Quiksilver announced a profit improvement plan designed to raise earnings before amortization by $150 million to at least 13 percent of net revenues by 2016. About half of the gain should come from the optimization of the supply chain and the balance primarily from reduced overheads, new licensing opportunities, better price management and a compound annual growth in sales of about 2.5 percent.
The plan was outlined by Andy Mooney, the new president and chief executive of the company, ahead of the presentation of Quiksilver's latest quarterly results next week, which should shed more light on his intentions.
Confirming earlier reports, Mooney, a former top executive of Disney and Nike, wants put the focus on the company's three brands – Quiksilver, Roxy and DC Shoes – clarifying their positioning and divesting or terminating some non-core brands and activities, as it has already done with VSTR, Summer Teeth and the Quiksilver women's line. Secondary or peripheral product categories will be licensed out.
The number of SKUs is set to be cut back by more than 30 percent. Operating costs will be slashed to reduce the SG&A ratio by three percentage points. The group wants to close down under-performing stores, to reorganize its wholesale operations, to improve sales execution and to exercise better price discipline.
The company has already reduced the number of employees and the number of sponsored athletes. Going forward, marketing investments will be prioritized again, emphasizing in-store presentation, print media and digital and social media. Quiksilver will also continue to give priority to investments in e-commerce and in emerging markets.
In terms of management functions, the group is aiming for greater centralization of functions such as product design, supply chain management, marketing, retail, licensing and administration. The company has appointed global heads for all these functions.
It announced most recently the appointment of a chief marketing officer, Nick Drake, who acted most recently as managing director of TBWA/Chiat/Day in Los Angeles. The agency has many important clients including Adidas, Apple, Craft, Energizer, Gatorade, Nissan and Pepsi. Drake previously worked in senior global brand communication and sports marketing positions at Adidas. He then joined TBWA Worldwide, where he took charge of the Adidas, Gatorade and Visa accounts.