Quiksilver Has Off Year, Blames the Recession : Earnings: $371,000 net is the most disappointing performance since the company went public in ‘86, but a stronger 4th quarter speaks well for the future.

Quiksilver Inc., a designer and marketer of casual clothing, blamed the recession Wednesday for its most disappointing year since it went public in 1986.

But the company’s excellent financial health and improved fourth-quarter earnings bode well for the future, said Robert B. McKnight Jr., chairman and chief executive officer.

The company reported a profit of $371,000, or 5 cents a share, on sales of $89.3 million for the fiscal year ended Oct. 31. For the previous 12 months, the company posted earnings of $6.4 million, or $1.02 a share, on sales of $97.1 million.

Quiksilver’s fourth-quarter earnings were more impressive. Profit for the latest three months was $139,000, or 2 cents a share, on sales of $20.5 million. That performance was an improvement over the previous fourth quarter’s barely break-even profit of $24,000 on sales of $19.7 million.

The improved fourth-quarter numbers are testimony to the success of the company’s money-saving measures, McKnight said. “We’ve been cutting staff and slashing budgets,” he said, including a layoff in July of five upper managers and pay cuts for the rest.

Quiksilver began the fiscal year with optimistic expectations for the economy, McKnight said. The Persian Gulf War was over, and the company thought good times would return with the troops, he said.

The company began cutting costs as soon as it realized that those projections were wrong, he said. The cuts continued into the fourth quarter, McKnight said, when the company reduced domestic operating expenses, which were $4.8 million for the final quarter of fiscal 1991, to $4 million.

McKnight said Quiksilver will continue to suffer because of an overall slowdown in retail sales. But with $4.6 million in cash and little debt, the company is in strong financial shape, he said.

“We continue to project the economy will be tough next year and retailers will order late, (putting) pressure on manufacturers,” he said. “But we’re optimistic about the next year. We’re very strong financially. . . . There still is a very loyal customer out there for Quiksilver who is into surf, skateboarding, snow, volleyball--the colorful California lifestyle.”

John McCartney, an analyst with Branch, Cabell Co. in Richmond, Va., also is optimistic. Quiksilver was criticized in 1990 for buying its European distributor and expanding European operations, McCartney said. But foreign sales continue to improve for the company, he said.

European sales for the latest quarter increased 43%, from $5.4 million to $7.7 million.

“They’re down (domestically) because the retail market is down,” McCartney said. He predicts that the company will post earnings per share next year of 50 cents to 55 cents on sales of about $95 million. The company has an expanded network of retailers carrying its clothing, he said, creating the opportunity for improved sales.

“Three years ago, they were selling to strictly surf-wear shops,” McCartney said. “Now they’re in Dillard’s and Macy’s and Nordstrom.”

In Wednesday’s trading on the NASDAQ market, Quiksilver’s stock closed at $5.625 a share, down 50 cents.