SYDNEY -- Hot on the heels of a takeover offer for Billabong, Australian surf-wear maker Rip Curl has put itself up for sale. The company that was founded in 1969 close to Victoria's iconic Bells Beach is hoping to realize a sale price of close to $400 million, although it's more likely the sale will realize $300 million.
According to a report in The Australian Financial Review, Rip Curl has suffered a decline in sales in recent times, much like its larger cousin, Billabong International (ASX: BBG.AX). With half of Rip Curl's sales coming from surf-wear shops in Australia, the brand has been hit hard by consumers increasingly reluctant to open their wallets. According to the company's accounts lodged with the Australian Securities and Investment Commission, half-year sales to June 30, 2011 fell to $8 million, compared with $15.5 million the previous year.
On top of selling to retailers worldwide, the company operates corporate stores, and it acquired 24 Rip Curl-branded and multibranded stores in 2012 in both Australia and South Africa. Unlike Quicksilver and Billabong, Rip Curl has opted to remain a private company and therefore hasn't expanded as aggressively as its larger rivals.
Fashion retailers have a difficult job at the best of times. You only have to look at the poor recent results from Premier Investments (ASX: PMV.AX) -- which owns brands such as Just Jeans, Jay Jays, Dotti, and Smiggle -- and Speciality Fashion Group (ASX: SFH.AX), operator of retailers Katies, Millers, and Crossroads. Likewise. Noni B Limited (ASX: NBL.AX) has been closing stores and undergoing a process of reinventing itself.
Competition from online sales and the high Australian dollar has meant that consumers can buy well-known, branded clothing and fashion accessories more cheaply from overseas retailers. In an effort to win back customers, local fashion stores are aiming to increase their Internet sales, and they're pulling out all the stops to draw consumers back into the traditional brick-and-mortar shops.
Rip Curl as a brand would certainly have some value to prospective buyers, and the timing appears interesting, given that private-equity groups have made recent competing bids for Billabong.
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The article Surf Sale: Now Rip Curl Is on the Block originally appeared on Fool.com.
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