Quiksilver, Inc. plans to divest and exit Surfdome Shop, Ltd., Hawk Designs, Inc., its Moskova brand, and its business under license with Maui and Sons as part of its profit improvement plan.
As a result, the company plans to classify Surfdome and Hawk Designs alongside Mervin Manufacturing as assets held for sale and discontinued operations at Oct. 31, 2013. The divestiture marks the company’s newest initiative under a Profit Improvement Plan announced in May. The company has completed three of those initiatives, including the:
- sale of its snowboard subsidiary, Mervin Manufacturing for $58 million;
- purchase of all remaining minority interests in its joint ventures in Mexico and Brazil;
- establishment of a €60 million European credit facility;
“These transactions represent additional milestones in executing our multi-year profit improvement plan,” said Andy Mooney, president and CEO of Quiksilver, Inc. “We used a portion of the Mervin proceeds to invest in our high-growth subsidiaries in Mexico and Brazil, and we now own 100 percent of our operations in both countries. The remaining proceeds from the Mervin sale, combined with the new European credit facility, enhance our financial flexibility and add greater stability to our liquidity.
“Divesting Mervin and the other non-core businesses will allow management to focus on expanding our three core brands Quiksilver, Roxy, and DC Shoes along with driving additional operational efficiencies.”
Last month, the company completed the sale of its snowboard subsidiary, Mervin Manufacturing, Inc. Mervin is a leading designer and manufacturer of snowboarding products, with brands that include Gnu and Lib Tech.
On Oct. 31, 2013, the company entered into a €60 million European credit facility with Eurofactor. The credit facility, which does not contain any financial covenants, has an initial term of three years.
Below are the preliminary and unaudited aggregate results for the discontinued operations. The company will report final fiscal 2013 fourth quarter and full year financial results, including these units as discontinued operations, on Dec. 12, 2013.
| Fiscal 2013 | |||||||||||||||||||||||||
| ($ in millions) | Q1 | Q2 | Q3 | Q4 | Full Year | ||||||||||||||||||||
| Net revenues | $ | 18.8 | $ | 11.4 | $ | 20.6 | $ | 32.3 | $ | 83.2 | |||||||||||||||
| Gross profit | $ | 9.9 | $ | 5.7 | $ | 11.2 | $ | 16.2 | $ | 43.0 | |||||||||||||||
| SG&A | $ | 8.9 | $ | 6.3 | $ | 7.7 | $ | 10.1 | $ | 33.0 | |||||||||||||||
| PF Adj EBITDA | $ | 1.0 | $ | 0.4 | $ | 3.7 | $ | 6.5 | $ | 11.7 | |||||||||||||||
