Moody’s Lowers Quiksilver Ratings - Stock Drops Below $1
mike lewis
- November 20 2008
- 2,001 views
- 35 comments
Moody’s Investors Service, a leading source for credit rating, announced on Wednesday it was lowering its ratings on Quiksilver Inc. to “B2″ — a speculative or “junk bond” rating, due to the company’s weakening liquidity and reliance on short-term debt. The latest in the company’s financial woes comes on the heels of what should have been good news for the company, the finalization of the Rossignol sale. However, the company experienced weakened liquidity following the sale, due to the reduction in sales price after funding Rossignol’s winter seasonal production.
Quiksilver’s stock dropped below the dollar mark today and is currently trading at 98 cents per share.
Here’s the AP story:
NEW YORK (AP) — Moody’s Investors Service on Wednesday lowered its ratings on outdoor apparel maker Quiksilver Inc., due to weakening liquidity and reliance on short-term debt following the sale of its Rossignol ski equipment business.
Last week, Quiksilver finalized the sale of its Rossignol to Chartreuse & Mont Blanc. It had been trying to sell the unit — which had been incurring operating losses — for much of the year.
Quiksilver received 30 million euros, or $37.5 million, for the unit.
Moody’s said the company has weakened liquidity following the sale, and also received smaller-than-expected leverage from the sale.
While the deal was considered a positive since it was losing money, “Quiksilver funded the seasonal build in Rossignol’s inventory through the date of sale, and the net cash sale proceeds (which were reduced in the revised final purchase price) were insufficient to retire the associated working capital debt,” Moody’s said in a statement.
Thus, the company continues to have a “significant” level of short-term debt in its capital structure, Moody’s said.
Moody’s downgraded the company’s corporate family rating and probability of default rating two notches to “B2″ — a speculative or “junk bond” rating five notches below investment-grade status — from “Ba3,” which is three notches below investment-grade status.
Moody’s also lowered the company’s speculative grade liquidity rating to SGL-4, the lowest rating, from SGL-3.
All ratings — except for the speculative-grade liquidity rating — are on review for a further possible downgrade.
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November 20th, 2008 at 8:26 am
Yikes! Some one throw these guys a life preserver or and the very least some water wings. Pretty scary…Somebody here called it last week.
November 20th, 2008 at 9:18 am
I guess this is a lesson for all of us, what did Cranmer say
are you diversified
November 20th, 2008 at 9:24 am
I think I called it last week (?) Then again, I’ve been calling it for the last few months! OUCH….91 cents a share!!! Yikes! Instead of someone throwing them a life preserver, it looks more like someone has tossed them a cinderblock! More layoffs at HQ perhaps? SCARY!
November 20th, 2008 at 9:51 am
….. That Slater’s $10 million for number 10 deal might be off the table! Well at least Quik didn’t BLOW a ton of cash on the Travis Rice movie …. Wait …. I guess it’s almost safe to say: That’s It, That’s All.
November 20th, 2008 at 9:56 am
VF Corp to the rescue?
November 20th, 2008 at 10:40 am
I thought it was Quiksilver trying to diversify that got them into this mess in the first place when they bought Rossignol. Not trying to put you on blast it’s just an observation.
November 20th, 2008 at 11:31 am
VF, they would kill the brand…those guys are hedging brands, not
building them. VF is a absolute spirit killer, with board members
who are age 70th. and more!
Bernard Mariette, almost ruined this company..unbelievable, and
he’s got a few millions as well to disapear.
How stupid is this world! Paying money to someone, who failed!
Bob McKnight we all pray to god, that you survive.
Please do everyhing in your power, that you stay indipendent!
Quiksilver has founded the Action Sports market, we all builded
our brands on the Quik foundation.
November 20th, 2008 at 11:46 am
Thanks God they have DC Shoes!
November 20th, 2008 at 11:49 am
UMMM…700 billion to corrupt banking institution to who tried to give baby boomers a cushy retirement at the expense of their kids futures. The big three crawling to Washington looking for over 25 billon, for producing cars of poor quality and did not meet market demands. It?s the American way.
But as much as you can bash VF for being super corpo, Vans and North Face are two of the most equitable brands in the MArket right now. But ya that would suck. But it’s the fact that Quik is on wall stret forced them to make all these wack leaps of faith in order to increase the worth of their stock. Now it coming back to bit them in the ass. They should have stuck with what they know, they alinated the core retailers by going direct on-line and they expended their retail operation on the eve of a recession.
November 20th, 2008 at 12:50 pm
Vans & North Face where natural boomers.
