Details From Quiksilver’s Q4 Conference Call
josh hunter
- December 18 2008
- 1,096 views
- 14 comments
This afternoon Quiksilver Inc. (ZQK) executives hosted the company’s Q4 conference call for investors. The call, which lasted about an hour, had tons of interesting takeaways. I’ll leave the heavy lifting to expert market analyst Jeff Harbaugh—he does have an MBA from The Wharton School, and more than 20 years of industry-specific experience, after all. But in the meantime, here’s some insight into the company’s overall current situation.
Q4 2008:
- Consolidated net revenues for the fourth quarter of fiscal 2008 increased 3% to $606.9 million compared to $587.3 million in the fourth quarter of fiscal 2007.
- Net revenues in the Americas increased 10% during the fourth quarter of fiscal 2008 to $306.9 million. European net revenues decreased 4% during the fourth quarter to $216.3 million and declined 6% in local currency. Asia/Pacific net revenues increased 2% to $82.6 million in the fourth quarter and increased 10% in local currency.
Fiscal 2008:
- Consolidated net revenues for the full year of fiscal 2008 increased 11% to $2.26 billion compared to $2.05 billion in fiscal 2007.
- Net revenues in the Americas for the full year of fiscal 2008 increased 7% to $1,061.4 million. European net revenues increased 16% during the full year of fiscal 2008 to $933.1 million and were up 4% in local currency. Asia/Pacific net revenues increased 9% to $265.1 million in fiscal 2008 and were up 3% in local currency.
- Consolidated inventories increased 5% to $312.1 million at October 31, 2008 from $296.2 million at October 31, 2007. Inventories grew 15% in local currency. Consolidated trade accounts receivable decreased 2% to $470.1 million at October 31, 2008 from $478.0 million at October 31, 2007. Trade accounts receivable grew 6% in local currency.
On Current Debt Issues:
- The company stated that as of October 31, 2008, it had approximately $215 million of available liquidity, including non-restricted cash and available borrowing capacity on its existing credit facilities. The company ended fiscal 2008 with $1,071 million of debt, including $11 million of debt within liabilities held for sale.
- The company is currently in discussions with its European and Asia/Pacific banks to refinance its short-term debt, including $167 million which is uncommitted, and a $72 million facility due to mature in March 2009.
- In addition, the company is negotiating a term loan to supplement its current credit availability in the US, subject to approval by its US lenders.
- The company believes that its projected cash flow from operations, together with its existing credit facilities, will be adequate to service its debt and to finance the projected capital requirements of the business. The company also believes that it can obtain additional financing needed to extend the maturities of its debt, reduce the amount of short-term uncommitted lines of credit and better position itself for the long term.
- On March 14, the company has a 55-million-Euro payment due to its creditors in Europe.
On Retail Stores/ Performance:
- The company identified 25 company-owned stores that are not profitable, and will be closing 9 of those in 2009. Quiksilver will also be looking to close the other 16 as soon as possible according to CFO Joe Scirocco.
- 21 of the stores are in the US, 12 are full-price stores, and 41-percent of those are in California, Arizona, and Florida.
Individual Brand Performance:
- DC is the leading growth brand owned by Quiksilver with double digit growth. According to Marty Samuels, President of Quiksilver Americas, DC’s business is broken up into 65% footwear and 35% apparel. There was no mention of the brand’s snow hardgoods business in the call.
- Samuels added that both Quiksilver and Roxy were both achieving low single-digit growth amidst the strong headwind of the curent economic climate.
Distribution
- According to CEO Bob McKnight, 77-percent of Quiksilver’s business is comprised of independent stores.
- Samuels later added that “quite a bit less than 15-percent” of the company’s business came from department stores.
- Quiksilver’s top 30 customers worldwide do less than 25 percent of the company’s sales.
Read The Entire Transcript From The Conference Call Right Here.
Stay tuned to Transworld Business for a much more in-depth look at Quiksilver’s performace in the next installment of Jeff Harbaugh’s Market Watch column.
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December 18th, 2008 at 9:25 pm
Why doesn’t quik take a note from a fortune 100 company like FedEx and cut salaries across the board from the CEO to the bottom. They should have been cost cutting for the last 2 years as they have been in the red and have had serious capital issues. These companies need to be more forward thinking so they don’t get themselves into these situations and more importantly their shareholders into this position. The board needs to start making more decisions and needs to hold people accountable.
