Quiksilver Inc., which also owns DC Shoes and Roxy, reported revenues in its second quarter ended April 30 were down 6.7 percent to $459 million, and were down 5 percent, or $25 million, in constant currenciues. Americas net revenues increased 3 percent to $229 million from $221 million, and were up 4 percent in constant currency.
We recently announced a multi-year profit improvement plan designed to enhance the performance of our three flagship brands, Quiksilver, Roxy and DC, and accelerate our path to sustained profitable growth, said Andy Mooney, president and CEO of Quiksilver, Inc. With a reorganized management structure and our new leadership team largely in place, we have begun working toward globalizing key functions and gaining efficiencies to reap the benefits of our size and scale. We believe that, over time, our new focus and structure will allow us to significantly improve profitability, working capital efficiency and competitive positioning.
Our second quarter performance reflects net revenue declines primarily within our EMEA wholesale channel, along with lower gross margins across all three flagship brands, particularly within DC, continued Mooney. We continued to liquidate prior seasons inventory and meaningfully lowered operating expenses.
Fiscal 2013 Second Quarter Review:
The following comparisons refer to the second quarter of fiscal 2013 versus the second quarter of fiscal 2012.
- Net revenues were $459 million compared with $492 million, and were down 5 percent, or $25 million, in constant currency.
- Americas net revenues increased 3 percent to $229 million from $221 million, and were up 4 percent in constant currency.
- EMEA net revenues decreased 16 percent to $165 million from $196 million, and were down 14 percent in constant currency.
- APAC net revenues decreased 14 percent to $64 million from $74 million, and were down 9 percent in constant currency.
- Gross margin decreased to 46.0 percent of net revenues compared with 49.2 percent, primarily driven by increased discounting and clearance of DC product, increased discounting in Europe across the companys three flagship brands, and inventory write downs related to certain brands and product categories which were discontinued in the second quarter.
- SG&A decreased to $218 million compared with $224 million, primarily due to the companys ongoing expense reduction efforts which resulted in savings across several expense categories.
- Non-cash asset impairments were $5.3 million compared with $0.4 million.
- Foreign currency gain was $2.6 million compared with $0.6 million.
- Net loss attributable to Quiksilver, Inc. was $32 million, or 19 cents per share, compared with $5 million, or 3 cents per share.
- Pro-forma loss, which excludes the after-tax impact of restructuring and other special charges and non-cash asset impairments from net loss attributable to Quiksilver, Inc., was $20 million and $2 million, or 12 cents per share and 1 cents per share, respectively.
- Pro-forma Adjusted EBITDA was $19 million compared with $41 million, with the decline largely driven by gross margin and net revenue declines.
Fiscal 2013 Q2 Net Revenue Highlights:
- Net revenues (in constant currency) by brand and channel for the second quarter of fiscal 2013 compared with the second quarter of fiscal 2012 were as follows.
- Brands (constant currency):
- Quiksilver decreased 10 percent to $182 million;
- Roxy decreased 4 percent to $129 million; and,
- DC increased 1 percent to $129 million.
- Distribution channels (constant currency):
- Wholesale decreased 7 percent to $344 million;
- Retail decreased 5 percent to $91 million. Second quarter same store sales in company-owned retail stores decreased 4 percent on a global basis. Company-owned retail stores totaled 564 compared with 549 at the end of fiscal 2012 second quarter; and,
- E-commerce was up 31 percent to $23 million.
- Emerging markets generated net revenue growth of 13 percent in constant currency.
Guidance for Fiscal 2013:
- Based on its current outlook, the company revised its fiscal 2013 financial guidance as follows:
- Pro-forma adjusted EBITDA for the second half of fiscal 2013 is expected to be greater than the $91 million achieved during the second half of fiscal 2012;
- Capital expenditures for fiscal 2013 are expected to decrease by at least 10 percent from the $66 million recorded in fiscal 2012.
- The foregoing guidance updates and supersedes the companys prior guidance for fiscal 2013.