Quiksilver Inc. reported its losses narrowed on a 13.7 percent decline in sales for the first quarter ended Jan. 31, but of the "revenue cut-off issue" the company cited two weeks ago as the reason for postponing the release of the results.
The company announced March 5 that it was postponing the release of the results pending an investigation by its audit committee of revenue cut-off issues discovered by its management team. On Wednesday (March 18), however, Quiksilver revealed that the investigation found no material impact on the quarter. Instead it revised revenue it reported for the first quarter of 2014 upward by $2 million.
In the more recent first quarter, sales from continuing operations were $341 million, down 13.7 percent, or 4 percent on a currency-neutral (c-n) basis from the first quarter of 2014. Net loss, on a pro-forma basis, declined to $18 million, or 11 cents per share, from $22 million, or 13 cents, a year ago.
“We are encouraged by our first quarter performance,” said Andy Mooney, chairman and chief executive officer of Quiksilver, Inc. “Revenues adjusted for currencies and licensed categories essentially stabilized in Q1, and operating expenses decreased by $20 million versus the prior year in constant currencies.
“Customer feedback on our Spring ‘15 product offering, across all brands, has been positive. Our order book for the Fall ‘15 product line continues to develop, and we are confident in our ability to generate increases going forward.”
Gross margin decreased to 49.7 percent from 50.8 percent. The 110 basis point decline in gross margin reflects higher discounting, the unfavorable impact of currency exchange rates, and higher freight and distribution costs related to the West coast ports labor dispute, partially offset by the favorable impact of higher sales mix in direct-to-consumer channels.
SG&A expense decreased $33 million to $171 million from $204 million. The decrease was primarily driven by currency exchange rates, reduced employee compensation, rent, distribution and legal expenses.
Pro-forma Adjusted EBITDA was $10 million compared with $16 million.
Net loss from continuing operations attributable to Quiksilver, Inc. was $18 million, or $0.11 per share, compared with $22 million, or $0.13 per share.
Cash and availability on credit facilities at the end of the quarter was $141 million.
Net revenues from continuing operations by region, brand, sales channel and product group for the first quarter of fiscal 2015 compared with the first quarter of fiscal 2014 were as follows.
