Quiksilver, Inc. continued to roll toward their goal of becoming a true global brand as they beat external and internal EPS estimates for the eighth quarter in a row. The companys march to become the first billion dollar beach/surf lifestyle brand should not be hindered in the least even as weakness at East Coast department stores hurt their mens spring futures bookings. The company increased its 2004 guidance to earnings per share of $1.18 to $1.22 on sales in the $1.06 billion to $1.08 billion range, a, 8.7% to 10.7% increase over sales for the fiscal year ended October 31, 2003.
Spring bookings are up 6% in constant currency terms, with domestic bookings gaining 3% and European futures increasing 9%.
U.S. womens bookings were up 11%, offset in part by an 8% decline in the mens futures business. The company said the mens business had a $10 million shortfall against the spring plan, and said the decline was “isolated” to issues with the East Coast department stores and was less than one percent of the expected revenues for the year. The issue appears to be weaker performance in the channel last spring and summer, not the current fall/holiday season, which has been trending up since July.
In Europe, futures for spring are up 9% in constant dollars, with womens jumping 16% and mens bookings increased 7% for the season. Asia-Pacific bookings increased 6% in constant dollars.
For the fourth quarter, revenues in the Americas grew 14.5%, with mens sales increasing 8% to $70.3 million and womens jumping 28% to $49.4 million. European sales grew 8% in Euros, or up 25.1% in reported terms. The mens business in Europe jumped 27% to $79.4 million and the womens business grew 19% to $27.3%. The company said sales for the region would have grown 8% in the quarter based on the FX rate alone. Asia-Pacific revenues were $36.7 million for the quarter.
Gross margin for the quarter improved primarily due to currency exchange benefits in Europe and an increase in the company-owned retail segment. The company opened 59 stores — both owned and licensed — this year and now has 138 company-owned stores, with 60 in the Americas, 58 in Europe and 20 in Asia-Pacific. Quik also has 149 licensed stores and another 94 shops in in licensed territories where they receive royalties. Gross margin for Asia-Pacific was 47.9%.
Inventories in the Americas increased 25% to 86.4 million and European inventories increased 38% in Euros, or 63% in U.S. dollars, to $43.8 million. Inventories in the newly acquired Asia-Pacific division totaled $16.2 million at quarter-end and accounted for 17% of the inventory growth. Total inventories increased 45% when adjusting for the stronger Euro.