Twenty-seven Quiksilver stores are set to shut their doors as part of the California-based company’s plan to restructure its U.S. operations after filing for Chapter 11 on Tuesday.
The shops on the chopping block—including 16 Quiksilvers, one Roxy store, seven DC Shoes stores, two Boardriders and one Waterman location—were together responsible for $5 million in losses last year. Going-out-of-business sales are planned for the locations and the cash-strapped company will sell excess inventory at 23 pop-ups.
What a difference 10 years has made for the 46-year-old company. Back in 2005 it reported more than $100 million in profit; for the year ended January 31, it wiped out with losses of $336 million.
And while CEO Pierre Agnes has said that he’s “confident we will emerge a stronger business, better positioned to grow and prosper into the future,” a quick glance at how Quiksilver’s competitors and retail partners have fared of late forecasts a very different outlook.
Zumiez net income plunged from $7.5 million to $3.2 million in the most recent quarter, a perilous dive of nearly 57 percent from the year-ago period. Rick Brooks, chief executive officer, pinned the drastic drop in sales on increased promotional activity after merchandise missed the mark.
“We are working quickly to address the lack of trend-right fashion in our U.S. channels,” Brooks stated Thursday.
PacSun is another surf and skate retailer that’s seen its sales slip in recent years. The second quarter delivered a 6 percent decrease in comps, while net sales were down to $195.6 million from $211.7 million. Earlier this week President and CEO Gary Schoenfeld said the company would cut $15 million in expenses in fiscal 2016 by streamlining stores and restructuring operations.
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But where did these once mighty purveyors of SoCal-inspired apparel and accessories go wrong? Plenty of designers send surf-inspired looks for men and women down the spring runways each year; Italian clothing company Brandy Melville has built its massive success on selling the image of bronze-limbed California girls in jeans shorts and crop tops; and despite its drop in sales, PacSun is still considered one of the top 10 brands among teen girls, according to a recent Piper Jaffray report.
So, if the market is there, what’s causing the downturn?
“Broadly speaking, surf brands have failed to keep up with fashion trends, repeating their hits each year rather than seeking newness. They’ve kept their original customer from the boom time—a customer who is now older and probably less aspirational for the teen market,” said Katie Smith, senior fashion and retail analyst at Edited.
She pointed out that athleisure’s grip on teen wallets isn’t letting go anytime soon (that same Piper Jaffray survey reported 16 percent of teen girls from upper-income households prefer “fashion athletic” labels, like Lululemon) and as Style.com once put it, “It’s never been cooler to be seen looking like you’ve been working out.”
“Secondly,” Smith added, “logo culture has diminished. Take a look at Abercrombie & Fitch stripping back on splashy logos for evidence of that. Unbranded, clean and sporty apparel from companies like Uniqlo, H&M and even the likes of American Apparel holds higher trend stakes than surf-branded wear.”
And yet Australian surfwear label Billabong recently posted its first full-year profit since 2011. So a turnaround—if executed properly—is possible. But there are opportunities that struggling brands should pay attention to, Smith noted.
“Relevant social media and a slick online experience are critical in order to appeal to their disengaged youth market, who see little disconnect between online and offline,” she said, pointing out that more on-trend styles need to be integrated into collections, too. “This shouldn’t be hard given the popularity of athleisure and runway’s recent riffing on surf looks,” she added, noting that brands may need to work closer to season, with more frequent shipments.
She continued, “Surf brands have technical abilities that are a real advantage. Incorporating trend-led prints, for example through collaboration with street artists or illustrators, or working in the latest color palettes in sync with high fashion could be surf’s life buoy.”