Quiksilver executives said today during an earnings conference call that it didn’t need to sell assets now that has revamped its capital structure.
We’ll have more highlights and details from Quiksilver’s conference call later this afternoon.
- Second quarter revenues dipped 17 percent, or 8 percent in constant currency terms, to $494.2 million, the company reported today.
- Sales in the Americas fell 7 percent, to $230 million.
- Sales in Asia/Pacific declined by 16 percent, or rose by 14 percent in constant currency, to $52.3 million.
- Sales in Europe dropped by 26 percent, or 13 percent in constant currency, to $210.5 million.
- Meanwhile, consolidated inventories grew by 1 percent, to $307.7 million in the period.
- Receivables declined by 13 percent to $411 million at quarter end.
Here is more from the company’s announcement.
Robert B. McKnight, Jr., Chairman of the Board, Chief Executive Officer and President of Quiksilver, Inc., commented, “We are pleased to report second quarter earnings that are essentially in-line with our expectations, but the environment remains extremely challenging and we have yet to see any improvement in overall business trends.
“With customers proceeding cautiously in this uncertain market, orders for the second half are building more slowly than in past periods and we continue to look for opportunities to streamline the business and improve profitability. As such, we are targeting substantial cost reductions by the end of this fiscal year and are planning our business conservatively.”
Addressing its outlook for continuing operations, the Company stated that based on current trends, third quarter revenues are expected to be down in the mid-teens on a percentage basis compared to the same quarter a year ago and that diluted earnings per share are expected to be in the low-single-digit range. The Company indicated that longer term visibility into revenues and earnings remains limited at the present time due to global economic conditions.
In a separate press release issued today, Quiksilver announced that Rhône, an international private equity firm with offices in New York, London and Paris, committed to provide a $150 million 5-year term loan as part of a financial restructuring plan for the Company. The new term loan is expected to stabilize the Company’s liquidity position and enable the Company to refinance its existing Americas line of credit and consolidate its European debts into a new committed multi-year facility, and is expected to be funded by the end of July.
Mr. McKnight continued, “Clearly our most important message is captured in our financing press release, also issued today, in which we announced the $150 million infusion by Rhône and the update on our Americas and European refinancing efforts. We do not think of the Rhône investment as merely a loan, but as the cornerstone of Quiksilver’s financial restructuring plan. Rhône is a strong strategic partner with an international presence and extensive experience investing in globally diversified businesses across a number of sectors. Our agreement with Rhône not only provides the financial stability necessary to complete our new Americas and European financing efforts, but it also allows us to improve our global business and increase the efficiency of our worldwide operations. We are pleased to have addressed our liquidity concerns so that we can now sharpen our focus on streamlining the business and making great product within our three great brands – Quiksilver, Roxy and DC.”
