Quiksilver said to seek buyer as it struggles to stay afloat

New York

QUIKSILVER Inc, the surfwear chain that has lost more than three-quarters of its value this year, is looking for a buyer that could help keep the company afloat, according to people familiar with the matter.

Quiksilver has been holding discussions with potential strategic bidders, said the people, who asked not to be identified because the process isn't public. The goal is a management-led buyout, ideally outside of a bankruptcy, that would let the company retain its stores, two of the people said.

The Huntington Beach, California-based chain replaced its top executives in March after the company had to restate earnings and projected disappointing sales. In June, Quiksilver scrapped its annual earnings forecast, saying a rebound would take longer than expected.

Quiksilver shares jumped as much as 32 per cent on Wednesday after Bloomberg News reported on the discussions, before paring the gain later in the session. The stock closed at 45 US cents, up 7.9 per cent.

Because of its level of distress, a sale outside of a bankruptcy could be difficult. Filing for Chapter 11 would mean the retailer can abandon costly leases, making it easier for a buyer to rein in costs.

Peter J Solomon Co is advising the company on a possible sale, according to the people. Bloomberg News reported in July that Quiksilver had hired the firm to seek additional financing. FTI Consulting Inc also is helping the retail chain with its operations, the people said.

If a strategic buyer can't be found, a company like Authentic Brands Group, which owns Spyder Active Sports and Tretorn, could be interested in the Quiksilver name, according to one person.

Representatives for Quiksilver, Peter J Solomon and FTI declined to comment. Authentic Brands, based in New York, didn't respond to a request for comment.

Quiksilver's woes have accumulated in recent months. It received a warning from the New York Stock Exchange in July that its low stock price put it at risk of being delisted.

Founded in 1969, Quiksilver sells gear such as wet suits and helmets, as well as clothing aimed at "mountain and ocean lovers". The company has about 700 locations, with more than half its sales coming from outside the US.

Quiksilver rode the fashion trend towards surfer and skateboarding styles in the 1990s and early 2000s, along with names such as Billabong International Ltd and Pacific Sunwear of California Inc. The company, which teamed up with athletes such as surfer Kelly Slater and skater Tony Hawk, sponsored surfing competitions around the world.

But a shift away from surfer fashion - along with broader pressures on the apparel industry - took their toll. After a period of heady expansion, Quiksilver struggled to compete with fast-fashion retailers such as H&M. Those brands lured away Quiksilver's teen customers with lower prices and on-trend clothes, and the company lost its cachet with athletes.

The chain suffered a 13 per cent decline in sales last year, with its net loss widening to US$309.4 million. BLOOMBERG