Rip Curl’s new parent company Kathmandu Holdings Limited outlined to investors how the company is cutting costs during the coronavirus crisis.
Like so many companies around the world, Kathmandu and Rip Curl are grappling with the nearly complete and sudden drying up of revenue while sitting on millions and millions of dollars’ worth of inventory.
The cost reductions the company announced for the Group, which includes Kathmandu, Rip Curl and Oboz, includes employee furloughs and layoffs.
Kathmandu, an outdoor retailer headquartered in New Zealand which also has a big retail presence in Australia, acquired Rip Curl in October.
Given the severity of the crisis, one has to believe Rip Curl founders Brian Singer and Doug “Claw” Warbrick are happy they sold the company when they did.
Both Rip Curl and Kathmandu just closed stores in Australia. Company stores have also closed in key regions such as Brazil, North America and Europe.
While e-commerce can continue in Australia, Europe and Australia, the New Zealand government has shut down online commerce as well as stores.
Staff cuts
In Australia, retail stores and head office staff for both brands except a skeleton crew have been furloughed without pay for four weeks. Those employees have access to government assistance.
In Europe, governments fund the majority of employees’ salaries during the lockdown.
In North America, because employment is “at will,” that allows for “efficient right sizing” of the business in that region, Kathmandu said in its statement. Rip Curl is Kathmandu’s largest operation in the region.
We reached out to Rip Curl’s North American leadership, but they declined to comment at this time.
Other Cost Reductions
The Group is also:
- Talking with landlords to get rent relief
- Cutting or cancelling future orders with suppliers
- Cancelling or deferring capital expenditures
- Cutting salaries of senior company managers of all brands by 20%
- Cutting casual workers in all retail and warehouses
- Suspending its dividend.
