ASB MAGAZINE: Billabong and Quiksilver will continue to keep their own identities, but putting the two major brands under the same umbrella will create a powerhouse action-sports company according to Dave Tanner, who will become CEO of Boardriders Inc. when the deal finalizes in a few months. Tanner spoke to US industry on Friday (AEDT), about the A$380 million deal and what it means to the surf industry, consumers and the brands. The transaction was confirmed by Billabong at the opening of the ASX on Friday, here in Australia. Stay tuned for our feature interview with Boardriders APAC boss Greg Healey. In the meantime, we’ve provided a summary of CEO David Tanner’s comments on the deal. [photo GRINDtv]
Tanner said combined, the company will produce nearly $2 billion in annual sales.
“At the end of the day, we believe in the action-sports space, we believe in the brands,” said Tanner, managing director of Oaktree Capital, the private equity firm that bailed Quiksilver out of bankruptcy in 2015. “All of these brands are lively and growing and healthy, and have passionate consumer bases and cultures around them that support them.”
All of these brands are lively and growing and healthy, and have passionate consumer bases and cultures around them that support them.
The global reach of the brands is also appealing. The sale will mean a combined 7,000 wholesale customers in more than 110 countries, as well as 630 retail stores in 28 countries, according to the announcement made Thursday.
Tanner said there are no plans to move Billabong’s global headquarters to the USA, saying Billabong is an Australian heritage brand whose roots are strong in that country, he said.
“This transaction was just announced. It needs to close, we have regulatory hurdles to go through,” he said. “As far as integration of physical locations – we are so early in the game, we’ve been focusing on getting the deal done. We haven’t focused on that.”
Any changes, at least in the early days, will be on the back end: consolidating customer service, finance and distribution “to give the brands a better platform to grow off of,” said Tanner. He said it’s too early to tell if the consolidation of departments will result in layoffs – but brand autonomy and creative departments are of the “utmost importance.”
According to Tanner, existing retail operations will not see change.
“The retail footprints for the short term will stay, for both companies, what they are,” Tanner said. “We’re not going to change or re-brand the stores. These brands need their own stores.”
“We’re only beginning this journey, but there’s been hundreds of people working on this transaction for months,” said Tanner.
He said the deal will open up opportunities for employees when it comes to training or cross-brand job placements.
“We think this continues to make Boardriders an even more attractive place to work,” he said.
The Boardriders concept – retail stores that serve as community hubs with bars and entertainment — launched after Oaktree Capital Management investors restructured Quiksilver with a $175 million investment.
Since then, 20 Boardriders shops have opened up around the world. A new Malibu store will be the first in the United States and the flagship for North America, with another planned in Orange County, though Tanner would not provide details.
In addition to Boardriders retail hubs, there are plans to open Quiksilver-branded hotels in Europe, but that is in the early stages, Tanner said.
Unveiled in September 2016, AccorHotels’ new brand JO&JOE opened its first address in Hossegor on May 29. Paris and Bordeaux will follow in 2018.
When asked why the surf industry has struggled so much in the past decade, Tanner said the exponential growth in the ’90s and 2000s led to decisions to over-expand and over-distribute. There were also too many retail shops opened as the brands chased that growth, and companies took on too much debt.
“Whenever you have a fire hose of growth, it doesn’t lead to the best business practices,” said Tanner. “When the growth comes off, all those things become exposed. I think the industry has been digesting that for a while.”
Tanner said that in the two years since the private equity firm took over Boardriders, the brand went from bankruptcy to now north of $70 million annual profit.
In 2013 Billabong inked a $360 million deal with C/O Consortium, a group of investors from Centerbridge Partners and Oaktree Capital Management, the same private equity firm that invested in Quiksilver. In 2016, Billabong announced it was profitable for the first time since 2011, posting a net profit of $4.2 million versus losses a year earlier of $233.7 million.
Tanner said his goal is to spend the next few months building a vision of where the company should go while having a “thoughtful, disciplined approach,” he said.
“This is going to take years, it doesn’t happen overnight,” said Tanner. “We’re focusing on the people and vision … we have talented people around the world who have shown they can execute. We believe in both sides. We believe with the right people and the right plan, they will be able to do it.”
About Dave Tanner.
Dave Tanner is 47 years of age, whose hometown is Chicago USA. Tanners resume includes 7 years as a Senior Pilot in the United States Airforce. Tanner has served on Multiple Board of Directors and Senior Vice President of Fortune Brands and Chief Turnaround Officer at Boardriders. Tanner is the current Managing Director and Head of Portfolio Operations, Special Situations at Oaktree Capital Management. He says his hobbies include anything outdoors mountains, water. “I try and keep myself physically healthy.”