Quiksilver Posts Q1 Loss, Extends European Credit Line
Struggling Huntington Beach, Calif.–based surf giant Quiksilver has released less-than-stellar first-quarter financial results.
According to the company, the quarter ending Jan. 31 resulted in a net loss of $194.4 million. During the same period last year, Quiksilver posted a net loss of $21.9 million. Net revenues from continuing operations dropped 11 percent to $443 million—that’s down from $496.6 million in the first quarter of fiscal 2008. In the Americas, Quiksilver’s net revenues fell 13 percent to $203 million. The company’s European division saw a drop of 9 percent in its net revenues, and its Asia/Pacific wing saw net revenues drop 5 percent.
“While our performance in the quarter was in line with our overall expectations, deteriorating macro conditions made for a very difficult operating environment,” said Bob McKnight, Quiksilver’s chairman of the board, chief executive officer and president. “Weak consumer traffic drove lower sales and margin compression, which resulted in a loss for the quarter.”
Quiksilver, which has been looking for ways to improve its liquidity position and capital structure, obtained an extension of the maturity of its 55 million euro credit line from March 14 to June 30. The purpose of this, a statement from the company said, is to “accommodate the timing of a potential transaction.” Quiksilver, which has seen the price of its shares drop 89 percent in a year, enjoyed a small rally on the news. On Wednesday, shares closed up at $1.17 per share.
Going forward, Quiksilver’s outlook remains guarded. It said it expects fiscal second-quarter earnings to be in the mid-single digits and revenue to fall in the mid-teens on a percentage basis.
Reuters reports Quiksilver has hired the investment firm of Peter J. Solomon & Co. to help raise funds or find an investor. The apparel maker has not commented on the report.
Quiksilver has been the center of much speculation of late. Unconfirmed rumors swirled that Nike or VF Corp. were looking to acquire the company in its entirety or just its still-performing DC shoe division. In January, the company eliminated 200 jobs and cut some executives’ pay by 5 percent. —Erin Barajas
