Quiksilver shareholder asks board to explore sale option

Ryan Drexler, president and shareholder of Consac LLC, said on Wednesday

that he believes footwear retailer Quiksilver Inc's (ZQK) turnaround plan is a failure and called on the board to explore options to sell the company. Drexler's Consac owns in excess of 2 million shares of Quiksilver.

In a letter to the Board, Drexler said Quiksilver's profit improvement plan has had a profound detrimental effect on the company's financial position and operating performance.

Drexler is an investor in consumer and retail companies, as well as the former operator of a well-known consumer brand. As such, he said he was profoundly disappointed with the company's performance over the last year and a half.

He noted that the stock price had fallen roughly 80 percent this year, and the 42.2 million dollar operating loss (excluding impairment losses) for the first three quarters of fiscal 2014 is a significant deterioration from the prior-year period.

Drexler pointed out that Quiksilver stated in its most recent annual report that by the end of fiscal year 2016, the profit improvement plan was expected to improve adjusted EBITDA by approximately 150 million dollar over 2012. However, he said, adjusted EBITDA for the first nine months of fiscal year 2014 is down 77 percent compared with last year.

The most telling measure, Drexler said, was the revenue decline in the company's three core brands, Quiksilver, Roxy and DC, which was down 17 percent, 9 percent and 34 percent, respectively.

"The revenue decline by brand indicates to me that the company's fashions have fallen out of favor, its targeted advertising is out of touch with today's consumers, and it has failed to take the necessary steps to maintain market share and profitability," Drexler said.

He said the company's well-known brands, global retail and wholesale presence and supply chain still have value that should be unlocked and maximized for shareholders with the sale of the company through a competitive process.

In September, Quiksilver said it slipped to a loss for the third quarter, hurt by lower sales and one-time charges. (dpa-afx)