Updated: Quiksilver CEO Pierre Agnes commented to SES about the Moody’s downgrade this morning.
Credit rating agency Moody’s downgraded Quiksilver’s corporate rating and the rating on a portion of the company’s debt yesterday following the company’s second quarter earnings last week.
Quiksilver’s stock is down 8% in trading this morning to 69 cents.
While Moody’s cut the rating, the report said the rating outlook is stable because current balance sheet cash and revolver availability should be sufficient to support cash needs over the next 12 months.
Quiksilver’s new leadership team pulled the previous earnings guidance last week due to operational execution issues that are hurting results. A change in currency rates, in particular the strengthening of the U.S. dollar against the Euro, is also shaving millions off the top line.
Read Moody’s report on the downgrade here.
Quiksilver CEO Pierre Agnes provided the following comments to SES via email that provides some perspective from the new management team’s point of view:
“As you know, Greg Healy and I have only had the lead of Quiksilver for two months now.
“And this week, we’ve had to announce that the profit improvement communicated by previous management for the back half of the year in North America will not happen. Moody’s downgrade followed this announcement.
“However, the new management team and all Quiksilver employees around the globe, particularly in North America, are now fully committed. We’ve already started to fix the problems that we have identified are confident we can expect good results in the short term.
“There are strong signals: the Fall order book is up for North America, Spring Summer 15 sell-through in Europe is up from last year and we have increasing reorders and less returns and markdowns. Finally, Spring Summer 16 products are well received by our customers.
“Quiksilver has experienced 2 very tough years. Going through the pains of globalization (from 3 regions to 1) and the SAP implementation caused many issues.
“Mistakes were obviously made, but we have worked hard to stabilize our organization and our processes, and we are now on track to deliver and grow in 2016.”
