Consolidated sales dropped at Volcom by 15.3 percent to $68.3 million in the first quarter, falling in all three segments. European sales were down by 14 percent to $21.7 million – a drop of 1 percent in constant currencies. Revenues in the U.S. segment, which also includes Canada, Japan, most places outside Europe and branded retail stores, fell by 14 percent to $42.4 million, and the Electric eyewear segment saw a decrease of 32 percent to $4.2 million.
The company said it was trying to help retailers, who are being hurt by the economy, by extending some terms and improving merchandising.
Net income plunged by 55 percent to $4.2 million. The gross profit margin fell by 2.1 percentage points to 50.3 percent.
Operating income in Europe decreased by 36 percent to $5.8 million while in the U.S. it plummeted by 70 percent to $1.4 million. The operating loss for the Electric segment was $900,000, compared with income of $400,000 in the same period in 2008. The operating margin was 9.3 percent, down from 17.9 percent in 2008.
Volcom said it believes the worst of the economic crisis is behind it, but its retailers are still ordering cautiously, and later in the year. It thinks the second quarter will be bad, the worst for the year, with a drop in sales of 31 percent to 35 percent to $47-50 million. This would include a 47 percent drop in sales to Pacific Sunwear, its largest customer. It forecasts earnings that will be flat or with a loss of up to $730,000.