Volcom, Inc. said total consolidated revenues for the fourth quarter inched up a bit to $69.6 million, compared with $69.1 million in the Q4 2007.
Total revenues in the companys U.S. segment, which includes revenues from the U.S., Canada, Japan and most other international territories outside of Europe, as well as the companys branded retail stores, slipped 6.7% to $54.9 million from $58.9 million in the prior year period. E.U. sales, however, grew 7.0% to $10.9 million from $10.2 million last year. It was the addition of Electric that gave the company its sales increase, accounting for $3.8 million for the quarter.
PacSun represented 16% of total consolidated revenue for 2008. Excluding PacSun revenues, the next four largest accounts decreased 11% for quarter. This group represented an increase of 5% for the year. Total revenues in the companys Electric segment, which Volcom acquired in January 2008, were $3.8 million.
Company Chairman and CEO Richard Woolcott said the “results for the fourth quarter were not acceptable,” indicating that a variety of items impacted both the core Volcom business and the Electric business. For Volcom, he said results were below plan due to three main items. Number one, a highly promotional environment that continued to impact gross margin. Number two, a non-cash impairment charge of $1.4 million related to two LS&S stores that were acquired in 2008; and number three, VLCM experienced an unexpected and sudden currency devaluation in Canada against the U.S. dollar, which generated a foreign currency loss of $1.4 million related to Canadian accounts receivable. That loss translated to approximately 4 cents per share in the quarter.
The company noted that as part of its cost reduction measures it has recently concluded a cut back of approximately 8% of its domestic, in-house workforce, including its Electric subsidiary; announced decreased salaries throughout the company; and, implemented company-wide spending cuts.
Consolidated gross margins were 44.4% of total revenues for Q4, compared with 43.4% of total revenues in the fourth quarter of 2007. SG&A expenses on a consolidated basis were $26.5 million in Q4 2008 versus $19.3 million in the comparable period in 2007. Adjusted consolidated net income for the 2008 fourth quarter, which excludes a non-cash impairment charge and the foreign exchange loss on the companys Canadian dollar denominated receivables, was $3.3 million, or 14 cents per diluted share.
Including the impairment charge and foreign exchange loss on the companys Canadian dollar denominated receivables, consolidated net loss for the fourth quarter of 2008 was $8.7 million, or 36 cents per share, compared to net income of $7.1 million, or 29 cents per diluted share, in fourth quarter of 2007.
Volcom expects Q1 revenues of $62 million to $65 million and fully diluted earnings per share in the range of 13 cents to 16 cents.
