Quiksilver Posts Pre-Tax Loss In Q4

The company owns the Quiksilver, Roxy, DC, Lib Tech and Hawk brands.

“We are pleased, despite economic headwinds in certain markets, especially Europe and Australia, that revenues for fiscal 2012 increased across all three regions, all three major brands and all three distribution channels, in constant currency,” said Robert B. McKnight, Jr., chairman of the board, chief executive officer and president of Quiksilver, Inc.

“We remain focused on our three core long-term initiatives, which are strengthening our brands, increasing global sales and driving operational efficiencies. Our brands received excellent exposure this year due to the success of our key athletes, who continue to dominate in our core sports. Our focus on sales resulted in continued growth for the Quiksilver and Roxy brands, as well as strong growth in our DC brand, our e-commerce business and our emerging markets. And, we made measurable progress in operating efficiency by controlling expenses, as seen in the reduction in fourth quarter SG&A as a percentage of sales.”

Fiscal 2012 Full Year Review:

The following comparisons refer to fiscal 2012 versus fiscal 2011.

SG&A expense increased 2 percent to $916 million compared with $896 million, primarily due to increased e-commerce expenses and higher non-cash stock compensation expenses, partially offset by reduced marketing expenses and other expense reductions implemented during fiscal 2012. SG&A expenses decreased as a percentage of net revenues by 40 basis points to 46 percent of net revenues.

Net loss attributable to Quiksilver, Inc. was $11 million, or 7 cents per share, compared with $21 million, or 13 cents per share.

Pro-forma income, which excludes $18 million and $47 million of net after-tax charges, was $7 million and $25 million, or $0.04 and $0.14 per diluted share, respectively.

Pro-forma Adjusted EBITDA was $153 million compared with $192 million.

Fiscal 2012 Net Revenue Highlights:

The following comparisons are between the fourth quarters of fiscal 2012 and fiscal 2011.

Net revenues grew 3 percent to $559 million compared with $545 million, and grew 6 percent, or $34 million, in constant currency.

    Americas net revenues increased 12 percent to $279 million from $250 million, and were up 13 percent in constant currency.
    Europe net revenues decreased 9 percent to $192 million from $213 million, and were down 2 percent in constant currency.
    Asia Pacific net revenues increased 6 percent to $87 million from $82 million, and were up 7 percent in constant currency.

Gross margin was 46 percent of net revenues compared with 52 percent, primarily driven by increased clearance sales within our wholesale channel, lower margins on those sales, increased discounting within our retail channel, unfavorable foreign exchange rate comparisons, and changes in the geographical composition of net revenues.

SG&A expense decreased 5 percent to $236 million compared with $248 million, primarily driven by reductions in marketing expenses and other expense reductions implemented during fiscal 2012. These reductions were partially offset by increased e-commerce expenses associated with the growth of our online business. SG&A expenses decreased as a percentage of net revenues by 320 basis points to 42 percent of net revenues.

Net income attributable to Quiksilver, Inc. was $4 million, or $0.02 per diluted share, compared with $68 million, or $0.38 per diluted share.

Pro-forma income, which excludes $8 million of net after-tax charges and $59 million of net after-tax income, respectively, was $13 million compared with $8 million, or $0.07 and $0.05 per diluted share, respectively.

Pro-forma Adjusted EBITDA was $40 million compared with $54 million.

Fiscal 2012 Fourth Quarter Net Revenue Highlights:

Net revenues increased (in constant currency) across all three distribution channels, as well as in the DC and Roxy brands, and in the Americas and Asia Pacific regions compared with the fourth quarter of fiscal 2011. In addition, emerging markets generated net revenue growth of 27 percent.

Brands (constant currency):

    Quiksilver decreased 5 percent to $200 million;
    Roxy increased 2 percent to $135 million; and,
    DC increased 18 percent to $187 million.

Distribution channels (constant currency):

    Wholesale increased 4 percent to $430 million;
    Retail increased 4 percent to $107 million. Fourth quarter same store sales in company-owned retail stores grew slightly; and,
    E-commerce increased 148 percent to $22 million.