The Quilsilver group claimed that it outperformed its rivals in the second quarter of its fiscal year ended in April, with a sales increase of 3 percent to $492.2 million. The group's managers said the performance had been praiseworthy in Europe, where Quiksilver managed to lift its sales in constant currencies in spite of strong pressure in the European action sports market. In line with recent trends, an increase at DC Shoes offset slight sales declines for the Quiksilver and Roxy brands.
In terms of U.S. dollars, the group's European sales declined by 6 percent to $195.6 million for the quarter, but they increased by about 2 percent in constant currencies. The Quiksilver group pointed out that this came at a time when several competitors have been suffering significant sales declines in Europe. It seems in fact that European retailers are concentrating on the stronger brands in a declining board sports market.
The company did take a hit of 6.3 percentage points to its European gross margin, which was reduced to 55.7 percent, but the ratio remains juicy when compared with other regions. The group's European operating profit fell by 41 percent, down to nearly $25.8 million for the quarter.
The company said that it was taking a cautious approach to the European market, given its economic turmoil and uncertainties about the prospects of the euro. While the company already has insurance for bad receivables, it has been mitigating risks by repatriating cash and converting it into U.S. dollars, keeping a close eye on hedging and intensifying cost control.
For the first half of the year, the group's European head office reported that its turnover inched up by 2 percent to €276 million, driven by the expansion of the DC footwear brand.
Quiksilver Europe was further aided by the rise of its own online sales, as well as high-single-digit comparable sales growth for its 267 fully owned stores. On the other hand, actual revenues were reduced by the closure of unprofitable stores and unfavorable weather conditions. It was not cold enough for sales of winter apparel at the end of the year, and too cold and rainy in March and April.
The gross margin for Quiksilver Europe fell by 2.8 percentage points to 57.8 percent for the half year, as increases in sourcing costs could not be entirely passed on to customers. Owing to tight cost controls, Quiksilver Europe's Ebit landed at €39.4 million for the half year, amounting to an Ebit margin of 14.3 percent.
