Quiksilver’s Massive Cut-Back

Last night when we said that Tuesday January 27, 2009 was “bring a box to work day” at Quiksilver we had no idea that so many boxes would be required.

Now that we’ve seen the press release on the Quiksilver site we better understand what was meant when we were told “the list is so long Bob doesn’t even want to look at the names.”

The company will eliminate 200 positions as part of the plan, including a reduction-in-force of approximately 150 employees which is expected to account for roughly one-third of the annual cost reductions. Quiksilver expects to record a charge of approximately $5 million in its first fiscal quarter as a result of these actions. . . Robert B. McKnight, Jr., commented, “All levels of our organization are affected by these actions as nearly 20 percent of the employees involved in the reduction hold manager-level titles or higher.

Now it sounds more like “bring a box to work week.” The worst part of all of this is that most of the people going to work tomorrow at Quiksilver have no idea if or when they will be called into HR, laid off, and given an exit interview.

Follow the jump for the entire press release and Bob McKnight’s memo to Quiksilver employees.
Quiksilver, Inc. Takes Steps to Reduce Costs in Americas Region
-Company to Eliminate 200 Positions
-Spending Cuts in the Americas to Total Approximately $40 Million

Huntington Beach, California, January 26, 2009–Quiksilver, Inc. (NYSE: ZQK) today announced that it is taking additional steps to reduce expenses in its Americas region as part of an overall restructuring effort to reposition its business and in response to the continued decline in the consumer retail environment. The cost saving measures are expected to reduce expenses in the Americas region by more than 10%, or approximately $40 million annually, and will impact nearly all functional areas. The company will eliminate 200 positions as part of the plan, including a reduction-in-force of approximately 150 employees which is expected to account for roughly one- third of the annual cost reductions. Quiksilver expects to record a charge of approximately $5 million in its first fiscal quarter as a result of these actions.

These cost reduction measures are in addition to expense reductions made by the company in 2008 and other actions already taken in the company’s European and Asia Pacific regional businesses.

Robert B. McKnight, Jr., Chairman of the Board, President and Chief Executive Officer of Quiksilver, Inc., commented, “Beginning last year, we initiated a process to reduce our corporate overhead and cut spending in each of our regions. While these measures improved our overall cost structure by more than $35 million, our commitment to further streamlining the business and the continued decline in the retail environment make additional steps necessary. Our spending cuts are across-the-board, touching each of our internal organizations and systems in the Americas, but have been designed to drive improved efficiency while minimizing the impact to our customers and other business partners. All levels of our organization are affected by these actions as nearly 20 percent of the employees involved in the reduction hold manager-level titles or higher. Our management team has worked together on these cost reduction measures with the primary goal of becoming better positioned to weather the current environment and to meet our business objectives moving forward.”

As a part of its reduction in payroll, Quiksilver provided news of further pay cuts for members of its executive management team in an SEC filing last week.

The company also reaffirmed that its efforts to restructure its uncommitted debt in Asia Pacific and Europe remain on track for completion in February.

The Letter From Bob begins here:

Subject: On Behalf of Bob McKnight

Hello Everyone!

I sent you all a message in late November about some of the issues we were facing in the growing economic crisis. I encouraged you to accept the challenges with renewed commitment and energy. I asked you to work harder than ever. I know you heard me and understood. I’ve seen it. I also know that each and every one of you is committed to our Company’s success and you are concerned about your job. With the recent departure of some of the Americas’ executives and our cost cutting efforts, rumors have been swirling. Here’s where we are.

The very difficult economic environment has forced us to adjust our 2009 financial plans to be aligned with our revised sales and earnings forecast. Unfortunately, these revisions will necessitate the elimination of jobs. This week we will have to cut approximately 200 positions within the Americas region impacting 150 current employees. The employees whose jobs will be eliminated will be individually notified this week and provided with a fair package of financial and transition support. Our Human Resources team along with department leaders will be personally involved in every notification conversation and we will have the onsite partnership of the local outplacement firm of Lee Hecht Harrison.

This message is very difficult and painful for me. I am deeply sorry and understand that this only serves to reinforce the angst many of you have felt over the last few months. And saying goodbye to some of our fellow employees will be the hardest. But like many other companies we have no choice but to make these difficult decisions in order to weather the current economic climate and position our company for future growth.

Once again, I sincerely thank you – our employees – for your ongoing commitment to Quiksilver. While we will continue to have challenges ahead of us I have the utmost confidence in our Quiksilver, Roxy and DC brands. Let’s remind ourselves that we are supported by a global presence of passionate believers in our Company – our customers, and we must continue to compete hard to keep their trust and loyalty. Maintaining our collective focus will contribute to our lasting success.

Regards,

Bob