Helly Hansen, Norway’s venerable maker of rain gear and, more recently, lots of other clothing, has run into financial challenges and a cash squeeze after expensive expansion in the US, reports newspaper Dagens Næringsliv (DN). Both its chief executive and finance director have quit in the past month.
Lars Kirkeby, credit analyst at Nordea, wrote in a fresh analysis that Helly Hansen’s working capital is “completely out of control.” He believes the company’s owners need to raise new capital in order to meet requirements for a loan of NOK 380 million.
The company delivered late fourth-quarter results this week, showing that positive cash flow of NOK 160 million in 2013 turned into negative cash flow of NOK 439 million last year. CEO Peter Sjølander and Finance Director Anders Olstad quit as of mid-February, right in the middle of the cash flow problems.
Sjølander denied he left because of the poor results or that he was forced to quit. He told DN the losses are temporary, and he blamed them on start-up costs in the US, after Helly Hansen decided to invest heavily in the North American market. “It costs to grow in the US,” Sjølander said.
Helly Hansen’s revenues doubled during Sjølander’s eight-year tenure. The new CEO, Paul Stoneham, wrote in a text message to DN that the company is “of course disappointed” over both the full-year and fourth-quarter results. He claimed the company, founded in Moss in 1877, was in the process of re-focusing its operations. The Ontario Teachers’ Pension Plan in Canada holds a 70 percent stake in Helly Hansen, while investment company Altor now holds 24 percent.