Shares of Quiksilver Inc. lost nearly a third of their value in after-hours trading Monday when the company reported a far larger second-quarter loss than analysts expected on a double-digit decline in revenues.
In the three months ended April 30, the Huntington Beach, Calif.-based marketer of surf and skate apparel and footwear reported a net loss of $53.1 million, or 31 cents a diluted share, versus a loss of $32.4 million, or 20 cents, in the year-ago quarter.
Stripping out discontinued operations, such as the Hawk brand sold to Cherokee Inc., and special items, the adjusted loss came to 15 cents a diluted share, far steeper than the 2-cent loss expected, on average, by analysts.
Revenues slid 10.4 percent to $408.2 million from $455.6 million and landed about $40 million lower than the Wall Street consensus estimate.
The stock, down 2.5 percent to $5.79 during the regular trading session Monday, dropped sharply on news of the loss and revenue decline. Within an hour of the disclosure of the figures, shares had fallen 31.8 percent to $3.95 in after-hours trading.
Retail revenues were flat at $90 million and same-store sales rose 1 percent, but wholesale volume was down 15 percent to $286 million. Volume rose 28 percent in constant currency in the emerging markets of Brazil, Mexico, South Korea, China, Indonesia, Taiwan and Russia and e-commerce revenues were up 23 percent to $30 million, the company said.
But revenues slumped for all three of the company’s core brands, with DC Shoes off 19 percent to $103 million, Quiksilver down 7 percent to $167 million and Roxy off 6 percent to $121 million.
Andy Mooney, president and chief executive officer, told analysts on a late afternoon conference call, “Our wholesale business in North America and Europe faces multiple challenges of both a systemic and cyclical nature. Our core multibrand retailers face competitive challenges from larger vertically integrated players in the lifestyle segment and pure-play online retailers.”
While demand for surf, snow and skate lifestyle apparel “remains robust” and demand for action sports footwear “particularly strong,” that demand “is increasingly being met by fast-fashion vertically integrated apparel retailers at price points significantly below those currently offered” in more traditional retail channels for action sports products.
The shift in the company’s sales mix to retail helped lift gross margins, which moved to 48.7 percent of sales from 45.9 percent a year ago. Selling, general and administrative costs fell 1.5 percent to $123.6 million and inventories were reduced 9.7 percent, to $320.6 million, as the company continued to pursue its Profit Improvement Plan.