Rip Curl parent company begins major review

The parent company of Rip Curl will carry out a sweeping review of all of the group’s businesses to “improve returns for shareholders”.

KMD Brands announced today in a statement to the Australian (ASX) and New Zealand (NZX) stock exchanges its business review would examine the group’s capital structure, portfolio configuration and other value-creation opportunities.

“To assist KMD Brands in this process and to bring additional commercial rigour and independence to it, the board will appoint external financial and legal advisers to lead the process; those appointments will be finalised over the coming weeks,” KMD Brands stated.

The review will assess “whether other opportunities may exist to accelerate the realisation of shareholder value”.

The day-to-day operation of the group’s businesses – Torquay-headquartered Rip Curl, Kathmandu and Oboz – will continue as usual, and customers, suppliers and staff have been advised not to expect any changes.

“Our commitment to creating long-term value for shareholders is the board’s clear priority,” KMD Brands group chief executive and managing director Brent Scrimshaw said.

“In parallel with our focus on improving KMD Brands’ operating performance, this business review is an appropriate next step at this time.

“The board is committed to assessing all credible options that have the potential to deliver superior value for shareholders.”

According to the statement to the ASX and NZX, Rip Curl’s total global direct to consumer sales have grown year on year due to favorable foreign exchange impacts “within a dynamic marketplace”.

Sales momentum softened after the start of the Iran war, with higher fuel prices and rising interest rates further affecting global consumer sentiment.

Today’s announcement follows KMD Brands in March formally rejecting an offer from rival surf brand owner Stokehouse Unlimited to split off Rip Curl and then form a new entity by merging it with Stokehouse.

“The concept proposed by Stokehouse creates no value for shareholders and is challenging from an execution standpoint,” KMD chair David Kirk said at the time.

In April, KMD Brands dismissed a suggestion Stokehouse could buy out Rip Curl completely.

The board had not received such a proposal, KMD stated, and was “not minded to provide access to due diligence to Stokehouse given the price, terms and executability of any such transaction by Stokehouse remains uncertain”.

Brian Singer and Doug “Claw” Warbrick founded Rip Curl in Torquay in 1969.

KMD, which also owns Kathmandu and Oboz, acquired Rip Curl from Singer and Warbrick in October 2019 for about A$350 million.