Volcom Third Quarter Revenues Up, Expands Retailer Base
Warnings about dark times ahead from Costa Mesa, Calif.–based maker of surf and skate apparel Volcom proved unfounded when the company released its third-quarter results on Oct. 26. In its July second-quarter results, the company reported strong earnings but gave lower guidance for the third quarter, sparking a slide in its stock. Analysts also worried that troubled retailer Pacific Sunwear, which represented approximately 30 percent of Volcom’s sales in 2005, would make for sluggish sales.
While the third quarter wasn’t stellar, there were small gains in sales and operating income. The publicly traded company posted $61 million in total revenues for the quarter, an increase of 19.3 percent over the same quarter last year. Operating income reached $15.6 million for the quarter, compared to $15.4 million last year.
These small victories complemented Volcom’s sunny outlook for the remainder of the year. The company raised its full-year 2006 earnings guidance from $1.14 to $1.17 per diluted share and now expects sales to increase 27 percent over last year, reaching $203 to $204 million.
Stronger sales at Pacific Sunwear and the addition of core chain Zumiez to its retailer roster seem to have bolstered the company. Other key new distributors are Federated’s Macy’s West division and Maurices, a Duluth, Minn.–based retail chain.
“We are pleased to formally announce today that we are now expanding distribution of our product to Macy’s West, which will initially include approximately 50 doors for men and 20 doors for boys,” said Richard Woolcott, Volcom’s chief executive, during an Oct. 26 conference call. Volcom’s edgy apparel should be in Macy’s for the holiday shopping season, he added. Midwest retailer Maurices will sell Volcom in 20 locations.
With the addition of department store and core retailers to its distribution, Volcom seems to be focusing on diversification. “These additional retailers will not only help us grow the brand but also help us lessen our risk with any one customer,” Woolcott said.
—Erin Barajas
