NEW YORK — Quiksilver Inc. shredded the slopes in the first quarter as earnings more than doubled on impressive sales and margin gains.
This story first appeared in the March 11, 2003 issue of WWD. Subscribe Today.
For the three months ended Jan. 31, the Huntington Beach, Calif.-based activewear and sportswear company reported net income shot up 112.8 percent to $6.6 million, or 24 cents a diluted share. By comparison, last year the company recorded profits of $3.1 million, or 13 cents. Earnings per share eclipsed the Wall Street estimate by 5 cents.
Total revenues caught some major air, soaring 30.7 percent to $192.1 million from $147 million a year ago. On a conference call with analysts, chief executive officer Robert McKnight Jr. said the company now expects full-fiscal-year revenues of $875 million to $890 million, putting it on the edge of becoming a billion-dollar company on the strength of its international expansion.
“As we approach the $1 billion sales mark, our philosophy remains the same,” said McKnight in a statement. “What has changed is that we are now doing these things in a global context. Today, we have an incredibly broad base of sales, both from a global perspective and with regard to our portfolio of brands. We also have a well-developed infrastructure to support future growth. Our goal is to continue to leverage our leadership position in the market.”
Industry observers are likewise very bullish about the company’s future.
“We believe that the company is fashion right and should continue to capitalize on the popularity of surf-inspired fashion,” wrote Wells Fargo Securities analyst Jennifer Black in a research note. “We continue to see Quiksilver outperforming its peers in the department store channel. Channel checks indicate that the brand’s momentum in the specialty channel is not waning. Quiksilver is positioning itself to generate long-term growth by means of carefully expanding a variety of key brands and territories. In our opinion, Quiksilver has barely skimmed the surface of the international markets.”
The quarterly numbers arrived after the markets closed on Thursday, and on Friday, investors reacted by bidding up the firm’s shares $1.51, or 5.8 percent, to close at $27.77 in New York Stock Exchange trading. While Quiksilver’s ticker symbol, ZQK, puts them last, alphabetically, in many portfolios, the firm’s performance has ranked close to the top. The stock has grown 39.9 percent from $19.85 over the past 12 months. That compares with the Standard & Poor’s 500, which has lost 28.4 percent, to 828.89 from 1,157.54, over the same period.
Other strong indicators included a 510 basis point expansion of gross margin to 42.4 percent of revenues, and operating margin growth of 160 basis points to 6.8 percent of revenues. Globally, gross margin for the Americas swelled 170 basis points primarily because of cleaner inventory, while European gross margin grew about 100 basis points on the strength of better initial markups and the addition of company-owned retail stores.
By global region, revenues in the Americas increased 13.5 percent to $102 million from $89.8 million. In Europe, revenues jumped 38 percent to $77.2 million from $56 million last year. Additionally, the firm’s new operations in the Asia-Pacific region chipped in $12.1 million.