Quiksilver Posts 14% Q1 Sales Rise

Quiksilver, Inc. reported a 14% rise in first quarter net revenues to $605.3 million from $528.7 million in the first quarter of fiscal 2007. Consolidated income from continuing operations for the first quarter of fiscal 2008 was a loss of $14.7 million, or 12 cents per share, compared to income of $6.8 million, or 5 cents per share, for the first quarter of fiscal 2007. Net revenues and income from continuing operations for all periods exclude the results of the Cleveland Golf business, which the company has reported as discontinued operations. 
 
Robert B. McKnight, Jr., Chairman of the Board, CEO and president of Quiksilver, Inc., commented, “Although we are not satisfied with our financial results in general, we are pleased that our core apparel and footwear operations enabled us to partially offset the more difficult than expected results from our wintersports equipment business. As we go forward, we are energized to regain focus on our core opportunities. We are executing a variety of strategies to improve our gross margin, reduce our expense levels and generate cash flow to repay our indebtedness. We are resolved to continue to pursue strategic transactions to reduce or eliminate our exposure to our wintersports equipment business.”

In November 2007, the company reorganized its operating segments to include a separate wintersports equipment segment. Americas, Europe and Asia/Pacific segments include the apparel operations by geographic region and the wintersports equipment segment includes world-wide equipment operations. The company’s global apparel revenues increased 19% to $500.5 million from $421.5 million a year ago with approximately $27.7 million of the increase attributed to the effects of foreign currency rates. Within in this total, net revenues in the Americas segment increased 18% during the first quarter of fiscal 2008 to $232.9 million from $197.4 million in the first quarter of fiscal 2007. European segment net revenues increased 19% during the first quarter of fiscal 2008 to $205.3 million from $172.0 million in the first quarter of fiscal 2007. Approximately $21.4 million of Europe’s increase was attributable to the positive effect of foreign currency exchange rates. Asia/Pacific segment net revenues increased 19% to $61.3 million in the first quarter of fiscal 2008 from $51.4 million in the first quarter of fiscal 2007. Approximately $6.3 million of Asia/Pacific’s increase was attributable to the positive effect of foreign currency exchange rates. Wintersports equipment segment net revenues decreased 2% to $104.8 million in the first quarter of fiscal 2008 from $107.1 million in the first quarter of fiscal 2007. The decrease in wintersports equipment revenue was partially offset by a favorable foreign exchange increase of approximately $10.2 million.

Consolidated inventories increased 11% to $490.2 million at January 31, 2008 from $442.8 million at January 31, 2007. Consolidated trade accounts receivable increased 13% to $638.7 million at January 31, 2008 from $566.1 million at January 31, 2007.

The company indicated that visibility into revenues and earnings is limited for the remainder of the year. It acknowledged, however, consensus estimates as published by First Call of $2.6 billion for consolidated revenues and 58 cents for EPS (both from continuing operations) and believes that such estimates should be achievable.

Mr. McKnight concluded, “I am excited to return to the role of President of Quiksilver. This is a unique company with compelling growth opportunities in each of its major brands, within existing markets, in new markets and across a wide range of categories. We have been through difficult situations at a variety of points in our 30-year history and have always emerged stronger and been able to unlock significant value to our shareholders in the process. We believe that a focus on profitability and on our key strengths as one of the few, true branded lifestyle apparel companies will enable us to do so once again.”