Quiksilver, Inc. ended its fiscal year with decent sales growth given the overall environment and undoubtedly breathed a sigh of relief at finally having put the Rossignol acquisition fiasco behind it. A quarterly conference call with analysts saw the investment community worried about Quiksilvers ability to maintain liquidity, despite the increased sales.
Net sales increased 3.3% to $606.9 million for the fiscal fourth quarter ended October 31 from $587.3 million in the year-ago quarter. Gross margins declined 100 basis points to 48.1% of net sales from 49.1% last year, while SG&A expenses increased 130 basis points to 38.2% of net sales. Income from continued operations, excluding a goodwill charge, was $42 million, or 32 cents per share, for the fourth quarter, compared to $44 million, or 34 cents per share, in the fourth quarter of 2007.
In the Americas, net sales increased 9.7% to $306.9 million from $279.8 million last year.
Sales in Europe slipped 3.7% to $216.3 million from $224.7 million last year, with gross margins down 40 basis points to 56.5% of net sales. Currency-neutral, net sales declined 6% for the fourth quarter. Owned-retail comps were down in high-single-digits but were offset by 13 new stores opened in the fourth quarter and 37 net new shops, including concessions that were opened in Europe during the fiscal year. SG&A expenses increased as a percentage of net sales to 44.7% of sales, up 180 basis points from 42.9% last year. As a result, operating income declined 20.8% for the region in the quarter to $24.7 million from $31.3 million last year.
The Asia Pacific region saw a 1.8% increase in net sales for the fourth quarter to $82.6 million from $81.1 million last year, but in local currencies net sales jumped 10%, boosted by a stronger performance in Japan. The region was the only one to post an increase in gross margins, up 130 basis points to 52.9% from 51.6% last year. However, SG&A expenses also increased for the region, up 60 basis points to 34.6% of net sales from 34.0% last year. The region reported an operating loss of $40.7 million for the quarter after a valuation associated with the companys Australian operation caused a $55.4 million impairment charge. For the year-ago quarter, the region saw an operating profit of $14.2 million.
Looking ahead, the company will have to record an impairment charge of $150 million for the sale of Rossignol in the first quarter of fiscal 2009 as the deal closed on November 20, after the end of the current fiscal year. Net sales “could be down” somewhere in the low-double-digits with a net loss of 10 cents per share. For the full fiscal year, revenues are anticipated to decline in the high-single-digits to low-double-digits range, driven by continued contraction of the marketplace and declines in the value of the euro and Aussie dollar compared with fiscal 2008.