Quiksilver Inc. (ZQK:US), the maker of surf clothing and other athletic wear, plunged the most in almost three decades after posting a wider loss and forecasting sluggish sales for the rest of the year.
Excluding some items, the loss grew to 15 cents a share last quarter, the Huntington Beach, California-based company said yesterday in a statement. Analysts had estimated a 2-cent loss on average, according to data compiled by Bloomberg. Revenue declined 11 percent to $408 million, missing the $448.8 million predicted by analysts.
Quiksilver is facing shrinking sales in North America and Europe -- a trend the company expects to continue through the second half of fiscal 2014, which ends in October. The company also is competing more with independent boutiques and niche online retailers. Following the earnings report, analysts at Stifel Financial Corp. and other firms downgraded the stock.
“You’re still seeing some weakness in the core brands they own -- they’ve become quite tired,” said Erinn Murphy, a Houston-based analyst at Piper Jaffray. “In an industry that’s seeing a lot of competition from up-and-coming brands, it’s hard to maintain that authenticity. At this point, it’s fairly bleak.”
She has the equivalent of a hold rating on the shares.
The shares tumbled 41 percent to $3.41 at the close in New York, the biggest decline since the company’s initial public offering in 1986. The stock has dropped 61 percent this year, dragged down by concern the company is struggling to turn around the business.
While sales from Quiksilver’s stores were flat last quarter, they performed better than its wholesale business, which sells clothes to other retailers. In the past 12 months, 20 percent of the company’s smaller U.S. wholesale accounts closed, Chief Executive Officer Andrew Mooney said on a conference call.
Total wholesale revenue fell 15 percent to $286 million last quarter. E-commerce sales, meanwhile, increased 23 percent to $30 million.
While Quiksilver tries to rekindle the allure of its brands, it may be able to cut costs by consolidating vendors and streamlining the number of products it sells, Murphy said.
The company also is expanding its athlete product collaborations, including one with professional street skateboarder Nyjah Huston, which is the largest partnership in the retailer’s history. As part of that rollout, a shoe will debut this quarter with a “significant” marketing campaign, Mooney said on the call.
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