It was not neccesary by VF to invest much marketing dollars in
those brands…they just became desired by consumers because
of the brand history and heritage…yes they opened a few flag
ship stores, made co-ops with Marc Jacobs etc. but that’s it.
Those two brands where at the right spot at the right time.
But look what they do with Reef? This brand did not grew at all
over the last 3 years…revenue shrank at Reef, and they bought
it at a dumb ass high price. All the good peoples at reef walked
away, and they’re girls apparel line is a joke.
Another stupid acqusition they made is 7 for all Mankind, completely overpaid..and I can hardly understand the asset of this brand. VF IS A BRAND HEDGE FUND, NOTHING ELSE!
SOMETIMES THEY HAVE LUCK, SOMETIMES NOT.
November 20th, 2008 at 12:55 pm
Fair enough…
November 20th, 2008 at 12:59 pm
How long does their stock need to be under $1 until they get kicked off the exchange?
If I worked for a Quick sub-brand I would be very worried right now. Word on the skreets is that they’re shopping DC around right now.
All the banana tech in the world is not going to dig them out of this sloppy bowl of poop they are sinking in.
Go Socal!
November 20th, 2008 at 1:18 pm
quiksilver has been a lame brand for 20 plus years now. they have a bunch of retarded execs who still have a single fin mentality.
November 20th, 2008 at 1:29 pm
Jeff Harbaugh just wrote an article on this site about that today.
http://business.transworld.net/2008/11/20/market-watch-delisting-a-stock/
November 20th, 2008 at 2:01 pm
90 days apparently.
November 20th, 2008 at 2:41 pm
Yah just in time for the AMERO currancy! was it planned this way with the creation of the NAFTA? Stay tune same bat channel, same bat time………..
ONLY THE PUPPETIERS KNOW FOR SURE! We are all in DEEP POOOOO.
November 20th, 2008 at 2:46 pm
Normally that’s true, but it sounds like they’ll have even more time to rebound because:
“Effective October 16, 2008, due to ‘current extraordinary market conditions,’ NASDAQ has determined to suspend the bid price and market value of publicly held shares requirements through Friday, January 16, 2009.”
So it sounds like that means they’ll have up to 120 days to confirm starting Jan. 19, 2009.
November 20th, 2008 at 5:37 pm
These company’s ,never planed for a rainy day , there is tremdous waste of labor, product ,and planning. They never took advantage of kelly slater and used his marketing name and exposure a source to brand the company. Kelly slate 10 million ? where is it? They should of branded the clothing line like nike has for the jordon line specific store only it was a huge success . this is what action stores want and it gives it relavancy. What where they think when they bought rossignal?? well call me someone if you want my advice or time Bob Knight Remember BASIC BASIC/ and do not sell out … Sell assest or down size
November 20th, 2008 at 7:08 pm
There is an old adage I swear by: “Best to keep your mouth shut and look stupid, than to open it and remove all doubt”. The Rossignol aquisition was a HUGE blunder for Quik! Bad, bad, move indeed. YES…stick to what you know best. Stay core and TRUE to what Quik got started in the first place. I’m totally sad to see this company (Quiksilver) potentially go by way of the do-do bird if it does not do something quick (no pun intended). Today Quik stock closed at .88 cents a share! Ouchy! Rumour has it that Wall Street may allow up to 6 months instead of the standard 90 days for underperforming stocks to re-coup due to the volatility of the economy. Sad times for all…
November 20th, 2008 at 9:15 pm
Ya it’s crazy that Burton got into Surf Hard goods and quik went into skis & golf clubs? Strange…
November 21st, 2008 at 4:50 am
Someone know what is going at burton ? I heard that their sale drop 60% this year cause target and active have return the boards…
November 21st, 2008 at 9:52 am
Quik needs to sell to VF in order to do the right thing for their shareholders. In my opinion it will help clean up their back end operations and they can use synergies to lower operations costs. They will keep the same team in place for sales, marketing, design (not sure that is a good thing as the team there is very stale and old and they need new blood with real authentic management) yet VF will bring finance and operations expertise. Not to mention they will bring much needed capital to the table. Quik needs money and needs to focus on emerging markets such as the Bric countries,India, China, Russia and Brazil. VF can use best practices from all its brands to make a major dent in these growth markets. In American we have 300 million people and within the BRIC countries there are over 3 billion. This should be the focus.
Nike would be another good fit as they could share expertise and Nike sees the value and future growth of the action sports market.
BOB– please sell and do what is right for your shareholders. You guys need a change of scenery and operation. You need some authentic young management who can be the new faces of your brand.
