Sales and profit growth in Europe lifted Quiksilver Inc.’s third-quarter top- and bottom-line results in the third quarter.
In the three months ended July 31, net income rose 25.7 percent to $10.4 million from $8.3 million in the 2010 period. Earnings were 6 cents a diluted share in both periods with shares outstanding up in the more recent period. Analysts expected EPS of 8 cents.
Revenues grew 14 percent to $503.3 million from $441.5 million, with Europe’s sales up 16.3 percent to $176.4 million and ahead 2 percent on a constant currency basis. Sales in the Americas rose 10.9 percent to $260.2 million while those in the Asia-Pacific region increased 20.2 percent to $65.5 million but were down 3 percent on a constant currency basis.
The company’s retail operations posted a same-store sales increase of 21 percent, while e-commerce grew 65 percent.
Gross margin declined to 50.7 percent of sales from 52.3 percent in last year’s quarter.
“The margin compression was largely driven by our Americas business, reflecting higher sourcing costs and some promotional pricing,” said Joseph Scirocco, chief operating officer and chief financial officer of the Huntington Beach, Calif.-based firm, in comments during the company’s quarterly conference call. “Gross margins contracted just 30 points in Europe and in the Asia-Pacific region as both were able to offset a fair portion of higher input costs with favorable currency hedging contracts in place for fiscal ’11.”
Responding to an analyst’s question, he commented that price increases were keeping pace with the increased cost of goods and stuck by earlier estimates that full-year margins would be in line with those of 2010. For the nine months, gross margins rose to 52.6 percent of sales from 52.3 percent.
Robert McKnight, chairman and chief executive officer of Quiksilver, said the company was encouraged by consumer and retailer reactions several merchandising initiatives, including Roxy’s Surf Denim and Quiksilver offerings for girls and men over 30.
He reported that the Quiksilver Pro New York surf contest sponsored by the company in Long Beach, N.Y., would go on as scheduled beginning Sunday.
Results were reported after the close of the market on Thursday. On Friday, as equity markets around the world dipped, shares of Quiksilver fell 18 cents, or 4.4 percent, to end the week at $3.94.
In the nine months, the company registered a net loss of $89.2 million, or 55 cents a share, principally because of asset impairment charges against its Asia-Pacific operations, versus net income of $12.4 million, or 9 cents, in the prior-year period. Revenues were up 4.9 percent to $1.41 billion.