Quiksilver (ZQK) Wipes Out
Shares of Quiksilver (ZQK: Analysis) slid last week, after the Huntington Beach, California-based surf company reported a net loss of $30.6 million for its first quarter - a 46.4% increase in losses from the $20.9 million it lost in the prior year quarter. Top line growth was weak as well, sliding 4.1% from $449.6 million to $431 million. Daily Chart
Quiksilver's namesake brand - which produces surf apparel, surfboards and other accessories, posted a 7% decline in inflation-adjusted revenue to $179 million. Its women's surf gear brand, Roxy, reported a 7% decline to $115 million. However, sales at its skate footwear brand, DC, rose 1% to $109 million. Quiksilver's products are sold at over 90 countries - across the Americas, Europe and Asia through a wide range of distribution points. It currently operates roughly 829 owned or licensed company retail stores. More than 60% of the company's revenue is generated overseas. The company acknowledged that these widened losses has pushed it to reevaluate weak spots in its organization. Like many struggling retailers, Quiksilver's e-commerce growth remained robust, rising 39% to $33 million, but wholesale and retail revenue dropped by $269 million and $129 million, respectively. The company also discontinued its Quiksilver Women's and Girls' lines, which has been overshadowed by its Roxy label. Roxy has been around since 1991, and is targeted at 14 to 17 year-olds. Quiksilver Women was originally launched in 2008 to focus on the 18 to 24 demographic, which was later expanded to Quiksilver Girls - however, it never achieved the brand recognition or success of its Roxy line. Quiksilver's story has been well documented, when previous CEO Bob McKnight founded the company with surf industry insider Peter Townend and Jeff Hakman 38 years ago. Together, the trio started Quiksilver in a Newport Beach garage to become a multinational company generating annual sales exceeding $2 billion. McKnight went from selling shorts to shops from the trunk of his car to become the CEO for nearly four decades. However, a poorly-timed acquisition of skiwear company Rossignol, which weighed down the company with $1 billion in debt, nearly sank the entire company when the recession hit. McKnight acknowledged that it was one of "the most financially and emotionally painful chapters in Quiksilver's history." Quiksilver eventually sold Rossignol in 2008. 59-year old McKnight announced his resignation late last year, and was replaced by 57-year Andy Mooney, a former Disney (DIS
) and Nike (NKE
) executive, effective January 11. "During the first quarter, we took a number of steps supporting our three core strategies of strengthening our brands, increasing sales and driving operating efficiencies," Mooney stated in a press release. "We are revising our global organizational structure and transitioning toward global core processes led by experienced senior executives." Mooney stated that growth in emerging market snad e-commerce is a top priority, as well as lowering operating expenses and improving its gross margin. McKnight, who is still widely recognized as the face of Quiksilver, will remain as a liaison to Quiksilver's primary markets and will still appear at stores, trade shows and sales meetings. "My biggest role will be to support Andy 100 percent," stated McKnight. "We want to grow in territories where we can be bigger, like Korea, China and Indonesia. He knows what we do here, it's in his DNA as well as mine. Now I think we can make the operations bigger, better, faster and more profitable." Other News About ZQK Out of Fashion: Foot Locker & Quiksilver Fall After Earnings
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Published on Mar 12, 2013
By Leo Sun