Quiksilver Q2 Revenues Off 8%; Announces It Won’t Sell Any Brands

Quiksilver released it’s 2009 Q2 earnings report today in which it announced that revenues dropped 8% in constant currency. Despite the dip, Quiksilver reported Income from continuing operations of $0.05 per share. The company also announced in its conference call that with the new financial restructuring plan, it would not be selling any of its brands..

Stay tuned for an in-depth analysis of the conference call from Jeff Harbaugh.

Here’s the release:

Quiksilver, Inc. (NYSE:ZQK) today announced results for the second fiscal quarter ended April 30, 2009. Consolidated net revenues from continuing operations for the second quarter of fiscal 2009 decreased to $494.2 million from $596.3 million in the second quarter of fiscal 2008. Adjusting for changes in foreign currency as compared to the U.S. dollar, this represented a decline of 8% in constant currency. Consolidated pro-forma income from continuing operations for the second quarter of fiscal 2009 was $6.6 million, or $0.05 per share, compared to $38.7 million, or $0.30 per share, for the second quarter of fiscal 2008. The pro-forma income from continuing operations for the three months ended April 30, 2009 excludes a severance charge of $1.7 million, net of tax. Including these charges, income from continuing operations was $4.9 million, or $0.04 per share. A reconciliation of GAAP results to pro-forma results is included in the accompanying tables. Net revenues and income from continuing operations for all periods exclude the results of our Rossignol wintersports business, which was sold in the first quarter of fiscal 2009 and is reported as discontinued operations.

Net revenues in the Americas segment decreased 7% during the second quarter of fiscal 2009 to $230.0 million from $247.6 million in the second quarter of fiscal 2008. In constant currency, European segment net revenues decreased 13% compared to the prior year. As reported in our financial statements, European segment net revenues decreased 26% during the second quarter of fiscal 2009 to $210.5 million from $284.5 million in the second quarter of fiscal 2008. In constant currency, Asia/Pacific segment net revenues increased 14% compared to the prior year. As reported in our financial statements, Asia/Pacific segment net revenues decreased 16% to $52.3 million in the second quarter of fiscal 2009 from $62.5 million in the second quarter of fiscal 2008. Please refer to the accompanying tables in order to better understand the impact of foreign currency on revenue trends in our Europe and Asia/Pacific segments.

Consolidated inventories increased 1% to $307.7 million at April 30, 2009 from $304.1 million at April 30, 2008. Consolidated trade accounts receivable decreased 13% to $411.0 million at April 30, 2009 from $473.0 million at April 30, 2008.

Robert B. McKnight, Jr., Chairman of the Board, Chief Executive Officer and President of Quiksilver, Inc., commented, "We are pleased to report second quarter earnings that are essentially in-line with our expectations, but the environment remains extremely challenging and we have yet to see any improvement in overall business trends. With customers proceeding cautiously in this uncertain market, orders for the second half are building more slowly than in past periods and we continue to look for opportunities to streamline the business and improve profitability. As such, we are targeting substantial cost reductions by the end of this fiscal year and are planning our business conservatively."

Addressing its outlook for continuing operations, the Company stated that based on current trends, third quarter revenues are expected to be down in the mid-teens on a percentage basis compared to the same quarter a year ago and that diluted earnings per share are expected to be in the low-single-digit range. The Company indicated that longer term visibility into revenues and earnings remains limited at the present time due to global economic conditions.