WWD.com/business-news/financial/quiksilver-q1-loss-exceeds-expectations-6836774/
government-trade
government-trade

Quiksilver Q1 Loss Exceeds Expectations

Restructuring and weakness in the Americas leave firm in the red.

Steps taken to improve Quiksilver Inc.’s long-term business profile, including the closure of weaker stores, resulted in a wider loss in the first quarter.

In the three months ended Jan. 31, the Huntington Beach, Calif.-based owner of the Quiksilver, Roxy and DC brands saw net losses grow to $31.1 million, or 19 cents a diluted share, from losses of $22.6 million, or 14 cents, in the first quarter of 2012. Its operating loss more than tripled to $8.7 million from $2.5 million.

On an adjusted basis, eliminating impairment charges and restructuring expenses, the loss came to 16 cents, above the loss of 7 cents expected, on average, by analysts.

RELATED CONTENT: Click Here for More Earnings Coverage >>

Hurt by weakness in its Americas region, revenues declined 4.1 percent to $431 million from $449.6 million in the prior-year quarter. Americas revenues declined 9.3 percent to $186.3 million and were off 2.3 percent to $72.9 million in the Asia-Pacific region. Sales in Europe, the Middle East and Africa rose 1.4 percent to $171.2 million.

“Net revenues in the first quarter were impacted by the closure of underperforming retail stores over the last year, as well as disappointing performances in our wholesale channel and in the Americas region,” said Andy Mooney, president and chief executive officer of the company. “On the positive side, we saw continued growth in our emerging markets and e-commerce channel, a modest improvement in gross margin and lower operating expenses.”

Gross margin rose 30 basis points to 51 percent of sales from 50.7 percent in the first quarter of last year.

Mooney said the firm would continue to move on three fronts — the strengthening of its brands, increasing sales and driving operating efficiencies — and noted that it had recently appointed heads for its global supply chain, global footwear design and global apparel design and was “actively recruiting” a chief marketing officer.

“In addition, we made decisions to better focus the product line breadth of our three core global brands,” Mooney commented.

Results were reported after the close of the equity markets Thursday. In the first 60 minutes of after-hours trading, shares dropped 45 cents, or 7.2 percent, to $5.84 after rising 6 cents, or 1 percent, to $6.29 during the regular trading session of the New York Stock Exchange.

Mooney, a veteran of the Nike and Disney organizations, succeeded founder Bob McKnight as ceo of Quiksilver on Jan. 11. McKnight now serves as executive chairman.