Quiksilver Earnings: Increasing Costs Tighten Margins

Quiksilver Inc. (NYSE:ZQK) reported its results for the second quarter. Quiksilver designs, produces and distributes apparel, wintersports equipment, footwear, accessories and related products.

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Quiksilver Inc. Earnings Cheat Sheet

Results: Loss narrowed to $5.1 million (loss of 3 cents per diluted share) from $83.3 million (loss of 51 cents per share) in the same quarter a year earlier.

Revenue: Rose 3% to $492.2 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Quiksilver Inc. reported an adjusted net loss of 2 cents per share. By that measure, the company fell short of mean estimate of one cent per share. Analysts were expecting revenue of $495.9 million.

Quoting Management: Robert B. McKnight, Jr., Chairman of the Board, Chief Executive Officer and President of Quiksilver, Inc., commented, “I’m proud of the Quiksilver team’s performance in the second quarter amid inconsistent economic conditions around the world. We continue to see examples of solid growth in our emerging markets while some established markets, particularly in Europe, have been impacted by regional economic uncertainty. Especially against this backdrop, we’re pleased to see that the improvements we’ve made to our retail presence continue to drive positive comparable store sales in all three regions. We’re also pleased to be turning the page on a challenging first half of the year that included a number of known headwinds that particularly affected our gross margins. We expect the second half of fiscal 2012 will compare favorably to last year as we anniversary higher input costs that we began to see in Q3 of 2011 and as we begin to deliver goods for our highly anticipated back-to-school season, particularly for DC. We also expect to reduce inventory levels in the second half as we anticipate a productive fall season and largely conclude the clearance activities we identified a quarter ago.”

Key Stats:

Revenue has increased for four consecutive quarters. Revenue increased 5.4% to $449.6 million in the first quarter. The figure rose 10.1% in the fourth quarter of the last fiscal year from the year earlier and climbed 14% in the third quarter of the last fiscal year from the year-ago quarter.

The company has fallen short of estimates for two consecutive quarters. In the first quarter, it missed expectations by 3 cents with a loss of 13 cents versus a mean estimate of a loss of 10 cents per share.

Looking Forward: Expectations for the company’s next-quarter performance are higher than they were ninety days ago. Over the past three months, the average estimate for the third quarter has risen to 10 cents per share from 9 cents. At 15 cents per share, the average estimate for the fiscal year has fallen from 21 cents ninety days ago.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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