Iconic Aussie surf brand gets $US600m refinancing approval from US Court and makes big brand plans.
With its finances now under control, Quicksilver is planning to turn around fledgling brand with ‘boardrider’ stores that showcase the true brand experience.
Under the refinancing deal, Quicksilver’s equity owners, Oaktree Capital Management has freed up funds to enable the company to rebuild its brand.
Oaktree hasa big task ahead to bring the brand’s magic back and they know it.
The company is will have to close under performing stores, especially in the US. It will also have to achieve cost savings across the business including reassessing brand ambassador and licensee contracts, and reducing product lines by 20 per cent.
But the big news is the cost cutting will also fund investment in a more distinctive and engaging brand experience.
Quiksilver plans to roll out more of their expanded ‘Boardriders’ signature stores. The new format is three times the size of their traditional retail store and along with traditional surf and skate gear will offer hair cuts, beard trips, and live music.
Quiksilver president Greg Healy told Fairfax media that the new store format enables Quiksilver “to tell the full story behind the brand”. He said that they are “now concentrating on brand health and distribution,” Mr Healy added.
The new retail approach has the potential to create a true brand experience that starts to build more differentiation and value beyond just selling gear that can be bought online just about anywhere. A handful of Boardrider stores have been successfully tested in Australia, Japan, Europe and Russia, so it appears they might be on the right track.
Oaktree also owns 18.7 per cent share of rival surf brand Billabong. It is also rumoured that the group is considering merging Quiksilver and Billabong to strengthen their focus on capturing a bigger slice of the $19 billion global action sports market.
While each brand fan has its loyal fans it is getting increasingly difficult to differentiate between Quiksilver and Billabong. Neither has a truly compelling and unique brand proposition or experience anymore.
Unless Oaktree is truly prepared to invest in building two distinctive brands, it probably does make sense to focus on creating one powerful surf brand.
However, like with any M&A apart from the usual due diligence, a thorough audit of each brand and its value to its audiences (internal and externally), particularly in different market needs to be carefully considered before killing off either.
Michael Hughes
Managing Partner, Strategy