Two ways to own a surf brand
Issue 02 — The business of outdoor & action sports
Rip Curl is one of the brands that built surfing. Right now it’s being pulled in two directions at once — and the strange thing is that both sides are led by people who know the water. One is a listed group that has spent the past year fixing its balance sheet. The other is a surf-industry veteran who wants to take the brand out and run it as a pure surf company. Two credible camps, both fluent in the sport.
And yet, read the fine print of what each side is actually proposing, and neither answer is really about surfing. Both are about capital, structure and shareholder value. That’s not a criticism — it’s the whole point. In the first issue of this newsletter, I argued that the brands you grew up with have quietly become financial assets to be held and traded rather than businesses to be run. Rip Curl is that argument playing out in real time.
The case for breaking it out.
Start with the challenger, because his case is the one most surfers instinctively want to win.
In March 2026, Stokehouse Unlimited — the vehicle of Paul Naude — approached KMD Brands (KMD), Rip Curl’s listed parent, with a proposal to separate the brand and merge it into a dedicated surf company. Naude is not a financier who discovered surfing on a pitch deck. He’s a former professional surfer, ran Billabong’s Americas business for years, and founded the surf brand Vissla. Few people alive have a stronger claim to understanding what a surf brand is supposed to feel like.
His argument is straightforward and, on its own terms, compelling. Rip Curl currently sits inside a diversified group whose other main brands — Kathmandu and Oboz — are hiking labels. In that structure, surf is one line item among several, competing for capital and attention against very different businesses. Pull it out, the argument goes, put it in the hands of people who live the sport, and you get a focused surf company run by surfers rather than a division managed for portfolio balance.
It’s the romantic case, and it deserves to be taken seriously. On brand credibility alone, Naude is almost certainly better placed to speak for Rip Curl than a group executive allocating capital across rainwear and trail shoes. If this were only a question of who understands the brand, the argument would be over.
But look at the deal structure.
It isn’t only that question — and this is where the cultural story meets the financial one.
Look at how the deal was actually built. Under the proposal, Rip Curl would first be demerged from KMD into a separately listed company, then merged with Stokehouse, with Stokehouse’s shareholders ending up owning 22% of the combined entity. Naude would run the merged business as chief executive, from California.
The problem KMD’s board identified is not ideological; it’s arithmetic. By KMD’s account, Stokehouse’s contribution to the combined group’s earnings would be immaterial — the board described it as an “immaterial contribution to combined EBITDA” — yet Stokehouse’s side would take 22% of the merged company. Put plainly: a small, less profitable business would end up owning nearly a quarter of a structure built mostly on Rip Curl’s earnings, diluting the shareholders who own Rip Curl today.
Then there’s the funding. According to KMD, Stokehouse was not bringing in new capital of its own. Instead, the transaction would be financed by a large capital raising carried out by the smaller, newly demerged Rip Curl–Stokehouse entity itself — meaning the asset being “rescued” would, in effect, pay for its own takeover, diluting existing shareholders a second time. Add the one-off costs and dis-synergies of separating a brand out of a shared group platform, and the board concluded the concept created two smaller, less profitable companies rather than one stronger one.
This is the tension the romantic version skips over. An offer whose stated purpose is to protect a surf brand’s culture would have been executed by demerging that brand, loading the new entity with a capital raising, and handing 22% of it to the acquiring side for a modest earnings contribution. So the honest analyst’s question is not “does Naude love surfing” — he plainly does — but a harder one: does an intention to preserve the culture survive a structure that demerges, dilutes and financially stretches the very brand it claims to protect? Is this cultural stewardship, or is culture the framing around a control transaction? I don’t think the public record settles it, and it’s worth being clear about why: KMD’s objections are laid out in a formal announcement, while Naude’s side of the argument has been reconstructed mostly through the trade press and is far less documented. The asymmetry is real, and I’m flagging it rather than papering over it.
The other camp, and its blind spot.
It would be easy, having read all that, to cast KMD as the cold financial owner starving a great brand. The numbers don’t support that story either.
KMD is not running Rip Curl into the ground; it is, by its own guidance, repairing the group that owns it. For the 2026 financial year, KMD guided group underlying profit to roughly double the prior year, refinanced its debt, and raised fresh equity to bring borrowings down relative to earnings. Whatever else you think of the group, this is not the behaviour of an owner asleep at the wheel. The diversified-portfolio logic KMD defends — spreading risk across different sports, seasons and geographies — is a real strategy, not an excuse, and right now it is working at the group level.
But the group is not the brand, and here is the number that should trouble KMD’s camp. Over the same 24-week period, on a constant-currency basis, Kathmandu sales rose 4.8% while Rip Curl sales fell 2.8%. Management points to weak consumer confidence in Australia and heavy discounting by competitors — both fair, and both partly outside its control. Still, the fact stands: inside its own group, the surf label is the one going backwards, while the hiking brand pulls ahead.
So each side holds one half of the truth and is blind to the other. Naude has the better story and the weaker structure. KMD has the better balance sheet and the underperforming brand. Neither camp is wrong, exactly — and neither is the guardian of surfing it might like to be.
What the fight actually reveals.
Step back from who should win and look at what the fight itself tells you.
A founding surf brand is now something to be demerged, merged, refinanced, reverse-split and reviewed for sale. Over a single stretch of 2026, Rip Curl’s parent rejected a takeover concept, launched a strategic review, refinanced its debt, raised equity, did a 25-to-1 reverse share split and put a manufacturing facility up for sale in South-East Asia. At no point in any of this is the first question “what’s best for surfing.” The first question — for KMD’s board and for Naude’s vehicle alike — is what creates shareholder value. That’s not a moral failing on anyone’s part. It’s simply what owning a brand as a financial asset means.
That’s the thread back to issue 01. The point was never that private equity or foreign capital “kills” brands. It’s subtler and harder to escape: once a brand becomes an asset on someone’s balance sheet, its culture stops being a stakeholder and becomes the thing being valued. The most striking part of the Rip Curl story is not that a conglomerate treats it this way — it’s that even a lifelong surfer trying to “save” the brand can only do so through a demerger, a capital raise and a 22% ownership split. Culture isn’t a party at the table anymore. It’s the asset on it.
What happens next.
None of this is settled. KMD’s strategic review is due to conclude alongside its full-year results on 23 September, and at least one industry observer has suggested the group’s largest shareholder is pushing for structural action on the portfolio, with an asset sale seen as a possible outcome — though that remains reported intention, not fact, and worth treating as such.
Whatever the review decides, the more revealing answer is already in. A brand that helped invent a sport is now, to everyone at the table, a position to be optimised. What the market decides it’s worth will tell you exactly how much “credibility in the water” counts for on a balance sheet.
More on that once the review reports.
B. Rousselot
Sources: KMD Brands ASX / NZX announcements, including the 24 March 2026 response to the Stokehouse proposal and the July 2026 FY26 trading update; company financial guidance; trade reporting on Shop-Eat-Surf Outdoor website. Figures and ownership as of July 2026 (at constant currency).