December 18th, 2008 at 9:30 pm
Your right, they have a bunch of old, uneducated, cocky executives. Steve Tully? Come on!! He might be the worst executive in all of corporate america. They need to cut the fat and cut it quik. (Sorry the pun). They need to really do what is best for their shareholders and cut some fat. They should have done this a long time ago.
Hopefully VF buys them as they know how to operate. I’m surprised they haven’t been purchased as they have (quik) been behind the industry averages when it comes to SGA, Margin etc. and VF could come in and really make them more efficient and profitable. The board needs to represent the shareholders or they need to get new board members.
December 19th, 2008 at 6:41 am
See post VF cut jobs across all brands, they are triming the fat as we speak. But overall they seem to be painting a pretty rosey picture of their situation.
December 19th, 2008 at 8:11 am
Anyone can say negative things about Quiksilver….blah, blah, blah.
The thing is a lot of you who read these blogs, don’t realize that the CEO’s of Billabong, Volcom, Oneil, RipCurl, DC and more have all worked for Quiksilver at point or another in their career. So to hate on Quiksilver is just as much hating on this whole inessential industry. I don’t want to say Quiksilver is the cornerstone of this industry, but a lot of you don’t understand the long term business psychological affects if they are acquired.
I have been keeping my thumb on the blogs lately and there has been talk/rumors of Nike, VF, Redbull and Burton acquiring Quiksilver but a lot of you don’t realize it could also be Walmart, Costco, Target or even Abercrombie who are all really healthy right who can also place their bid. Now if that happens that won’t only affect Quiksilver but it wouldn’t be to long until you would see DC, Roxy, Lib, Quiksilver and other small subsidaries being sold 100% through that channel. This would have a gigantic affect on the rest of our market and lifestyle as a lifeline.
I don’t work for Quiksilver or ever have worked for them. I have been watching this brand for years though and have faith in their team. Bob has been in this since the beginning and he has been through this twice as he said yesterday. The rest of his team are A+ players when you compare them to other equal peers. So people should have confidence that they will pull through this and continue to be a leader.
If the option of them being aquired does happen, let’s all hope it will be someone or some business that doesn’t understand the sub-culture we all live in.
December 19th, 2008 at 9:23 am
target,
thats where they belong , along with mossimo, and shaun white.
I hope it happens soon, they have put themselves there. Burton would be crazy to buy that blown out company, which by the way is being sold at some of the lamest stores around. Target would be upscale to where they are now. Its either target or walmart
December 19th, 2008 at 9:40 am
I’ve seen Quiksilver sold at Marshalls! Gimme a break!
December 19th, 2008 at 10:58 am
Jack,
So toby bost, kelly gibson,paul naude etc have worked for Quik? I didn’t know that, yet I knew Wooly did.
Can you let me know which executives you speak of when you say they are superior to their peers? And what they have acheived in business, eduction, leadership? From what I can see on most of their balance sheets and income statements they have been behind their peers on nearly every financial category from SG and A expenses, Gross margin, EBITA, net income etc.
Thanks for the info,
December 19th, 2008 at 3:59 pm
Who cares who “worked” for Quiksilver. …And furthermore not many people have much respect for those “other” C.E.O’S.
Look, it’s pretty obvious that it’s all about the money for all of these guys. Just look at how Hurley sold out to nike!
You are right, they all learned from Quik. Oh, and just how did Quiksilver get their start? I wish someone would right a book that tells the truth about how most of these
older surf company’s really got their start.
Now, that said, it’s hard not to respect what Quiksilver has done for the surf industry. McKnight is a good guy and he is the REAL THING! He is smart and he actually surfs.
But, Quik has become a monster! they are out of control. Over a BILLION in debt? A surf company? Come on? Give me a break! Business is business, But debt is debt. Maybe the team is to big? Maybe the executives are paying themselves too much money? Maybe they put too many ads in the magazines? Maybe, just maybe, GREED IS THE PROBLEM!
Best Regards:
erik
December 22nd, 2008 at 12:10 pm
idealism: n.
1. The act or practice of envisioning things in an ideal form.
2. Pursuit of one’s ideals.
3. Idealized treatment of a subject in literature or art.
4. Philosophy. The theory that the object of external perception,
in itself or as perceived, consists of ideas.
January 16th, 2009 at 7:11 pm
They could change their brand to incorporate the only person keeping them alive.
Quikslater or Kellysilver, which ever one you choose if they lost him, goodnight Bob.
So how much are they spending to keep him happy? Rumor is that he has been paid with stock. if thats true he ain’t worth a fraction of what a 9 times world champ should be worth.
Time for someone to make him an offer??