DOW JONES NEWSWIRES
Quiksilver Inc.'s (ZQK) fiscal first-quarter net loss widened as
weak customer traffic resulted in lower sales and margins.
The retailer also said it won extension of a EUR55 million
European line of credit until June 30 from March 14 as the company
looks at strategic and financing alternatives. The company, which
relies on short-term and uncommitted funding, has about a quarter
of its consolidated debt coming due in the current fiscal year.
"While our performance in the quarter was in line with our
overall expectations, deteriorating macro conditions made for a
very difficult operating environment," said Chief Executive Robert
McKnight.
Like other retailers, the outdoor-sports apparel and accessories
maker has been hurt by the dropoff in consumer spending. In
January, the company said it would cut 200 jobs and reduce expenses
in the Americas by 10%. It also cut some executives' pay by 5%, and
saw its credit ratings cut further into junk territory.
For the quarter ended Jan. 31, the company reported a net loss
of $194.4 million, or $1.53 a share, compared with a year-earlier
loss of $21.9 million, or 17 cents a share. Quiksilver has posted
only one quarterly profit in the past two years.
The latest results included a $50.8 million write-off of
deferred tax assets in the U.S. and a $6.1 million severance charge
in the Americas. Excluding items, the loss was 7 cents a share
compared with a year-earlier loss of 6 cents.
Revenue dropped 11% to $443.3 million.
Analysts' estimates were for a loss of 10 cents a share on
revenue of $436 million, according to a poll by Thomson
Reuters.
Gross margin fell to 46.7% from 49%, while inventory increased
4.4%.
Revenue fell in all regions, with the biggest drop, 13%, in the
Americas. The Americas segment also swung to an operating loss of
$16.3 million from a profit of $7.1 million a year earlier.
Earnings rose 1.8% in Europe but slid 3.6% in Asia/Pacific.
Quiksilver's shares jumped in January on reports that Nike Inc.
(NKE) was interested in acquiring the company, but neither would
comment.
Meanwhile, Quiksilver has been reducing its sports-equipment
operations, by selling its Rossignol Group unit, which makes skis,
in November and its golf-equipment unit before that.
Looking ahead, Quiksilver expects fiscal second-quarter earnings
to be in the mid-single digits and revenue to fall in the mid-teens
on a percentage basis. Analysts estimated earnings of 16 cents a
share on revenue of $526 million, down 12%.
Quiksilver's shares closed Wednesday at $1.17, up 6.6%. The
stock price has fallen 89% in the past year.
-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975;
Kathy.Shwiff@dowjones.com