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Apparel Sales Buoy Quiksilver

Despite revenues that jumped 14 percent, Quiksilver Inc. posted a first-quarter loss of $21.9 million.

NEW YORK — Despite revenues that jumped 14 percent, Quiksilver Inc. posted a first-quarter loss of $21.9 million, or 18 cents a diluted share, compared with earnings of $2.5 million, or 2 cents a diluted share, in the year-ago period. The Huntington Beach, Calif.-based active company’s sales gains, particularly in apparel, were dragged down by higher costs of making goods and higher selling, general and administrative expenses. Stripping out discontinued operations, the loss was 12 cents a diluted share. Sales climbed to $605.3 million, compared with $528.7 million last year. 

Apparel sales were a standout, with gains of 19 percent, to $500.5 million from $421.5 million. The company said it plans “to continue to pursue strategic transactions to reduce or eliminate” hardgoods exposure, referring to its intended sale of the Rossignol hardgoods business. 

Analysts welcomed the probable sale of Quiksilver’s long-struggling Rossignol hardgoods. Todd Slater, managing director and specialty retail, apparel and footwear analyst at Lazard Capital Markets, said the sale of Rossignol “will allow for renewed focus on apparel. We believe management’s priority is to sell Rossi (probably in whole rather than in part), enabling it to more sharply focus on its organic apparel and footwear opportunities.” 

Brad Stephens, retail analyst at Morgan Keegan & Co. added in a research note that Quiksilver’s apparel business is “amazingly strong given the environment.” As for its hardgoods business, Stephens continued, “At this point we’re thrilled the core apparel business is thriving and we’d be happy with the Rossi loss going away.”