Quiksilver hits turbulence in sports apparel market
Surfwear retailer Quiksilver, which several years ago faced a near-death experience, has highlighted the global downturn in the sports apparel market after reporting sliding revenue and a drop in sales for two of its three flagship brands.
It comes as Quiksilver rival, Australian-based retailer Billabong, last month breached its banking covenants after issuing its second profit warning in as many months and posted a $567 million write-down.
The dour market commentary from Quiksilver doesn't auger well for Billabong and its chief executive, Launa Inman, as she works frantically to turn around the loss-making retailer amid soft sales driven by weak consumer sentiment and store closures.
At a time when the retail sector is in upheaval and possibly a protracted decline, Ms Inman is also fending off rival private equity takeover bids for Billabong with a range of US-based funds circling the group.
Investors hoping for a better 2013 could have their hopes dashed after Quiksilver provided its quarterly earnings update to the market. Quiksilver, which has more than $US2 billion in revenues against Billabong's annual revenue of $1.45 billion, reported that first-quarter net revenues were $US431 million, down 3 per cent.
The revenue decline was focused in the troubled Americas region, where revenue decreased $US17 million or 9 per cent. For the half-year to December, Billabong's sales in the Americas declined 20.1 per cent.
Quiksilver said Asia-Pacific first-quarter revenue fell 1 per cent and European revenues rose 2 per cent. Its two leading brands, Quiksilver, its male brand for surf and snow, and Roxy, its flagship brand for women, both recorded marked falls in sales and reflect the challenge facing owners of established brands in the face of fickle consumers.
Global Quiksilver brand revenues fell 7 per cent or $US13 million. Of the $US13 million shortfall, $US11 million was in the wholesale channel, and wholesale channel revenues fell roughly 10 per cent in each region. Roxy global brand revenues dropped 7 per cent or $US9 million.
Quiksilver chief financial officer Richard Shields said $US7 million of that $US9 million shortfall was in the Americas wholesale, "and most of that Roxy wholesale sales shortfall relates to the timing of clearance shipments. So we're less concerned with the Roxy brand performance in the first quarter." Revenues for its skateboarding and snowboarding DC brand increased 1 per cent or $US1 million.
Recently appointed Quiksilver boss Andrew Mooney said the company would maintain price points in Australia and not chase discounting occurring in that market.
"I think Quiksilver is kind of holding their own and on track in a very difficult economic environment, particularly in Europe, and but also in Australia and other markets," he said.