get through a restructuring.
At the conclusion of that process‚ Oaktree will exchange its debt claim for a majority stake in a reorganised Quiksilver. The plan requires bankruptcy court approval.
The Huntington Beach-based retailer replaced its top executives in March after restating earnings.
In June‚ it scrapped its annual earnings forecast‚ saying a rebound would take longer than expected.
The next month‚ the New York Stock Exchange threatened to delist the stock because its price was so low.
Quiksilver had already begun talking with potential bidders before filing for bankruptcy in Delaware‚ people familiar with the discussions said last week.
The goal was a management-led buyout in which the company would retain its stores‚ said two of the people.
A sale in bankruptcy will allow the chain to abandon costly leases.
The company’s European and Asian operations are not affected by the bankruptcy‚ it said.
At April 30‚ Quiksilver had about 700 retail stores.
The chain‚ which was founded in 1969‚ sells wetsuits and helmets‚ as well as clothing aimed at “mountain and ocean lovers” in its own stores and specialty surf and skateboarding shops.
More than half its sales come from outside the US.
Quiksilver rode the fashion trend towards surfer and skater styles in the 1990s and early 2000s‚ along with names such as Billa- bong International and Pacific Sunwear of California.
But a shift in tastes – along with broader pressures on the apparel industry – took its toll.
Quiksilver struggled to compete with fast-fashion retailers such as H&M‚ which lured its teen customers with lower prices and on-trend clothes.
Quiksilver is the latest chain to stumble in a changing retail landscape. Private-equity firms and distressed-debt investors have snapped up well-known clothing brands such as Wet Seal‚ Frederick’s of Hollywood and RadioShack in bankruptcy sales. – Bloomberg