Quiksilver’s stock price dropped 41% Tuesday, closing at $3.41.
The price has ranged from $3.13 to $9.29 in the past 52 weeks.
The decline comes a day after the company released a second quarter earnings report that came in well under expectations, especially on revenue.
The consensus of analysts was that Q2 revenue would be $448.6 million.
Quiksilver delivered revenue of $408.2 million.
Quiksilver also pushed back the timeline for its profit improvement plan, painted a grim picture of the state of its wholesale sales in North America and developed countries in Europe, and lowered its outlook for the year.
Executives also announced a major strategy change regarding the pricing of wholesale goods. SES Executive Edition members can read about the significant new philosophy on pricing in our in-depth story from the call. We also have details about what executives said about the performance of the Quiksilver, Roxy and DC brands, and future strategies.
Here are excerpts from analysts’ notes produced after the earnings call.
Mitch Kummetz, RW Baird: “Maintaining our Neutral rating. Another quarterly sales and earnings miss reflects ZQK’s continued challenges in the core North American and EMEA wholesale channels. Moreover, these challenges prompted ZQK to provide cautionary FY14 guidance and move back its profit improvement plan one year (from 2016 to 2017). Despite a significant sell-off in shares in after hours, we’re content to remain on the sidelines until more pronounced signs of improvement (particularly revenue growth) become evident.”
Andrew Burns, D.A. Davidson: “At the end of the day, the stock is back to where it was three years ago and the turnaround story has been 1-2 years delayed. Additionally, U.S. wholesale issues look more structural in nature than previously thought. I stuck with the name because I believe management is taking the right steps to fix the business and that the brands remain relevant at a global level.”
Jeff Van Sinderen, B. Riley & Co.: “We have further reduced our estimates and price target to reflect company-specific wholesale segment challenges, as well as the extreme challenges in the domestic apparel retailing environment. Our revised PT of $4.50 (previously $7.00) is based on a multiple of 10x our FY ’15 EBITDA estimate, based on projected net debt. We remain at Neutral.”
David King, Roth Capital Partners: “Results missed, highlighted by the largest core revenue drop of the last six quarters. Management guided to lower EBITDA in FY14 and pushed out its $300M target to FY17. It reiterated its FY17 revenue target even with seemingly poor visibility and noted limited potential for further cost cuts. Quiksilver announced a plan to lower wholesale prices to better compete, but we worry about its ability to preserve margins and its brand.”
