Volcom, Inc. reported a 49% jump in third quarter
revenues to $91 million from $61 million a year ago. Net income surged
42.2% to $14.5 million, 59 cents a share, from $10.2 million, or 42
cents. However, the surf company slashed fourth quarter expectations
and cut its 2007 outlook, due in part to slower-than-expected sales.

Volcom
said it expects fourth-quarter earnings per share of 30 cents to 32
cents on revenue of about $70 million to $73 million. Analysts surveyed
by Thomson Financial forecast earnings of 47 cents on revenue of $82.3
million.

Volcom said the outlook reflects the company's current visibility into
its business with its largest customer, concerns about the overall
economic environment, slower-than-projected sales of outerwear, and
weakness in the overall vulcanized slip-on category, which hurt the
company's new footwear business.

Given the company’s outlook for the 2007 fourth quarter, Volcom is
changing its 2007 revenue guidance to $270 to $273 million, an increase
of 31% to 33% compared with 2006, from its original guidance of 34% to
36% growth. This translates to diluted earnings per share guidance for
2007 to a range of $1.37 to $1.39, reflecting growth of 16% to 18%,
from $1.47 to $1.50.

For the third quarter, Volcom's revenue growth was due, in part, to
approximately $26 million of revenue attributable to European operations.

“Our results for the quarter and year-to-date
continue to demonstrate the strength of the Volcom brand and the
success of our growth initiatives,” said Richard Woolcott, Volcom’s
president and CEO. “We intend to continue to grow the Volcom brand
through an emphasis on our core retailers, team riders, worldwide
events and film and music initiatives, which all serve to reinforce our
commitment to the boardsport community.”

Gross profit as a percentage of total revenues for
the third quarter of 2007 was 50.4%, compared with 50.6% in the third
quarter of 2006.

Selling, general and administrative expenses for the
quarter were $22.8 million versus $15.3 million in the comparable
period last year, which reflects the company’s continued investment in
its European infrastructure which is now fully operational. As a
percent of revenue, selling, general and administrative expenses were
flat at 25.1% in the third quarter of 2007 compared with 25.1% in the
third quarter of 2006.

Operating income for the third quarter was $23
million, compared with $15.6 million, a 48% increase. Operating margin
was 25.3% versus 25.5% a year ago.