An interesting topic to get everyone thinking.These three Aussie...

An interesting topic to get everyone thinking.
These three Aussie companies have managed to basically copy each other and almost destroy themselves in the process and now when all three are in somewhat distressed positions none of them has the resources to take the others out of the game.
Rip Curl tried to sell their business six months ago for $500 million but withdrew that because they got no takers at that price which suggests that it probably is not worth anything remotely like that and as a private company its figures whilst available are generally not that well known.
Quiksilver and Billabong and to s lesser extent Rip Curl went on a massive expansion and buying spree mostly funded by debt.
The Bong and Silver bought up brands at ridiculous prices for Goodwill which now suffer from that magical accounting term "impairment" or loss of original value. They both went mad and bought 600 or so retail stores, Rip Curl bought a few only. It seems the Bong and Silver have about 400 shops each that are losing money from high rents, high staffing and high inventory levels and both are entering the slash and burn process of closing them down at a massive cost. The Bong paid $99 million for Canadas West 49 chain of 138 shops a few short years ago now there are only 70 West 49 shops open. It wasnt such a smart buy that one.
These two competitors have online divisions, huge sponsorship committments, derive 70% of income from wholesale, have massive debts, their Annual Reports are almost carbon copies of each other and they are both doing identical rescue plans to save their businesses.
Looking at the numbers. Quiksilver has not made a profit in the last four years, is struggling to maintain sales at $2 billion a year and they sell through 48000 shops up from 45000 the Bong sells through 11000 outlets with sales of $1.2 billion so its retailers seem to be supporting it much better than Quiksilvers.
Quiksilver has a Market capitalisation of just over $1 billion and a current share price of around $6. It has net assets of $550 million or $3.20 a share so is grossly over valued forva company that cannot make a profit. It is only over priced brcause several analysts have stupidly placed a buy and market outperform rating on it. When it fails to materialise the price will fall.
It has $1.75 billion in assets and $1.2 billion in total liabilities. BUT $450 million of those assets are BRAND VALUATIONS and goodwill both intangibles and both seemingly being impaired yet again so it is probably worth in reality about $100 million 60 cents a share.
It has $750 million of debt so is far worse off than the Bong..
Put all three together and you would have a formidable business but none of them has the funds to do it. There are far too many surf, skate, ski shops out there..,the industry will rationalise itself it is just a shame these three companies did not have the foresight to see it too.