Quiksilver gave more insight into its positioning with the Rossignol acquisition as the “Worlds Leading Outdoor Sports Lifestyle Company,” presenting investors and analysts with a chronology that saw the company post $100 million in sales in Stage 1 as a company “By Surfers, For Surfers,” to crossing the Billion Dollar mark in Stage 2 as a Boardriding Lifestyle company, to its Stage 3 positioning in a market that is seen as ten times larger than the boardsports business. Quik sees the outdoor sector as a $42 billion market, compared to $4 billion in boardsports. Quik also includes Clevelands golf business in their outdoor vision.
Company CFO Steve Brink said that Rossignol is still structured like they were 25 years ago, a structure they will need to change significantly to move the brands positioning from a wintersports brand to an outdoor lifestyle brand. He said Rossi had lost money in snowboard, due primarily to issues in the boots and bindings business, but still had excellent boards. Going forward, ZQK sees Rossi, GNU, and LIB Tech boards, DC boots, and Bent Metal bindings combining for a winning hardgoods package to complement Quiksilver and Roxy apparel. They will build boards in Spain instead of Seattle to cut costs.
Brink said they will eliminate redundancies between Rossignol and Dynastar and centralize in Europe the same way they are consolidating in the U.S. with the new Park City Wintersports HQ. The Park City move is expected to provide a 35% reduction in the Wintersports employee structure. The city of Voiron in France provided a 15 acre land grant for the new European HQ. They plan to move more production from France to Spain to take advantage of a lower cost structure. Brink said they expect little resistance with the production move because of the additional jobs created through the HQ creation. The company will move from 16 warehouses in Europe to just three going forward.
The company will also change the way Cleveland is distributed worldwide, from its historical structure through the wintersports distribution, which gave it a counter-seasonal opportunity, to a separate group that will give the golf brand control of its own distribution. In regions like Japan and Europe, Cleveland will take advantage of Quiksilvers summer infrastructure already in place.
The industrial changes are expected to net the company $10 million in annual savings by the third year and another $10 million a year by the fifth year.
Quik still sees Rossignol apparel as one of the biggest opportunities, which management said they think can be twice the size of its hardlines business. It is expected to generate about $100 million in sales by 2008 and $150 million by 2010, the fifth year of the program.
Talking with company Chairman and CEO Bob McKnight afterward, SEW got the impression that this is the last deal for awhile. The companys founder said the Rossi deal is a ten year strategy, even though Wall Street wants it to happen faster. “Were full,” he said. “We need to execute now.”
The three- to five-year plan sees total revenues in the $2.7 billion to $3.2 billion range, with Quiksilver in the $900 million to $1.0 billion range and Roxy generating $800 million to $900 million in revenues.
One tidbit that popped up was McKnights revelation that the company will launch a new sports drink and energy bar program for the action sports industry. They will launch to their core customers at the ASR show.
>>> Quiksilver walked through the acquisition of a French company with relative ease, but will the U.S. boardsport consumer embrace a Euro board brand that is best known for slalom rather than the pipe
