Quicksilver shares plunge 36% following miss on earnings
- Quiksilver (ZQK $3.66 -2.13) reported second quarter loss of $0.15 per share, which is worse than expected, while revenues fell 10.5% year/year to $408 million which is worse than expected.
- "During the second quarter, we again reduced our expense structure, increased sales in our direct to consumer channels and emerging markets, and drove improvements in gross margins. These improvements were offset by decreased net revenues in our wholesale channel, especially in the developed markets in North America and Europe. Consequently, pro-forma adjusted EBITDA decreased versus the prior year." Americas net revenues decreased 18% to $186 million from $226 million, and were down 16% in constant currency. EMEA net revenues decreased 2% to $162 million from $165 million, and were down 5% in constant currency. APAC net revenues decreased 6% to $60 million from $64 million, but were up 3% in constant currency. Gross margin increased to 48.7% from 45.9%. The 280 basis point improvement in gross margin reflects the sales growth in our direct to consumer channels, reduced clearance activity in the wholesale channel of certain regions and benefits of licensing activities.
- Guidance: The Company anticipates that the general sales trends of recent quarters compared to the same prior year period will continue into the second half of fiscal 2014 with continued net revenue declines in the North America and Europe wholesale channels being partially offset by net revenue growth in emerging markets and e-commerce. The Company also anticipates some continued year-over-year gross margin improvements in the second half of fiscal 2014, and that pro-forma adjusted EBITDA for fiscal 2014 will be below the $118 million achieved in fiscal 2013. The Company said that it has revised the timing for achieving its Profit Improvement Plan adjusted EBITDA target to the end of fiscal 2017.