Quiksilver Inc, the parent of Quiksilver, Roxy and DC Shoes, reported revenues declined 4.6 percent in its first quarter ended Jan. 31, to $393 million compared with $412 million a year ago. Revenues were down 2 percent, or $9 million, in constant currencies. It's pro-forma loss was lowered in the period, largely due to income tax benefits recognized in continuing operations related to the sale of the Mervin and Hawk businesses.
"We continued to execute our Profit Improvement Plan over the last few months," said Andy Mooney, president and CEO of Quiksilver, Inc. "During the first quarter, we further reduced our expense structure and made progress on optimizing our supply chain and laying the foundation for stabilizing and expanding revenues.
"Pro-forma adjusted EBITDA improved versus the prior year quarter, continuing the progress made in the final two quarters of last year," added Mooney. "The key drivers for the improvement were reduced selling, general and administrative expenses, along with higher Roxy brand sales and increased revenues in our direct-to-consumer channels and emerging markets. We were able to report this improvement despite decreased net revenues, which were driven by lower sales in our wholesale channel, especially in the developed markets in North America and Europe."
As previously announced, the company sold its Mervin Manufacturing and Hawk businesses, and is pursuing the divestiture of its Surfdome business. As a result, the company has reclassified the current and prior year operating results of these non-core businesses as discontinued operations. 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 the first quarter ended January 31, 2014 and 2013, net revenues in historical and constant currency, and a definition of the company's emerging markets.
Fiscal 2014 First Quarter Review:
The following comparisons refer to results of continuing operations for the first quarter of fiscal 2014 versus the first quarter of fiscal 2013.
Net revenues were $393 million compared with $412 million, and were down 2 percent, or $9 million, in constant currency.
Americas net revenues decreased 5 percent to $173 million from $183 million, and were down 3 percent in constant currency.
EMEA net revenues decreased 4 percent to $149 million from $156 million, and were down 6 percent in constant currency.
APAC net revenues decreased 4 percent to $70 million from $73 million, but were up 11 percent in constant currency.
Gross margin was consistent with the first quarter of last year at 50.9 percent. Modest improvements in gross margins in the Americas and EMEA segments were offset by increased promotional activity in the APAC segment.
SG&A expense decreased $12 million to $204 million from $216 million, primarily due to reduced employee compensation expenses, including incentive compensation, and reduced athlete and event spending.
Pro-forma Adjusted EBITDA increased to $16 million from $12 million.
Net loss from continuing operations attributable to Quiksilver, Inc. improved to $22 million, or cents 13 per share, from $32 million, or $0.19 per share, primarily attributable to income tax benefits of $10 million recognized in continuing operations related to the sale of the Mervin and Hawk businesses, which are not expected to be recurring.
Pro-forma loss from continuing operations, which excludes the after-tax impact of restructuring and other special charges and non-cash asset impairments, was $16 million, or $0.10 per share, compared with $26 million, or $0.16 per share, also largely as a result of the income tax benefits recognized in continuing operations related to the sale of the Mervin and Hawk businesses.
Fiscal 2014 Q1 Net Revenue Highlights:
Net revenues from continuing operations (in constant currency) by brand and channel for the first quarter of fiscal 2014 compared with the first quarter of fiscal 2013 were as follows.
Brands (constant currency):
Quiksilver decreased $11 million, or 6 percent, to $163 million.Roxy increased $6 million, or 5 percent, to $117 million.DC decreased $4 million, or 4 percent, to $102 million.Distribution channels (constant currency):
Wholesale revenues decreased 7 percent to $239 million.Retail revenues increased 4 percent to $131 million. Same-store sales in company-owned retail stores increased 2 percent. company-owned retail stores totaled 645 at the end of the fiscal 2014 first quarter compared with 615 at the end of the fiscal 2013 first quarter.E-commerce revenues grew 16 percent to $23 million.Emerging markets generated net revenue growth of 32 percent in constant currency.