November 21st, 2008 at 10:49 am
Yeah…golf clubs and skiis. !Lord Almighty! I’m suprised they did not aquire soccer equipment as well! Sheesh! I think Quik spends waaaay too much time and bucks-deluxe on their holiday party’s and Friday beer busts (insider info). Let’s get down and get to work at Quik! We cannot lose this brand. Selling it off to VF or Nike is a cop out. They (Quik) can recover and ride out this economic maelstorm. Yes, agree…get rid of some of the wasteful junk positions there and personnel, and hire some authentically smart and resourceful people who know what the heck they are doing without a beer in their hand. Hire me!!!
November 21st, 2008 at 11:35 am
Are you fucking insane, VF has nothing to do with Boardsports…it’s
a hedge fund, and theyre boards an directors are crap.
Believe me, I know them!
November 21st, 2008 at 6:09 pm
Ya gotta admit though… Quik is pretty watered down and “lame” at this point.
It’s like: “Okay okay we get it we get it, you guys f’n LOVE the beach and sponsor 8,000 surfers… GREEEAAAAT.”
Ever see a kid come into the shop hoping to actually “buy” a Quiksilver tee shirt? The answer is NO… well, maybe if he’s from out of town or wearing a Hollister or Abercrombie hat.
Seriously, how much growth can come in the future with the Quiksilver name? Hmmm… The story is so dang old and tired. I mean, it’s fine, it’s just old and not really much of a “vehicle” for growth. They lack true innovation THROUGHOUT the brand story on the product end. It’s almost always “me too” stuff. Tell ya one thing, there’s not many more categories they can enter with the brand name either… they’ve covered that, from Quik watches, shoes, wetsuits, f’n WAKE vests (what in the?) & sunglasses all the way down to Quik exercise fag clothes and Quiksilver for women (holy crap)… where else do you go?!!
DC is solid. Good global growth potential there. But it can’t carry the whole load…
Quik has no cash to acquire any brands that are relevant either, which is too bad.
Sucks… but it’s the real world. And the real world is changing…. Quik is an old model. Shops take notice…
Kids don’t want it - heck they even sold out to shareholders and the SHAREHOLDERS DON’T EVEN WANT IT?!! Proof is in the pudding.
November 21st, 2008 at 8:31 pm
Quik is still relevant–outsells most if not all other brands in surf shops on both coasts, yes they sold out to the big box stores– so didn’t every other successful surf brand on the market.
No surf company has blazed new trails since before the grunge movement in the early nineties–surf has been a lazy follower not a leader for almost 2 decades(moto x,emo…..)–it’s not just Quik, it’s the entire industry–why do think so many shops have private label filling the racks the past 5-10 years, higher margins and it looks exactly the same as brand a,brand b and brand cs’ current offerings, sewn by the same overseas sweatshops with the same materials. But of the current companies that represent surf–Quik is still number one in the shops just maybe not on Wall st. I hope Quik can pull through this(hello Nike, are you listening). Everybody hates the big guy on the block–so if Quik goes, who’s next, Volcom,Billabong, you name ‘em.
November 22nd, 2008 at 12:03 pm
Your right, Quik sells as good if not better then any other brand due to the litany of age groups it hits. If you look at any 30-50 coastal inhabitant you will see many of them wearing Quik as they have since they were 15. This is truly hitting the lifetime value of a customers and Quik has done this better then anyone. Quik has just cracked the surface. Look at Nike? And look at the global growth opportunities. America is the biggest consumer but as the middle class grows in China and India they will out spend us in the long term. Nike or VF should buy them and use their global strategies to build share all over the world. Quiksilver is still relevant and has reinvented itself over the years. One thing they could do is get rid of all the old executives and try an incubator strategy with new brands as this is a trend of where specialty retail is going. They should utilize their resources to start the next RVCA or Insight. Then use their global strategies to take them to the world. It is all about building a portfolio of brands and using your buying power and best practices to make them all successful.
November 22nd, 2008 at 2:04 pm
its not doing well cause there is so many new good if not better brands around that the kids want to suport. because they get suport back from the company. eg local sponsor’s, small events, close relations with shops ect ect.. every one wants the newest freshest shit these days. the small core brands are getting biger and bigger and the big brands are getting smaller and smaller..
out with the old in with the new..
