As economic recovery continues to move retail higher each month, executives at Volcom are content to remain cautiously optimistic, citing that economic recovery is coming slower than the company had anticipated. Despite the slow economy, Volcom and Electric branded products continue to grow at double-digit rates. 
Richard Woolcott, chairman and CEO of Volcom, supported that sentiment in Volcom’s recent conference call with analysts to discuss third quarter results. “Both Volcom and Electric continue to show strength across virtually all product categories and regions. Our initiatives to gain market share have generated revenue growth, and have enabled us to build stronger relationships with our retailers,” said Woolcott.
For the third quarter ended Sept. 30, total consolidated revenue increased 11.4% to $104.7 million from $93.9 million in the year-ago period. Excluding revenue from newly acquired licenses in Australia, consolidated revenue increased 9% fro the period.
In the U.S. region, which is comprised of the U.S., Canada, Japan, and most other international territories outside Europe and Australia, total revenue increased 13.6% to $64.5 million versus $56.8 million in Q3 last year. Gross margins in the U.S. were 45.0% of sales compared to 49.4% of sales in the year-ago period.
In the U.S., Men's product revenue increased 28.6% to $31.5 million compared with $24.5 million in the prior-year quarter, while Juniors product revenue dipped 1.8% to $10.7 million. In contrast, Boys revenue increased 23.4% to $5.8 million compared with $4.7 million in Q3 last year and snow revenue declined 3.9% to $14.9 million versus $15.5 million in the year-ago quarter.
International product revenue, part of the company’s U.S. segment consisting primarily of sales in Canada and Japan, saw revenues increase 21% to $22 million or 34% of the company’s U.S. segment revenue in the third quarter.
Revenue from PacSun, the company’s largest customer, increased 5% to $6.9 million for the quarter, slightly above expectations. Excluding PacSun, revenue from the company’s next four largest full-price accounts decreased 13% for the quarter, primarily attributable to lower revenue from the Juniors business.
Third-quarter revenue from outside Volcom’s five largest full-priced accounts, which represented 79% of total U.S. segment product revenue for the quarter, increased 20% to $50.3 million. In the third quarter of 2009 revenue from the same group was $41.8 million, representing 74% of total U.S. segment product revenue.
In the company’s Europe segment, gross margin increased to 55.7% of sales versus 52.9% of sales in Q3 last year, despite a 5.2% decline in sales, reflecting better pricing on Fall products. The Men's business remained relatively flat at $15.7 million compared with $15.6 million in the prior-year quarter. Juniors decreased 15.8% to $4.8 million compared with $5.7 million in 2009, while boys increased 55.0% to $1.5 million compared with $927,000 a year earlier.
Finally, revenue from the Electric segment increased 29.2% to $8.9 million compared with $6.9 million in the prior-year quarter. Gross margin in the Electric segment grew to 61.3% of sales compared with 59.7% of sales in Q3 last year, primarily due to product mix that included more high-margin goggles, and a significant improvement in gross margins on soft goods.
