Dallas, Texas 02/13/2014 (FINANCIALSTRENDS) – The $1.22 billion market capped Textiles and clothing lines major Quiksilver, Inc. (NYSE:ZQK) announced in mid January that it has decided to sell its flag ship “Tony Hawk” brand and its associated licensed clothing product line to a subsidiary of Cherokee Inc (NASDAQ:CHKE) for a purported $19 million. Cherokee Inc (NASDAQ:CHKE) is a $117 million market capped lifestyle cloths and accessories company head quartered in Sherman Oak’s CA. It owns brands like “Carole Little, Liz Lange and Sideout”.
The move by Cherokee Inc (NASDAQ:CHKE) to buy out the licensing interest in the international skateboarding icon’s signature cloths line has been explained as a growth multiplier, with its Chief Executive Officer Henry Stupp having been quoted as saying that, “We bought Tony Hawk brand for a variety of reasons including the opportunity to further expand into the department store and specialty channels of distribution globally. We expect the transaction to be immediately accretive and look forward to continuing to execute our long-term growth plan that seeks additional new markets for our existing brands; expands our product offerings with our current partners; and identifies additional lifestyle brands to add to our portfolio.”
The move by Quiksilver, Inc. (NYSE:ZQK) to exit out of the lucrative Tony Hawk cloths line was on the cards, ever since the Huntington beach based firm had announced in December’13 that it had decided to monetize and exit from non-core lines of business, in its efforts to concentrate on its own proprietary cloths line. It had also indicated that it was looking for institutional investors who were willing to buyout its controlling stake in companies like “Sufdome Shop Ltd and Maui and Sons”. The funds raised from this transaction have been set aside to retire debt ahead of schedule and to expand its operations into the emerging markets like Russia, China and India.
These move to realign its business, were on the cards ever since Quiksilver, Inc. (NYSE:ZQK) had reported quarter results which were disappointing, since it was coming right after the most important holiday shopping season.