Quiksilver Unable to Shake Doldrums as Stock Falls Again
Quiksilver Inc.’s shares headed lower Monday, extending a two-week slump amid investor jitters over sluggish sales at surf shops and unfavorable foreign currency rates.
The Huntington Beach sportswear company’s stock fell $3 a share to $21.80 on the New York Stock Exchange and is off nearly 23% since shares hit a three-month high of $28.20 on May 22.
Gloomy weather and a slowing economy have conspired to drag down the sale of surfwear--along with retail sales in general, analysts say. In California, the much-despised “June Gloom” arrived early this year and has been a bona fide bummer for coastal surf shops.
“A weekend with sunshine is going to be twice as good as a weekend without,” said Nick Thomas, a salesman at Laguna Surf & Sport in Laguna Beach. Although surfers are tuned more to waves than rays, tourists like a little sunshine to accompany their spending, he said. The overcast weather “definitely affects business strongly.”
Indeed, Pacific Sunwear of California Inc., which carries the Quiksilver brand, noted recently that cool spring weather had depressed first-quarter results. On Monday, the Anaheim retailer’s stock dropped $2.18 to $21.64 in Nasdaq trading.
Quiksilver executives could not be reached for comment.
Analysts say the popularity of surfwear may have peaked last year and is being elbowed out of the spotlight by edgier skateboard apparel. Most surfwear companies softened the blow by backing off Hawaiian shirts and adding more skateboard apparel.
Quiksilver, whose products range from snow boots to toddlers’ board shorts, last year bought Hawk Clothing, a company founded by skateboard champion Tony Hawk.
Quiksilver also has continued to reap strong sales from its hot Roxy girls’ brand. That’s the company’s “saving grace,” said Mitchel Kummetz, an analyst with A.G. Edwards & Sons.
“Right now the wannabe girl is still very into surf apparel and she’s very into Roxy.”
The company’s stronger emphasis on denim--the closest thing to a must-have item this year--should also help sales in the important back-to-school season, he said.
Quiksilver is scheduled to release its second-quarter results Wednesday after the market closes, and should meet or beat analysts’ expectations, said David Campbell, an analysts with Merrill Lynch Global Securities.
The weakness of the French franc also has been a problem for Quiksilver, which pulls about 35% of its sales from Europe. When measured in francs, European net sales jumped 32% in the first quarter, but when measured in dollars, the sales increase totaled 16%.
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Crested?
Shares of surfwear designer Quiksilver tumbled Monday on worries about near-term sales trends.
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Quiksilver shares, monthly closes and latest on the NYSE
Monday: $21.80, down $3
Source: Bloomberg News
