Quiksilver, Inc. reported consolidated net revenues from continuing operations for the third quarter ended July 31 increased 7% to $564.9 million, from $528.6 million in the third quarter of fiscal 2007.
Consolidated income from continuing operations for the third quarter of fiscal 2008 was $33.1 million, or 25 cents per share, compared to $35.7 million, or 28 cents per share, for the third quarter of fiscal 2007.
Results for the quarter included a 3 cents per share benefit from certain tax adjustments. Net revenues and income from continuing operations for all periods exclude the results of our Rossignol wintersports equipment and apparel operations which are reported as discontinued operations.
Including discontinued operations, net income for the quarter was $2.9 million or 2 cents per share compared to a net loss of $7.9 million or 6 cents per share in the same quarter a year ago. The company recently announced that it had received a binding offer to purchase Rossignol and expects to close this transaction in the Fall of 2008.
“Our performance overall was in-line with our expectations and we are relatively pleased to deliver results in this range given the negative trends weve all witnessed during the quarter in the retail environment,” said Robert B. McKnight, Jr., chairman of the board, CEO and president of Quiksilver, Inc. Our gross margins benefited from a higher proportion of our revenues coming from Europe and from our retail stores than in the same quarter a year ago and we again achieved some improvements in sourcing margins. At the same time, this business mix drove our expense ratio higher, and a weaker performance at retail, together with conservative ordering by our wholesale customers, led to some deleveraging of expenses.”
All segments have been adjusted to reflect the discontinued operations classification of our Rossignol wintersports equipment and apparel business.
The Americas, Europe and Asia/Pacific segments each include operations of our Quiksilver, Roxy, DC and other apparel brand businesses.
Net revenues in the Americas segment decreased 4% during the third quarter of fiscal 2008 to $271.9 million from $281.9 million in the third quarter of fiscal 2007.
European segment net revenues increased 25% during the third quarter of fiscal 2008 to $232.0 million from $185.6 million in the third quarter of fiscal 2007. Approximately $28.6 million of Europes increase was attributable to the positive effect of changes in foreign currency exchange rates.
Asia/Pacific segment net revenues decreased slightly to $59.6 million in the third quarter of fiscal 2008 from $59.9 million in the third quarter of fiscal 2007. Asia/Pacifics decrease would have been greater but for the positive effect of changes in foreign currency exchange rates of approximately $7.9 million.
Consolidated inventories increased 14% to $358.6 million at July 31, 2008 from $315.1 million at July 31, 2007. Changes in foreign currency exchange rates accounted for approximately $22.5 million of the increase in inventories compared to July 31, 2007. Consolidated trade accounts receivable increased 10% to $491.4 million at July 31, 2008 from $445.5 million at July 31, 2007. Changes in foreign currency exchange rates accounted for approximately $31.5 million of the increase in accounts receivable compared to July 31, 2007.
Addressing its outlook for continuing operations, the company indicated that it continues to believe it can achieve earnings per share for the full fiscal year ending October 31 of slightly below $0.90 per share, including the $0.03 tax benefit recognized in the fiscal third quarter.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended July 31,
In thousands, except per share amounts
2008 2007
Revenues, net $564,876 $528,591
Cost of goods sold 280,047 276,512
Gross profit 284,829 252,079
SG&A expense 232,094 194,323
Operating income 52,735 57,756
Interest expense 11,801 11,881
Foreign currency
(gain) loss (1,231) 310
Minority interest
and other expense 415 80
Income before provision
for income taxes 41,750 45,485
Provision for
income taxes 8,677 9,783
Income from continuing
operations 33,073 35,702
Loss from discontinued
operations,
net of tax (30,219 ) (43,569)
Net income (loss) 2,854 (7,867)
Income per share from
continuing operations $ 0.26 $ 0.29
Loss per share from
discontinued operations $(0.24) $ (0.35)
Net income (loss)
per share $ 0.02 $(0.06)
