The management reshuffle launched at the Quiksilver Group since Andy Mooney's appointment as president and chief executive continued with several high-profile changes last week, just before the company published declining results for the quarter that ran until the end of January.
The company has appointed Tom Hartge as global head of footwear and Kasey Mazzone as global head of supply chain. Hartge spent the last years as an adviser for Patagonia after nearly three decades at Nike. As for Mazzone, she joins Quiksilver after stints at Lands' End and American Eagle Outfitters, among other companies.
As part of the changes, Pierre Agnès, president of Quiksilver Europe, has been placed in charge of global apparel, and the group said it was searching for a chief marketing officer. Mooney, the former Disney executive who took the helm at Quiksilver in January, described the appointments as part of its plan to move towards global structures led by seasoned senior executives. Product development should go in the same direction: All beachwear and outerwear will be developed in Europe and board shorts in Huntington Beach, for example.
Mooney is meant to outline strategic plans to the Quiksilver board in April. The changes should sharpen the focus of each of the group's three largest brands, with DC exiting the surf market and Quiksilver and Roxy moving out of skateboarding. Quiksilver is to focus on men's ranges after the closure of the young Quiksilver women's business. The retail business should also be improved with fewer but more profitable stores, and some more outlets.
In the first quarter of its fiscal year ended Jan. 31, the Quiksilver group's sales were down by 4.1 percent to $431 million, a decline of 3 percent in constant currencies. On the same basis, sales of the Quiksilver brand dropped by 7 percent to $179 million, while Roxy's sales shrank by 7 percent to $115 million and DC went up by just 1 percent to $109 million.
Still in constant currencies, the group's wholesale business slid by 8 percent to $268 million, while retail sales were off by 1 percent to $129 million, with a small decline of 1 percent in comparable store sales, but online sales soared by 39 percent to $33 million.
Quarterly sales landed at $186 million in the Americas, which was a decrease of 9 percent in dollars and in constant currencies. They increased by 1 percent in Europe, the Middle East and Africa (EMEA) to reach $171 million, which was a rise of 2 percent in constant currencies. On the other hand, the group's sales slid by 2 percent to $73 million in the Asia-Pacific region, off by 1 percent in constant currencies. Sales in emerging markets - regrouping Brazil, Mexico, South Korea, China, Indonesia, Taiwan and Russia - were up by 15 percent in constant currencies.
The group's gross margin inched up by 0.3 percentage points to 51.0 percent, with a larger share of sales coming from the company's own retail operations and sales outside the Americas. The margin improved by 0.6 percentage points to 43.4 percent in the Americas but the slight sales increase in EMEA was apparently achieved with discounts, since the group's margin in that region dropped by 2.5 percentage points to 57.8 percent. This was partly compensated by an increase of 2.8 percentage points to 53.9 percent for the gross margin in Asia-Pacific.
Due to its cost reduction efforts, the group's sales, general and administrative expenses were down by $5 million to $225 million, in spite of $4 million worth of costs related to the development of online retailing. However, the group was affected by an asset impairment charge of $3.2 million.
Thus, the company suffered an operating loss of $8.7 million, up from a loss of nearly $2.5 million for the same quarter the previous year. The operating loss deepened to $8.8 million in the Americas, compared with $1.5 million. The group's operating performance also worsened in EMEA, where operating income declined by 10 percent to $14.1 million, but it more than doubled to $2.0 million in Asia-Pacific.
After interest, tax and foreign currency losses of $3.2 million, the group ended the quarter with an increases in its net losses to $31.1 million, compared with a negative result of $22.6 million in the same quarter of the previous year.