if they want to survive they need to get back to there roots, fuck the share holders fuck the money! it’s about the sports!! do whats best for the riders and they will suport you back by buying you gear. its just the way things roll,
November 22nd, 2008 at 4:07 pm
Ya guys (HB, MR & Luke) - Quik is not #1 and does not sell “fast if not the fastest” in specialty shops or even specialty chains like a Zumiez who has just come out and said “Big brands are hurting sales” read up on it… Quik is not a core aspect to actual relevant youth. As stated above, maybe they’ll sell to the Abercrombie or Hollister barney though…
Quik has a broad market appeal you say? Oh cool… is that a positive for their future or a signal to their demise and end? You say that folks 30-50 are all wearing Quik…? Is that actually “good”? Uh… RED FLAG! Ha ha, that’s a big problem. Look at core youth age 13-24… they are NOT wearing Quik, not unless they are sponsored or their best friend who IS sponsored is giving them free shirts. And when that 13-24 age group is 30-50 will they be wearing Quik then? NNOOO… where will Quik be then? Will I check back online and see you chiming in again: “If you look at any 60-100 year old great grandfather, they are all wearing Quik! Quik is still core!” haha…
The regional brand incubator strategy is solid though. It would just need to be on the down low that oversold/over distributed Quik is behind the new regional brand…. Hey, it’s better than what they’re doing now. Can’t expect much different though, their management has gotta be pretty old school by now as far as their mentality and passion for a “fresh approach”…
November 22nd, 2008 at 4:15 pm
One more thing - remember when Gotcha sold out to JC Penny’s back in the day… everyone at specialty was OVER IT. Gotcha was the sh*t too as far as brands go back then…. well, they re-grouped and rolled out with MCD - More Core Division…. Archy, Andy Irons etc…. AWESOME! That concept had legs…
Maybe Quik could think to do something along those lines but learn from the mistakes and ultimate failures that Joel Cooper & co made back in the day with MCD….. Still though, that would be fresh.
BTW - that just made me think of the new Lost ads, taken from old school Gotcha “If you don’t surf, don’t start etc…” Couldn’t help but think how lame that idea is to copy right now. They even copied the look of the Gotcha logo haha… pretty kooky. The youth won’t even know what it is….
Anyway… Quik should think about something like that mayeb? Call it a code name: “Project MCD”
November 23rd, 2008 at 7:10 pm
Bob,
You could be right about Quik being watered down as a brand. We will agree to disagree on that one. I just think they have an iconic heritage and I see a ton of young kids wearing their stuff. I recently had a conversation with Dick Baker and he said back in the day if a dad was wearing a particular brand their kid wouldn’t be caught dead in it, however now kids and their dads are wearing the similar items and brands. Does Volcom or RVCA have more of a buzz for the gen Y crowd, of course but I think Quik is still relevant. However the incubator strategy is one that I think could have legs. They could get a trendsetter in a region and give them resources to make something happen. Quik did try this along time ago with Pirate Surf (they might have bought it though-not sure) and it wasn’t very successful but lets be honest “PIRATE SURF”, could someone think of a name with less cachet?
I personally like the new Lost ads as they crack me up. Divel over at lost has proliferated some funny spoofs that I think create more awarness and more of a story board then most other companies. All the marketing if our industry is stale for the most part so it is nice to see something different. I actually don’t flip the page of a surf mag in .1 seconds when I see Lost of Insight ads. I even like RVCA’s ads as they are really telling a story in a quick timeframe.
Nice chat.
Peace
November 24th, 2008 at 10:12 am
This is fact: I dated a gal who has worked (still does) at Quik HQ told me point blank: “We make cheap crap made in China and overprice them here in the U.S.” Even Quik employees bagg on the very own company that employs them! Wow! Sad indeed…
December 1st, 2008 at 6:54 pm
Guess I don’t have to worry about a co store coming into my back yard too soon.The bigger they are the harder they fall. Bob needs to tighten up the ship get back to what made Quik hot and stay out of the F’n golf and ski market. No wonder kids who really surf today tend to buy volcom and Lost.Good Luck, i’m rooting for ya Bob cause if you go we may all follow!
December 6th, 2008 at 5:55 pm
Quik Linked to Corporate Predation Case….. Mentawai controversy at http://www.globalsurfers.com has links to ZQK. Check out “we find ‘em virgins and we leave ‘em w hores”
Seems Quik Travel are part of a complex and well funded conspiracy to seize control of the Mentawai surf industry. Tactics range from premeditated assault to character assassination and intimidation. Death threats, commercial espionage and a media blitz have been masterminded by people very close to Q in the Mentawai industry. This story will break. It is ugly. It happened to me. Same on Q for buying into this.
December 8th, 2008 at 5:23 pm
? I thought Quik signed up with Daily og to do The Crossing with reef check. The crossing was a great thing. I’m not sure what you are speeking of but you can not always control the other people you do business with. There are two sides to every story and I would love to see who is pointing the fingers.
Years ago people freaked on Tavarua without knowing the whole story and it turned out that their competition was the one saying all the crap. It also turned out that Tavarua was really helping the Fijians while the crap spreader was not. Who knows?