New Lines Push Volcom to Double-Digit Q1 Gains…

Volcom, Inc. saw double-digit gains in nearly every metric for the first quarter, with the only blemishes coming from slightly increased SG&A expenses and flat sales of men’s product. Across the pond, the company’s European initiative is up and running with the new HQ opening last month and management still anticipating the new division to be slightly accretive to earnings this year.

On a conference call with analysts, management said that men’s, the company’s largest category, was essentially flat to last year with sales of $24.7 million for the quarter. The flat results came from a 27% decrease in men’s sales to PacSun paired with an especially strong quarter last year. Excluding the affects of PacSun, men’s sales would have increased 12%. Girl’s was up 31% to $17.1 million from $13.1 million in the year-ago quarter, while Boys led all categories in percentage growth, jumping 47% to $3.3 million from $2.3 million in the 2006 quarter. Other product sales increased 24% to $507,000 from $410,000, while sales from VLCM’s new girl’s swim line amounted to $1.7 million and the new footwear line, Creedlers, added another $2.1 million. Geographically, sales in the U.S. increased 16.7% to $35.6 million, while international sales jumped 38.0% to $13.8 million.

Looking ahead, VLCM sees Q2 revenues of $54 million to $56 million with fully diluted earnings per share in the 21 cents to 22 cents range, including an anticipated loss in Europe of approximately 6 cents per diluted share. The EU operations are expected to overcome the first half losses in the back half of the year.

For the full fiscal year, the company raised its previously issued diluted earnings per share guidance to a range of $1.47 to $1.50, from $1.44 to $1.47. The company is also reaffirming its 2007 revenue guidance of an increase of 34% to 36% over 2006, equating to total revenues ranging from $275 to $280 million.