Quiksilver Lowers ’06 Forecast

Shares of surf wear company Quiksilver Inc. fell as much as 18% on Wednesday, their biggest decline in about four years, after the company forecast lower fiscal 2006 profit than analysts expected.

Earnings per share in 2006 will be 87 cents to 88 cents a share on revenue of $2.25 billion to $2.27 billion, the Huntington Beach-based company said in a statement Tuesday. The average estimate of analysts surveyed by Thomson Financial was 98 cents.

Quiksilver said it was moderating its 2006 forecast after a faster-than-expected integration of winter sports equipment maker Skis Rossignol of France. Quiksilver also cited the effects of a stronger dollar and a higher-than-expected interest expense.

The company is losing market share to Abercrombie & Fitch Co.’s Hollister Co. stores, said analyst Ivan Feinseth of Matrix USA in New York.

“The problem is their return on capital has been turning negative and continues to decline,” said Feinseth, managing director and director of research for Matrix, which does not hold shares of Quiksilver. “They’re losing share to Hollister as Hollister opens more and more stores.” He added that “the valuation is still somewhat high.”

Quiksilver shares fell to $10.71, a 52-week low, before rallying to close at $11.25, down $1.75. Trading volume was 9 million shares, about nine times the three-month daily average. Before Wednesday, the shares had fallen 13% this year.

A company spokeswoman and executives didn’t return calls for comment.

Quiksilver reaffirmed that earnings for fiscal 2005, ending Oct. 31, would be 86 cents to 87 cents a share, compared with 68 cents a year earlier. Revenue is expected to be $1.73 billion to $1.74 billion.

Quiksilver said it would report full fourth-quarter and fiscal 2005 results Dec. 15.