Quiksilver Inc. reported revenues were down 3.1 percent in its third quarter ended July 3, to $496 million. On a currency-neutral basis, sales declined 10 percent for the Quiksilver brand while increasing 1 percent for both Roxy and DC shoes. Quiksilver's earnings tumbled due to restructuring charges, although operating earnings before non-recurring items improved.

“Our third quarter results reflect progress on our path toward improving operating efficiencies,” said Andy Mooney, president and chief executive officer of Quiksilver, Inc. “Pro-forma adjusted EBITDA increased by $4 million, selling, general and administrative expenses were reduced by $9 million and we continued to right-size our organization worldwide. In addition, our EMEA region returned to sales growth, and our global e-commerce channel and emerging markets contributed meaningful revenue increases. While global net revenues were down for our DC and Quiksilver brands, we believe that the product development plans we have in place will deliver improved sales over time.

“We are pleased with the advancements on our Profit Improvement Plan. We completed assembling our senior management team, refinanced debt to extend maturities and increase liquidity, reduced headcount, narrowed our athletes and events roster, began re-engineering supply chain processes and continued to close underperforming retail stores. Our plan is on track and we remain confident that our initiatives will lead to improved efficiency and profitability.”

Fiscal 2013 Third Quarter Review:

The following comparisons refer to the third quarter of fiscal 2013 versus the third quarter of fiscal 2012.

Net revenues were $496 million compared with $512 million, and were down 3 percent, or $14 million, in constant currency.

Americas net revenues decreased 6 percent to $268 million from $286 million, and were down 6 percent in constant currency.

EMEA net revenues increased 6 percent to $164 million from $154 million, and were up 3 percent in constant currency.

APAC net revenues decreased 12 percent to $63 million from $72 million, and were down 1 percent in constant currency.

Gross margin was in line with last year at 49.4 percent of net revenues compared with 49.5 percent, with gross margin declines on DC brand sales in the Americas wholesale channel, largely offset by gross margin improvement in the EMEA wholesale channel.

SG&A decreased $9 million to $217 million from $226 million, primarily due to reduced expenses related to compensation, athletes and events, and administrative costs.

Non-cash asset impairments were $2.2 million compared with $0.1 million.

Foreign currency loss was $4.1 million versus foreign currency gain of $2.2 million.

Net income attributable to Quiksilver, Inc. was $2 million, or 1 cent per diluted share, compared with $13 million, or 7 cents per diluted share.
Pro-forma income, which excludes the after-tax impact of restructuring charges, non-cash asset impairments and non-cash interest charges from net income attributable to Quiksilver, Inc., was $18 million and $17 million, or 10 cents per diluted share in both years.

Pro-forma Adjusted EBITDA increased $4 million to $56 million from $52 million.

Fiscal 2013 Q3 Net Revenue Highlights:

Net revenues (in constant currency) by brand and channel for the third quarter of fiscal 2013 compared with the third quarter of fiscal 2012 were as follows.

Brands (constant currency):

  • Quiksilver decreased 10 percent to $172 million;
  • Roxy increased 1 percent to $130 million; and,
  • DC decreased 1 percent to $166 million.

Distribution channels (constant currency):

  • Wholesale revenues decreased 6 percent to $345 million;
  • Retail revenues increased 1 percent to $120 million. Third quarter same-store sales in company-owned retail stores increased 2 percent on a global basis. Company-owned retail stores totaled 562; and,
  • E-commerce revenues grew 33 percent to $31 million.

Emerging markets generated net revenue growth of 21 percent in constant currency.

QUIKSILVER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


 


 


 

 


 











 


Three months ended

Nine months ended
In thousands, except per share amounts
July 31,

July 31,



2013




2012





2013




2012












 
Revenues, net
$ 495,764

$ 512,439


$ 1,385,530

$ 1,454,273

Cost of goods sold


 

250,989

 


 

258,951

 



 

709,912

 


 

730,686

 










 
Gross profit

244,775


253,488



675,618


723,587










 

Selling, general and administrative expense



216,579




225,788





660,042




680,213


Asset impairments


 

2,152

 


 

141

 



 

10,652

 


 

556

 










 
Operating income

26,044


27,559



4,924


42,818










 

Interest expense



20,195




14,834





50,991




45,464


Foreign currency loss/(gain)


 

4,074

 


 

(2,242

)



 

4,629

 


 

(4,701

)










 
Income/(loss) before (benefit)/provision for income taxes

1,775


14,967



(50,696 )

2,055










 

(Benefit)/provision for income taxes


 

(49

)


 

2,508

 



 

10,322

 


 

14,913

 










 
Net income/(loss)

1,824


12,459



(61,018 )

(12,858 )

Less: net loss/(income) attributable to non-controlling interest


 

247

 


 

151

 



 

(435

)


 

(2,257

)










 
Net income/(loss) attributable to Quiksilver, Inc.
$ 2,071
 

$ 12,610
 


$ (61,453 )
$ (15,115 )










 
Net income/(loss) per share attributable to Quiksilver, Inc.:








Basic
$ 0.01

$ 0.08


$ (0.37 )
$ (0.09 )
Diluted
$ 0.01

$ 0.07


$ (0.37 )
$ (0.09 )










 
Weighted average common shares outstanding:








Basic

167,624


164,518

About The Author

Thomas J. Ryan

Thomas J. Ryan Senior Business Editor | SGB Media tryan@sgbonline.com | 917.375.4699

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