Executives rarely draw attention to their mistakes, but after Quiksilver (ZQK) reported a 9 percent drop in sales and a $46 million loss, Chief Executive Officer Andrew Mooney candidly listed his company’s missteps. His assessment is a doozy:
• Quiksilver has gotten bloated, making too broad a range of products and keeping them around for too long, rather than keeping inventory trim and reacting to fashion whims more quickly.
• It has priced apparel too high, while focusing on wholesale channels where consumers expect discounts. That’s led to late-summer fire sales, and now wholesale partners are reluctant to place big orders.
• It hasn’t done much marketing. A few months ago, Quiksilver even lost its 23-year tie-up with surfing legend Kelly Slater.
Mooney makes a number of valid points, particularly with respect to leaner, more agile processes. Here’s another thesis: The brand just isn’t that cool anymore.
Take swimwear. The rage for men this season is trunks with shorter legs–outseams in the 15- to 17-inch range, like this pair from Chubbies Shorts ($59.50) or this one from J.Crew ($75). Just take a peek at the guys in this month’s GQ spread on Brazil-appropriate beachwear: Those models might not know a fun-shape surfboard from a fish, but every one of them is showing a lot of skin above the knee.
Quiksilver, meanwhile, is still stocked with trunks that flirt with the shin, stylish in the days of Jams and board shorts. Outseams from 20 to 22 inches are the norm, and even its Modern Originals line stretches to at least 18 inches.
Comparatively, at H&M (HMB:SS)—which Quiksilver named as a threat this week—the new line of David Beckham swimwear comes in three inseam lengths: short, shorter, and don’t-wear-these-unless-you-are-David-Beckham. At $24.95, that last model is sold out.
Footwear is another missed opportunity for Quiksilver. On that front, canvas shoes with thinner, “vulcanized” soles—Jack Purcells or Vans (VFC), for example—are in. Quiksilver’s DC Shoes has nothing that competes with those ubiquitous canvas cruisers. (Skaters still love its beefier, “cupped” sole shoes.) “Were we to attain only 5 percent share of that market, DC as a brand could double in size,” Mooney says.
It’ll have to do so without Slater. Quiksilver’s favored son is working on a line of apparel for Kering (KER:FP), the French conglomerate behind both Volcom and Gucci.