HUNTINGTON BEACH, United States — Quiksilver Inc., the California surfwear chain that lost 79 percent of its market value this year, filed for bankruptcy with a plan to hand control over to lender Oaktree Capital Management LP.
Under a plan announced Wednesday, affiliates of Oaktree Capital Management LP will supply the chain with the $175 million 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 reorganized 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, who asked not to be identified because the process isn’t public. A sale in bankruptcy would allow the chain to abandon costly leases.
The company’s European and Asian operations aren’t affected by the bankruptcy, it said in the statement.
As of April 30, Quiksilver had about 700 retail stores. The chain, which was founded in 1969, sells wet-suits 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 U.S.
Quiksilver rode the fashion trend toward surfer and skater styles in the 1990s and early 2000s, along with names like Billabong International Ltd. and Pacific Sunwear of California Inc. The company, which teamed with athletes such as surfer Kelly Slater and skater Tony Hawk, sponsored surfing competitions around the world.
But a shift in tastes — along with broader pressures on the apparel industry — took its toll. After a period of expansion, Quiksilver struggled to compete with fast-fashion retailers like H&M, which lured its teen customers with lower prices and on-trend clothes.
The chain suffered a 13 percent decline in sales last year, with its net loss widening to $309.4 million. It listed total debts of $826 million and assets of $337 million in its bankruptcy filing.
Quiksilver is the latest brick-and-mortar chain to stumble in a changing retail landscape. Private-equity firms and distressed-debt investors have taken advantage, snapping up well-known clothing brands like Wet Seal Inc., Frederick’s of Hollywood Inc. and RadioShack Corp. in bankruptcy sales. The case is In re Quiksilver Inc., 15-11880, U.S. Bankruptcy Court, District of Delaware.
By Steven Church, Lauren Coleman-Lochner, Andrea Tan, with assistance from Jodi Xu Klein and Ed Hammond. Editors: Andrew Dunn, Nick Turner, Daryl Loo.