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Volcom’s Sales Strong in Weak Q4 Retail Environment

Higher than anticipated off-price sales ate into Volcom’s fourth-quarter profits.

NEW YORK — Higher than anticipated off-price sales ate into Volcom’s fourth-quarter profits, though sales continued to rise, and the Costa Mesa., Calif.-based firm said it will continue to pursue growth through product diversification, international expansion and potential strategic acquisitions.

“Even with the challenges of an economic slowdown,” said Volcom president and CEO Richard Wolcott on a conference call, “we still managed to post solid results, launch a successful operation in Europe and strengthen our foundation for future growth.”

Profits for the three months ended Dec. 31 fell 6.8 percent to $7.1 million, or 29 cents a share. This compared with earnings of $7.6 million, or 31 cents a year earlier.

Sales shot up 23.2 percent to $68.4 million from $55.5 million.

In the U.S. segment, where the struggling action-sports specialty chain PacSun makes up Volcom’s largest business, the company saw a revenue increase of just 8 percent, thanks to a 15 percent sales decrease at PacSun. Although its men’s apparel continues to perform well at the chain, Volcom attributed the PacSun sales dip—which it anticipates will continue throughout 2008—to pressure on the girls’ business at the retailer.

For the full year, earnings advanced 15.9 percent to $33.3 million, or $1.37 a share, on a 31.8 percent rise in sales to $265.2 million.

Looking ahead, the firm is planning on first-quarter earnings of 20 to 21 cents a diluted share and sales of $69 million to $70 million. For all of 2008, the company said earnings would come in at $1.50 to $1.53 a share, on revenues of $339 million to $344 million.