Quiksilver Q2 Loss Widens; Stock Plunges 30% - Update

(RTTNews) - Sports apparel and footwear retailer Quiksilver Inc. (ZQK), Monday reported a loss for the second quarter that widened from a year ago, hurt mostly by lower revenues and higher impairment charges. Loss for the quarter was more than what analysts' anticipated, while revenues also fell short of estimates. Shares of Quiksilver plunged about 32 percent in extended trading hours.

Huntington Beach, California-based Quiksilver's second-quarter loss from continuing operations widened to $53.7 million or $0.27 per share from $32.7 million or $0.20 per share last year.

Excluding one-time items, proforma loss for the quarter widened to $0.15 per share from $0.12 per share last year. On average, 10 analysts polled by Thomson Reuters expected a loss of $0.02 per share for the quarter. Analysts' estimates typically exclude special items.

Quiksilver has been facing lower sales across the U.S. and EMEA regions. To turnaround, the company has cut costs, optimized its supply chain and sold non-core assets.

Revenues for the second quarter dropped 9 percent to $408.22 million from $455.56 million last year. Analysts expected revenues of $448.60 million for the quarter.

Commenting on the results, Chief Executive Andy Mooney said, "During the second quarter, we again reduced our expense structure, increased sales in our direct to consumer channels and emerging markets, and drove improvements in gross margins. These improvements were offset by decreased net revenues in our wholesale channel, especially in the developed markets in North America and Europe."

Gross margin for the quarter increased to 48.7 percent from 45.9 percent last year, reflecting sales growth in direct to consumer channels, reduced clearance activity in the wholesale channel and benefits of licensing activities.

Asset impairments for the quarter increased to $20 million from $5 million due to a $15 million write-down of Surfdome goodwill and intangible assets.

Moving ahead, the company expects general sales trends of recent quarters to continue into the second half of 2014 with continued net revenue declines in the North America and Europe wholesale channels.

ZQK closed Monday's trading at $5.79, down $0.15 or 2.53%, on the NYSE. The stock further slipped $1.79 or 30.92% in after-hours trade.