Volcom’s total consolidated revenues increased 22.4% in the fourth quarter of 2010, according to the company report in its conference call Thursday, February 24. As part of its direct to consumer strategy, the brand also announced a new agreement to purchase the assets related to the operation of the 10 existing Volcom outlet stores located in California, Nevada, Washington and Utah, from a licensee. As part of the deal, Volcom will terminate its current outlet license agreement and will purchase the assets related to the operation of the exisitng stores. Terms of the transaction were not disclosed.
“Last year at this time, along with many others, we shot out of the gates quickly responding to depleted retail shelves with the mindset that consumers would be back in stores and ready to spend,” says Volcom CEO Richard Woolcott. “Clearly, things were not that simple either in the U.S. or anywhere else for that matter. But as we navigated the constantly changing landscape, we stay true to the core drivers of our business that we believe will enable us to achieve our financial targets. We are still on track to achieve our previously stated goals by the end of 2014, which include consolidated revenue of approximately $550 million, gross margin of approximately 50%, and return to operating margins of 15% to 20%.”
Consolidated gross profit for the 2010 fourth quarter was $35.3 million, equal to 45.0% of total revenues, compared with $31.6 million, equal to 49.2% of total revenues, in the fourth quarter of 2009. The decrease in consolidated gross margin reflected lower gross margin in the U.S. segment, offset somewhat by higher gross margin in the company's Electric apparel segment.
Fourth quarter achievements cited by Woolcott included increasing its direct to consumer business and driving international expansion, plus noted sales growth of Electric and a recongition from the company’s core retailers.
“In my mind, a summary of achievement came a few weeks ago when Volcom was honored with the TransWorld Business Industry & Retail Award brand of the year,” says Woolcott. “This acknowledgement came from over 3,000 core retailers who cast their votes for the company that fell – that they felt did the most throughout the year to support their stores growth, goals and continued success. It is this very connection that I think was the essence of what we are working to achieve last year and while it is apparent and while it is apparent in our numbers, this stamp of approval from our retailers is a very important point of validation.
Read the full Volcom Q4 conference call transcript here.