Quiksilver Rides High on Wave of Demand for Surf Wear

Signaling the growing popularity of surf wear worldwide, Quiksilver Inc. said Wednesday that earnings quintupled in its fiscal fourth quarter as young shoppers snapped up its apparel, including the popular Roxy brand for girls.

In a particularly upbeat conference call with analysts, company executives said Huntington Beach-based Quiksilver has “excellent momentum” moving into 2003, with spring bookings up 16% compared with last year. The company also said it plans to open 30 stores and launch a new line of footwear for men.

“In nearly every way, this was an excellent year for our company,” Chief Executive Robert B. McKnight told analysts.

Earnings for the quarter ended Oct. 31 were $12.2 million, or 49 cents a share, compared with $2.4 million, or 10 cents a share, in the same period last year.

In a consensus, analysts had expected earnings of 43 cents a share, according to Thomson First Call.

Sales rose nearly 15% to about $195 million.

For the year, earnings rose 34.2% to nearly $37.6 million, or $1.54 a share, compared with $28 million, or $1.17, in 2001. Analysts were expecting $1.47.

For 2003, Quiksilver reiterated earlier raised earnings expectations of $1.75 to $1.79. Analysts say Quiksilver is typically conservative with its earnings predictions, leaving room to “beat the numbers,” as one of them put it.

The company said its brands sold well during the back-to-school season and the strong sales have continued into the holiday shopping season.

Quiksilver’s strong performance shows that the surfing lifestyle has become “ingrained in the masses,” said Jeffrey Klinefelter, an analyst with U.S. Bancorp Piper Jaffray.

“It’s no longer a niche,” he said. “It’s not about the surf trend that comes around every three to five years. This is about a board-sport lifestyle that is part of the culture.”

In another indicator of the mushrooming appeal of clothes that reflect the laid-back Southern California lifestyle, Anaheim-based retailer Pacific Sunwear of California Inc. -- which sells many of the brands made by local surf wear companies -- is the second most-popular specialty retailer among teens, behind New Albany, Ohio-based Abercrombie & Fitch Co., said Klinefelter, who conducted a survey of young shoppers.

Sales at PacSun stores account for about 7% of Quiksilver’s revenue.

Other surf wear companies also are reporting strong spring bookings compared with last year, said Mitch Kummetz, an analyst with Wedbush Morgan Securities.

“I think it’s across the board for that group,” he said.

Quiksilver also said it signed this year’s British Open champion, Ernie Els, to endorse its Fidra Golf apparel line in a five-year deal.

The golf brand, launched in 2000, is expected to generate sales of $5 million to $7 million next year, up from $3 million to $3.5 million this year.

Quiksilver said its new men’s shoe line will ship to stores for next year’s holiday season. It probably will have about 12 styles, the company said. Currently, Quiksilver sells only thong sandals for men but has a wider range of shoes for girls and women.

Quiksilver’s stock, which is up 59% this year, fell 59 cents Wednesday to $27.30 on the New York Stock Exchange. The earnings announcement came after the market closed.