Quiksilver, Inc. reported revenues fell 19.0 percent in its third quarter ended July 31, to $395.7 million. On a currency-neutral basis, sales were down 17 percent for the Quiksilver brand, 9 percent at Roxy, and 34 percent at DC Shoes. The company showed a loss of $222.2 million, or $1.29 a share, after asset impairments of $182 million to write-off the carrying value of goodwill attributable to the company's EMEA reporting segment.
"We continued to execute against the key initiatives laid out in our profit improvement plan and to drive growth in our direct to consumer channels and emerging markets," said Andy Mooney, president and chief executive officer of Quiksilver, Inc. "As we expected, revenues for the third quarter declined in our wholesale channels in North America and Europe. In addition, late product deliveries, largely the result of our transition to global demand planning, negatively impacted our sales performance and gross margin.
"We are resolving the product delivery issues and already see improved fulfillment in the Holiday season. We continued to right-size staffing, redeployed our marketing to invest more in media and point of sale, improved the quality of distribution in North America and completed a number of licensing transactions for peripheral product categories. We are encouraged by the positive feedback we have received on our Spring 2015 product lines, both for apparel and footwear."
All of the results presented below represent the company's continuing operations.
Please refer to the accompanying tables for a reconciliation of GAAP results from continuing operations to certain non-GAAP results from continuing operations, including pro-forma loss from continuing operations, pro-forma loss from continuing operations per share, adjusted EBITDA and pro-forma adjusted EBITDA, for all periods presented, net revenues in historical and constant currency, and a definition of the company's emerging markets.
Third Quarter Review:
The following comparisons refer to results of continuing operations for the third quarter of fiscal 2014 versus the third quarter of fiscal 2013.
Net revenues were $396 million compared with $488 million, and were down 19 percent, or $96 million, in constant currency.
Americas net revenues decreased 27 percent to $191 million from $261 million, and were down 26 percent in constant currency. EMEA net revenues decreased 13 percent to $143 million from $164 million, and were down 16 percent in constant currency. APAC net revenues decreased 2 percent to $62 million from $63 million, but were up 1 percent in constant currency.
Gross margin decreased to 47.8 percent from 49.1 percent. The 130 basis point decline in gross margin reflects increased discounting in the wholesale channels of certain regions, partially offset by sales growth in our higher-margin direct to consumer channels.
SG&A expense decreased $2 million to $213 million from $215 million. The decrease was driven by reduced employee compensation expenses as a result of lower severance costs.
Asset impairments totaled $183 million compared with $2 million, reflecting a non-cash charge of $182 million in the third quarter of fiscal 2014 to write-off the carrying value of goodwill attributable to the company's EMEA reporting segment.
Pro-forma Adjusted EBITDA decreased to zero from $53 million.
Net loss from continuing operations attributable to Quiksilver, Inc. was $220 million, or $1.29 per share, versus income from continuing operations of $0.2 million, or $0.00 per diluted share.
Pro-forma loss from continuing operations attributable to Quiksilver, Inc., which excludes the after-tax impact of restructuring and other special charges, non-cash asset impairments and non-cash interest charges, was $35 million, or $0.20 per share, versus pro-forma income from continuing operations of $13 million, or $0.07 per diluted share.
Q3 Net Revenue Highlights:
Net revenues from continuing operations by brand and channel for the third quarter of fiscal 2014 compared with the third quarter of fiscal 2013 were as follows.
