Retail: 69
0.40%
Retail: 182
2.59%
Mon, Aug 28, 2017
Vol 1, Issue No. 33

Outdoor Insight
Inside Rip Curl’s Acquisition by Kathmandu

Kathmandu’s $237 million acquisition of the iconic, 50-year old surf brand Rip Curl will enable the publicly traded parent of Oboz to create a year-round business and reduce its reliance on its home markets of Australia and New Zealand. The deal is slated to close Oct. 18 with the Rip Curl founders Brian Singer and Douglas Warbrick and CEO Michael Daly retaining an equity stake in the new parent.

On a pro forma basis, a combined Kathmandu and Rip Curl create a $1NZ billion dollar ($646 mm) company with an estimated 38 percent of revenues generated by outdoor apparel followed by summer apparel (26%), footwear (13%) and accessories/other and wetsuits (7%). The company’s reliance on the Australia/New Zealand market will shift from 87 percent of revenues to an estimated 58 percent as North America’s percentage of revenues grows to 17 percent from 12 percent.

Rip Curl, which counts Tilly’s, Intersport and Amazon among its largest wholesale customers, currently has North American distribution in 1,250 wholesale locations, 30 owned and 10 licensed retail stores and its ecommerce business. The brand’s global product hub is in Costa Mesa, CA. In its most recent FY, Rip Curl generated 6.5 percent revenue growth to an equivalent of about $301 million and a nearly 35 percent increase in EBIT to $24.6 million. Worldwide, Rip Curl is currently available in 173 owned physical locations, 90 flagship stores and 26 outlets.

“…the acquisition of Rip Curl will help us diversify the profile of Kathmandu, in terms of geography, channel, product and seasonality,” Xavier Simonet, Kathmandu CEO told analysts last week. “Geography because they’re (Rip Curl) much more global than us and they’re going to give us the opportunity to expand more rapidly in new countries.”

In a separate acquisition announced late last week, Los Angeles-based Go Global Retail announced it would acquire the assets of ModCloth, the digitally native retailer of women’s fashion and accessories that was acquired by Walmart in March 2017.