While another mild season hurt Quiksilver’s winter sports segment, its other operations were more successful, so the company ended up with a 14 percent increase in revenues to $605.3 million for the first quarter ended Jan. 31. Gross profit was $275.7 million, up from $248.9 million last year.
The company’s operating loss was $4.29 million, compared with operating income of $27.3 million in the same period in 2007. The net loss was $21.94 million, but it included a loss of $7.29 million from its Cleveland Golf subsidiary, which was sold in December. Based on continuing operations, the group saw a loss of $14.7 million against a profit of $6.81 million in the year-ago period, largely due to the winter sports equipment segment that it is now trying to get rid of.
Quiksilver is approaching the end of the initial proceedings for the sale of the business and says that keeping the Rossignol apparel license would not be a condition of the deal one way or the other.
Re-orders for ski equipment have been disappointing so far this year, and the business being divested is now expected to have an operating loss of $41 million for the year, compared with a loss of $38 million in the past year, on 10 percent higher sales of $385 million.
In Quiksilver’s first quarter, winter sports products saw an operating loss of $21.38 million, a significant change from operating income of $7.69 million in the same quarter in fiscal year 2007. Revenues in this category were down by 2 percent to $104.8 million in the quarter, but they would have declined by an additional $10.2 million if exchange rates had remained constant. Gross margins in this segment fell by 13.1 percentage points to 51.6 percent of sales.
Last November, Quiksilver reorganized its segments and created a separate category for winter sports equipment, indicating the portion that is up for sale. Overall revenues of footwear and apparel were up by 19 percent from the same quarter a year ago, to $500.5 million; about $27.7 million of this, or 5.5 percent, was attributed to the effects of foreign currency rates.
Most of the foreign exchange impact was felt in Europe, where $21.4 million of $205.3 million in total net revenues – which were up by 19 percent from the previous year – was attributed to exchange rates. Gross margins were up 0.6 percentage points to 53.8 percent of net sales in the region. The rest of the foreign currency effect was in the Asia/Pacific segment, which also saw a 19 percent increase in revenues to $61.3 million. Revenues in the Americas were up by 18 percent to $232.9 million.
Quiksilver said that it was hard to make predictions for the rest of the year, but February looked much better than the previous months and the consensus estimate of a net profit of $72.2 million on $2.6 billion in consolidated revenues is possible.
