Quiksilver to dump Rossignol?

Marriages between stars often have the habit of being short lived, especially when there are cultural differences. When both parties are forced to issue a press release denying a split in the face of persistent rumours you can be almost sure there is something afoot. The marriage between the pretty young Australian-American Quiksilver (ZQK/NYSE) and the waning French beau, Rossignol looked difficult from the beginning. Commentators said that Quiksilver had paid too high a dowry and that the pair would have trouble deciding where to set up home.

Rossignol was once the star of French business. The brilliant Laurent Boix-Vives had rescued the marque, on the verge of bankruptcy, in 1954. Over the following four decades he built Rossi into a global powerhouse based on innovative ski technology and big name skiers such as Jean-Claude Killy. In the 70s even the French president would phone Boix-Vives to ask for financial advice. However in the late 1990s the firm failed to capitalize on big growth areas such as roller blading and suffered from a decline in the snowboard market. In March 2005, burdened by €120 million in debt, Rossignol was sold to Quiksilver for €236.5 million to create a $2.6 billion sports and apparel business.

Rumours of a possible divorce started in the late spring following Quiksilver’s filing with the Securities and Exchange Commission (SEC). While the Quiksilver-Roxy brand had forged ahead on strong clothing sales Rossignol has left a trail of red ink. Last year’s $3.7 million profit had turned into a $4.8 million loss. The first posted by the group in 15 years. Analysts and shareholders were shocked by the results. In filings to the SEC the losses were partially blamed on a change to earlier shipment dates but largely on the extremely poor winter in Europe and parts of the USA which have seen sales dry up. Quiksilver shares were down on the news but rallied when the Wall Street Journal first published rumours of the possible sale on the 3rd of July.

Rossignol, which also includes Dynastar, Lange and Look, has been restructured since the takeover. Plants and offices have been closed and production of skis cut. A factory has been closed in the Isere (France) and 14 of the 16 warehouses closed. A new 24 000 m² warehouse has been opened close to Grenoble International Airport. The group’s headquarters are split between Park City in the USA and Voiron in France.

Managing director Bernard Mariette has stated that he is thinking the unthinkable and nothing has been excluded, including selling Rossignol for a loss. In a statement yesterday the group said that the poor snow during the winter had had a significant impact but they remained confident in Rossignol and felt that the technological prowess of the company would be a springboard for future results. Rossignol’s clothing division, borrowing ideas from Quiksilver, has been doing rather well. A well placed source in the group has told us that the ski division or just the factories could be sold. Three offers are being considered including a management buyout and an offer from an American billionaire. Last year there were rumours that the group was looking to sell Dynastar, these were strongly denied at the time.

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