Still a bit short if anyone is good for a loan
Iconic Australian surfwear company Rip Curl may be up for sale as a wave of difficult trading conditions pummels the surf apparel sector.
The surf and ski wear business, based in Torquay, Victoria, could be put on the market by its owners, according to the Australian Financial Review, which said the business could fetch a sale price of between $300-$400 million.
Rip Curl, founded in 1969 by Doug 'Claw' Warbrick and Brian 'Sing Ding' Singer, has reportedly hired Bank of America Merrill Lynch to look into a partial or full sale of the business.
The news comes as rival surf clothing retailer Billabong said this month it had received a second takeover offer, after private equity group TPG's $1.45 a share offer.
Australia's retail and wholesale surf brands have been hit by a downturn in consumer spending, a shift by consumers to purchase goods offshore, as well as the high costs related to producing apparel in recent years.
Revenues at Rip Curl have been hit in recent years, sinking 8 per cent to $362 million in 2011. Profits plummeted by 49 per cent to $7.9 million in the same period.
Rip Curl has about 24 retail outlets in Australia and New Zealand.
Different to Billabong
Commonwealth Bank retail equities analyst Andrew McLennan said that unlisted Rip Curl may be better positioned than Billabong for the downturn in the surfwear sector.
"When you look at the numbers, it's pretty clear that Rip Curl haven't exposed themselves to the same risks as Billabong," said Mr McLennan. He said that like Billabong, Rip Curl has bought other retail brands but "not to the same extent."
Billabong's retail expansion has struggled as larger retail chains overseas offer similar clothes at lower prices. At the same time, consumer activity in Billabong's key US and European markets has been lacklustre in the years since 2008-9 when the financial crisis first hit.
Mr McClennan said that Rip Curl could conceivably grow more sales in the US in the future where they are currently underrepresented.
However, a broader trend is that young consumers have more choice for fashion products than in earlier times, which has eroded some of the allure beachwear used to have for younger buyers.
Rip Curl, Billabong, and Quiksilver compete in their core and in the youth market, he said. "But in the teen category it's much more competitive," he said.
"To an extent, consumers have moved on because they have more choice but they're still popular brands," he said
Read more:
www.smh.com.au/business/international-suitors-eye-rip-curl-20120917-2611s.html
SP
> 9 months ago, 17 Sep 2012
