Volcom Inc. delivered a lower but better-than-anticipated bottom line in the third quarter and, despite sales declines and softened forecasts for the current quarter, said it was poised to take market share in the next fiscal year.
In the three months ended Sept. 30, the Costa Mesa, Calif.-based surf and skate brand reported net income of $13.3 million, or 54 cents a share, 18.5 percent below the $16.3 million, or 67 cents a share, generated a year ago.
Revenues in the third quarter, which saw the firm begin shipments of its high-ticket snowboard outerwear, declined 15.9 percent to $93.9 million from $111.7 million in the comparable 2008 period.
Analysts polled by Yahoo Finance had expected third-quarter earnings per share of 37 cents on revenues of $84.8 million, on average.
“From our perspective, we are now in a build-back mode and ready to capitalize on pent-up consumer demand,” said Richard Woolcott, chairman and chief executive officer, on a conference call. “Our goal is to harness the shifting attitudes and maintain the competitive edge that this new environment demands.”
Woolcott said he hoped to rebuild business with the firm’s largest customer, Pacific Sunwear of California Inc., in 2010 and that Volcom has had “positive momentum” in talks with the retailer.
Sales in each of the company’s segments fell in the third quarter. Revenues in the U.S. division, which includes all of its business outside Europe and branded retail stores, fell 22 percent to $56.8 million. European sales declined 2.6 percent to $30.2 million and revenues at the Electric eyewear brand dropped 12.7 percent to $6.9 million.
Despite his belief consumer sentiment is beginning to improve, Woolcott did say the action sports industry was not yet out of the woods. His firm sought to manage expectations for the current quarter, during which it projects PacSun orders to fall 43 percent to $6 million.
Volcom expects EPS between 1 cent and 4 cents in the fourth quarter on sales between $59 million and $62 million. Before the earnings announcement, analysts had estimated EPS of 11 cents on $61.9 million in revenues.
For the nine months, Volcom’s profits retreated 39.8 percent to $18.3 million, or 75 cents a share, from $30.5 million, or $1.25 a share, last year. Revenues in the three quarters fell 18.2 percent to $216.4 million from $264.7 million in 2008.