US: Quiksilver swings to Q1 profit
- Q1 net profit of US$15.4m
- Gross margin flat at 50.9%
- Sales drop to $393m
Quiksilver narrowed its loss in the first quarter
US surfwear brand Quiksilver swung to a profit in the first quarter but saw sales decline in all of its geographic regions.
In the three months to the end of January, Quiksilver recorded earnings of US$15.4m. This compared to a net loss of $31.1m a year earlier.
In December, the company unveiled plans to pursue the sale and exit of several more non-core businesses following the divestiture of its Mervin snowboard unit a month previous.
Gross margin in the period remained flat at 50.9%. Modest improvements in gross margins in the Americas and EMEA segments offset increased promotional activity in the APAC segment.
Sales dropped to $393m from $412m a year earlier with declines spanning all of the firm's geographic markets, partly due to negative currency impacts.
In the Americas sales declined 5% to $173m, the EMEA region saw revenues fall 4% to $149m, and in the APAC region sales were down 4% to $70m.
"We continued to execute our Profit Improvement Plan over the last few months," said CEO Andy Mooney. "During the first quarter, we further reduced our expense structure and made progress on optimising our supply chain and laying the foundation for stabilizing and expanding revenues."
Roth Capital Partners analyst David King said Quiksilver’s results "fell short" mainly due to lower revenues.
"Looking forward, ecommerce and emerging markets growth should continue to offset weakness in the Americas and Europe wholesales business should continue through Fall 2014, when new product lines launch and segmentation strategies take hold. We remain impressed by management and its ability to execute a turnaround, but worry that revenue pressures could persist and necessitate more significant cost cuts."
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