Denying rumors that the Rossignol Group’s strategic decisions are taking into account its possible takeover by Jarden Corporation at a later stage, the chief executive of the French company, Bruno Cercley, told SGI Europe they are all meant to continue to improve its financial results, even though they involve competing with Jarden brands such as K2, Marker and Völkl.
As an example of that, he noted that the Rossignol brand is enjoying a new momentum in the U.S., where its sales are now expected to decline by less than the original estimate of 25 percent during the current season, possibly at the expense of the market leader, K2. This performance can be partly attributed to more timely deliveries and to the efforts of Tim Petrick, the former sales director of K2 hired by Rossignol a few months ago to do a similar job with the French group at the international level.
Cercley also denied a rumor that the Rossignol brand may drop out of free-style skiing to avoid head-on collision with K2. On the contrary, Rossi’s rather successful free-style ski line, the S series, is being expanded, Cercley said, noting that all the major ski brands are now involved in this growing segment. On the other hand, the group is still in the process of repositioning the Dynastar brand in a higher segment of the market.
Under Cercley’s management, the Rossignol Group has eliminated more than 30 percent of its former staff and cut sports marketing expenses by a similar rate in order to stop its losses, which amounted to the equivalent of €200,000 per day at the time of the takeover. The number of ski models offered for the current season was reduced by 25 percent and will be cut by another 25 percent for the winter 2010-11 season. Only R&D expenditures have been maintained in order to come up with innovative products, starting with a new slalom ski with a slanted nose that is being used by its sponsored athletes.
As a result, the company’s operating loss should be reduced to €5 million for the financial year ending next March, compared with €42 million in the previous year. The company would actually post an operating profit of €5 million if the restructuring process had been terminated last March. Furthermore, the working capital has been trimmed down to €115 million from €240 million.
The topline is expected to show total revenues down by 15 percent to €207 million this year from €243 million, with higher prices and margins per pair. The volume of alpine ski deliveries should in fact go down by about 25 percent to around 750,000 pairs in a global market expected to decline by 15 percent to 3.5 million pairs. A smaller decline will be recorded in ski boots, with a budget of 550,000 pairs in market estimated at 3.8 million pairs. The group will also sell about 100,000 pairs of cross-country skis and a lower number of snowboards.
Geographically, Rossignol will probably be able to post flat sales on the French market, but major volume declines will be recorded in several other European markets, including Italy, Germany and Austria. The level of profitability will be maintained in Italy, nevertheless, and Japan will become profitable.
Cercley provided this information during and after the inauguration last Monday of a beautiful new head office for the group at St. Jean de Moirans, five kilometers away from its previous base in Voiron. Wanted by Quiksilver, it has pulled together all the back-office functions related to the various brands of the group and most of its R&D operations. The manufacture of 6,500 pairs of racing and prototype skis is integrated into the structure. Shaped like a mountain, the building uses a maximum of raw wood and has an enticing convivial ambiance. The investment has cost about €1,600 per square meter.
Cercley declared publicly that the group intended to preserve all its brands and all its four manufacturing sites in France, Italy and Spain. Even the Look brand of ski bindings will be boosted. Noting that the cost of materials represents between 70 and 80 percent of the cost of manufacturing a ski, he indicated that there were no plans to move any of the production to China, unless the local market explodes. Some snowboards will continue to be made in Taiwan.
Cercley, who left as chief operating officer of Rossignol in 2005, became subsequently European manager of Coleman, a property of Jarden. He left the post, which is now occupied by a German-based executive, to engineer the takeover of Rossignol from Quiksilver and implement a drastic restructuring program.
Jarden was invited to participate in the acquisition one year ago by taking a 17 percent stake in Rossignol’s new owner, a company called Chartreuse & Mont Blanc controlled by Macquarie, an Australian investment fund that had previous explored a possible takeover of Dynastar, Look and Lange. Jarden has an option of first refusal on Macquarie’s shares if it decides to cash out at some point.
