The stock price of Quiksilver, Inc. (NYSE:ZQK) declined more than 27% after the company reported disappointing financial results for the third quarter. The shares of the company were trading at $2:05 per share at the time of this writing, around 3:03 in the afternoon in New York.
Financial result
Quiksilver, Inc. (NYSE:ZQK) reported a net loss of $220 million or $1.29 per share in the third quarter. During the same period a year ago, the company recorded $2.1 million net income or one cent per share.
According to the company, its revenue declined by 19% or $96 million to $396 million. Its revenue in the Americas dropped 27% to $191 million, revenue in EMEA declined 13% to $143 million and revenues in APAC fell 2% to $62 million.
Quiksilver, Inc. (NYSE:ZQK) said its gross margin declined from 49.1% to 47.8% due to increased discounting in the wholesale channels of certain regions.
The company said its SG&A expense declined by $2 million to $213 million during the quarter due to reduced employee compensation expenses as a result of lower severance costs.
During the quarter, Quiksilver, Inc. (NYSE:ZQK) recorded $183 million in asset impairments compared with $2 million last year. The company explained that its current asset impairments reflected a non-cash charge of $182 million to write-off the carrying value of goodwill attributable to its EMEA reporting segment.
The pro-forma adjusted EBITDA of Quiksilver, Inc. (NYSE:ZQK) declined from $53 million to zero.
Quiksilver brands/distribution channels revenue details
According to Quiksilver, Inc. (NYSE:ZQK), the revenues of its Quicksilver brand declined 17% to $143 million, Roxy brand dropped 9% to $119 million while the DC brand went down 34% to $109 million.
The company said its revenues from Wholesale plummeted 30% to $235 million, Retail sunk 1% to $123 million and E-commerce plunged 10% to $35 million.
CEO comments
Commenting on its financial performance, Andy Moore, president and CEO of Quiksilver, Inc. (NYSE:ZQK) said, “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.”
Moore said they are resolving the product delivery issues and already saw improved fulfillment for the holiday season. He added that Quiksilver, Inc. (NYSE:ZQK) continued its initiative to right-size its staffing, and redeployed marketing to invest more in media and point of sale. The company also improved its distribution quality in North America and a completed a number of licensing agreement for peripheral product categories.
