Shares of Quiksilver Inc. fell 18 percent Thursday after the firm, still smarting from the sale of the Rossignol ski business, posted a larger first-quarter loss.
This story first appeared in the March 12, 2009 issue of WWD. Subscribe Today.
The deficit grew to $194.4 million, or $1.53 a diluted share, for the three months ended Jan. 31 from a loss of $21.9 million, or 17 cents, in the year-ago quarter.
In addition to the November sale of Rossignol, the loss was driven by weak consumer traffic and margin compression.
Excluding operations of and expenses related to Rossignol, the net loss was $65.9 million, or 52 cents a diluted share, compared to net income of $7.6 million, or 6 cents, in the prior-year period. The loss in the most recent quarter includes a $6.1 million severance charge attributable to the elimination of 200 jobs in the Americas region and a $50.8 million noncash charge to write off deferred tax assets.
Net revenue from ongoing operations slid 10.7 percent to $443.3 million in the quarter, down from $496.6 million.
Shares of the company dropped 21 cents to 96 cents in the New York Stock Exchange Thursday following disclosure of results after the markets closed Wednesday.
“While our performance in the quarter was in line with our overall expectations, deteriorating macro conditions made for a very difficult operating environment,” said Robert McKnight Jr., chairman, president and chief executive officer of the Huntington Beach, Calif.-based company. “Weak consumer traffic drove lower sales and margin compression, which resulted in a loss for the quarter.”
Net revenue in the Americas decreased 13 percent in the quarter to $203.4 million, European revenue declined 9 percent to $181.7 million and Asia-Pacific revenue slipped 5 percent to $57.6 million.
Quiksilver is in the process of exploring a range of strategic and financing options with the goal of improving its liquidity and capital structure, with speculation the company will sell off some businesses or the entire firm. To accommodate the timing of a potential transaction, Quiksilver won an extension of the maturity date of a 55 million euro, or $69.8 million, line of credit from European lenders to June 30 from March 14.
Looking forward, company management said long-term visibility is limited, but forecast second-quarter revenue will be down in the midteens on a percentage basis, and that diluted EPS will decline in the midsingle-digit range.
The company owns and markets the Quiksilver, Roxy, DC and Hawk brands.