A full review of Rossignol's outdoor and winter sports apparel will be among the most urgent tasks set by Bruno Cercley, the French executive behind Rossignolfs take-over from Quiksilver. Backed up by Australian and American investors, the former chief executive of Rossignol entered exclusive talks with Quiksilver to buy the French brand for around €100 million.
Just three years ago, Quiksilver acquired Rossignol for €240 million and the assumption of €120 million in debt. Although it reaped about $105 million from the divestment of Cleveland, the golf business that belonged to the Rossignol group, Quiksilver's failed diversification still caused a substantial financial hit. The deal with Cercley is expected to be finalized in the next two months, to be paid with €75 million cash and through a seller's loan of €25 million. It remains unclear what share of Rossignol's debt of about €300 million will be taken over by Quiksilver as part of the French group's sale.
Covering the Rossignol brand as well as Lange, Look and Dynastar, the offer selected by Quiksilver was issued by Chartreuse & Mont Blanc, a holding company headed by Cercley. Its majority shareholder is Macquarie Group, an Australian investment company that otherwise specializes in infrastructure. Another, non-voting stake of 20 percent is in the hands of Jarden Corporation, the American company that owns sports and outdoor-related brands from K2 to Marmot, Coleman and Campingaz. Cercley has been in charge of Europe, the Middle East and Africa at Coleman since he left Rossignol in 2005. However, he made it clear that he would not seek any synergies with other winter and outdoor sports companies in the Jarden group.
The man behind the takeover told THE COMPASS that he was targeting break-even for Rossignol within two years and a sustainable operating profit margin of 5 to 10 percent starting in the third year. During its last season, Rossignol posted an operating loss of about €40 million on sales of roughly €300 million.
Cercley's immediate priority is to redress profits by cutting costs at all levels, from manufacturing to logistics and marketing. Next is an extensive review of Rossignol's apparel business: In spite of its resources, Quiksilver never managed to lift Rossignol's apparel sales beyond annual revenues of about €30 million, and due to the size of the organization that was mobilized for the push, the division is heavily loss-making. A more detailed plan will be mapped out over the next weeks, and Quiksilver is expected to provide further details on the proposed transaction when it releases its quarterly results this week.