Future Looks Bright for Quiksilver Again : Apparel: The surf wear manufacturer surprises analysts by getting back in the black after two non-profitable quarters.
Quiksilver Inc., one of California’s larger designers and marketers of surf wear, reported Tuesday that it returned to profitability in its latest fiscal quarter. Analysts said the company’s performance exceeded expectations.
The company, based in Costa Mesa, said it earned $1.5 million, or 23 cents a share, for its second fiscal quarter, which ended April 30. That was off 55% from a profit of $3.3 million, or 52 cents a share, for the same three-month period a year earlier. Sales totaled $28.9 million, down 19% from $35.5 million in the same period of 1991.
Although both profit and sales were smaller than a year earlier, they represented a rebound from a loss in the first quarter of the current fiscal year. In the fourth quarter of fiscal 1991, the company broke even.
Chairman Robert B. McKnight Jr. said that Quiksilver benefited from higher profit margins and cost-cutting measures, which included consolidating divisions, reducing pay levels on a sliding scale of more than 15% for some employees and cutting the work force to 190, down from 200.
“We wanted to restructure the company to go forward in the leaner and meaner ‘90s,” said Randall L. Harrell, chief operating officer. The company took a $700,000 one-time charge against earnings in the latest quarter to cover those costs.
The improvement in the latest quarter helped reduce Quiksilver’s overall loss for the first six months of the fiscal year. For that period, the company reported a loss of $290,000, or 4 cents a share, compared to a profit of $4.4 million, or 69 cents a share, in the same period a year earlier. Sales were $50 million, down 8.6% from $51.4 million in the first half of fiscal 1991.
Analysts said they they were impressed by the company’s cost-cutting efforts and its second-quarter results.
“They were better than expected,” said Miriam W. Meglan, an analyst for the brokerage Johnson Rice & Co. in New Orleans. “They are spending a great deal of time in the field with their customers--large and small--finding out what they want and setting about providing it.”
She noted that the company is downsizing to meet demand until the next surf wear fad comes along and its sales pick up. Quiksilver’s sales soared in the late 1980s when the company pioneered the neon-color look in surf wear.
“There’s still a place for real good-looking, California-inspired clothes for men and young men,” Meglan said.
Quiksilver, like most other surf wear companies in Orange County, designs and markets its products but leaves the manufacture to subcontractors.
John S. McCartney, an analyst for the brokerage Branch, Cabell & Co. in Richmond, Va., noted that Quiksilver has paid off much of its short-term debt and that sales of its Na Pali S.A. division in Europe have been strong despite the recession.
