Boardriders group wants to sell European headquarters
It isn’t the most optimistic of messages. The Boardriders group has decided to sell its European headquarters in Saint-Jean-de-Luz, in the French Basque country region. According to local newspaper Objectif Aquitaine, the decision was announced to Boardriders’ staff on September 27, and the board sports group intends to remain based at the same premises as a tenant.
The Boardriders group’s European headquarters is located in one of Europe’s premier surfing regions. The building sits close to the A63 motorway, between the towns of Guéthary and Saint-Jean-de-Luz, a visible architectural marker of the group's continental ambitions.
However, the outlook is now bleak, even though the Billabong, Element and RVCA staff, previously based further up the coast in Hossegor and now part of Boardriders - after the latter bought the Billabong group a year ago - is about to move to Saint-Jean-de-Luz. The move is part of a drive to optimise costs by Boardriders, whose majority shareholder since 2015 has been the Oaktree Capital investment fund.
In the first half of this year, Boardriders announced a restructuring in France, involving a job protection plan. The plan was approved by regional employment body DIRECCTE in May, and involves the loss of 136 jobs, 73 among the staff in Saint-Jean-de-Luz and 63 among the Hossegor staff. It is the third job protection plan activated by Boardriders in France since 2013. Incentives are available for employees who leave the Hossegor offices to move to Saint-Jean-de-Luz.
Details of the agreement between Boardriders and the French employment authorities to support the Billabong’s move from Hossegor, specifically aimed at “revitalising the Pédebert employment area,” were revealed in mid-September. Na Pali, a company of the Boardriders group, will remit the sum of “€192,000 for the creation of long-term jobs,” and of “€95,500 to fund the annual promotional giveaway and to provide backing for the continuation and diversification of businesses linked with the industry.”
While the staff of Boardriders will soon be concentrated in Saint-Jean-de-Luz, several observers are wondering about the future of the group’s European subsidiary. In early 2018, its CEO Pierre Agnès, a major pro-European influence within the group, was tragically lost at sea, and since then, and the departure at the start of 2019 of Thomas Chambolle, who had replaced Agnès and was substituted by Australian manager Greg Healy, European influence within the group's senior management has been waning, seemingly supplanted by a US-centric vision.
Is debt-renegotiation possible?
But why does Boardriders want to sell the Saint-Jean-de-Luz offices? The group is said to be heavily in debt, by as much as $450 million. Journalists from Objectif Aquitaine claim to have gained access to internal memos from Boardriders: “Thanks to a series of synergies, EBITDA is expected to reach $202 million in 2021, facilitating the renegotiation of the group's debt and enabling it to invest in marketing initiatives to re-energise sales.” Selling the offices would therefore provide Boardriders with fresh cash with which to reimburse creditors and meet payment deadlines.
The Saint-Jean-de-Luz headquarters was inaugurated in 2010 and recently renovated after the acquisition of Billabong. The buildings provide 14,000 m2 of office space within an 11 hectare-plot. Construction work lasted for two and a half years and costed €24 million, for which the group benefited from state, regional and departmental support.
According to information obtained by Objectif Aquitaine, the Boardriders group, led by Dave Tanner, recorded a sales downturn of 4.4% in the first nine months of 2019 but, thanks to a cost-rationalisation effort involving measures like job cuts in California last spring and the suppression of duplicated support functions in various regions worldwide, EBITDA reached $97 million in the same period, equivalent to an 11.9% increase. The revenue forecast for the full financial year is said to be $1.9 billion.
Boardriders has 9,000 employees worldwide and offices in California and Hong Kong, and remains a giant in the sport apparel and equipment industry. The challenges for the group are finding the right chemistry between Billabong and Quiksilver, differentiating its brands within a changing global consumption context and chiefly, in all likelihood, managing to reduce its indebtedness.
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