Volcom Inc. reported Q2 revenues jumped 25.6% to $72.5 million from $57.7 million a year ago. Net income fell 22.6% to $4.8 million, or 20 cents a share, from $6.2 million, or 25 cents, a year ago. Results in the quarter were slightly ahead of expectations but the surf apparel manufacturer slightly lowered its earnings outlook for the year.

In the 2008 second quarter, gross margin on a consolidated basis was 48.0%, compared with 48.2% in the second quarter of 2007.
Operating income for the second quarter of 2008 was $6.9 million, compared with $8.8 million for the second quarter of 2007. Operating margin was 9.5% compared with 15.3% in the second quarter of 2007.

“The strength of the Volcom brand continued to resonate with our customers domestically and abroad in the second quarter,” said Richard Woolcott, Volcom’s chairman and chief executive officer. “We believe our multi-pronged diversification strategy is providing us with more means to successfully weather the challenging retail environment. We are focused on the fundamentals of our business, which will ultimately make us a stronger company in the long term.”

2008 Financial Outlook

In casting its financial outlook for the third quarter and the full year, Volcom noted a continued overall soft retail environment. For the 2008 third quarter, the company anticipates total consolidated revenues of approximately $109 million to $110 million, representing an increase of approximately 20% to 21% over the 2007 third quarter. Fully diluted earnings per share are expected to be in the range of 63 cents to 64 cents.

For the full year of 2008, Volcom expects consolidated revenue of between $344 million to $347 million, which is generally in line with its previous estimate. This estimate includes a full year’s contribution from the company’s European operation, which was operating at full capacity beginning in the third quarter of 2007, the financial contribution from the acquisition of Electric Visual Evolution in January 2008, and the contribution from the acquisition of Laguna Surf & Sport, which is anticipated to close later this month. Earnings per diluted share expectations have been reduced and are anticipated to be in the range of $1.50 to $1.53 versus previous guidance of $1.56 to $1.59.