THE leading surf, skate and snowboard apparel brand Quiksilver has joined rival Billabong to warn of tough trading conditions for branded clothes, especially among youth-aligned retailers, with Australia faring just as badly as the recession-hit US and Europe.
Quiksilver's chief financial officer, Joe Scirocco, said the company expected revenue for the final quarter of this year to be as much as 15 per cent lower, dragged down by adverse currency movements and weak sales in the Asia-Pacific region.
"We expect fourth quarter ... revenues to be down 15 per cent after accounting for a weaker translation rate on the euro and the marked decline in consumer demand in the Asia-Pacific region," Mr Scirocco said.
Quiksilver posted a 12 per cent fall in third-quarter revenue to $US441 million ($481 million). Revenue in the Americas - dominated by a recession and high unemployment - was down 9 per cent but there was a 10 per cent drop in the Asia-Pacific region primarily due to market weakness in Australia.
Quiksilver recorded a profit of $US8.3 million for the quarter, up from $US1.4 million last year as the company reaped benefits from a restructure and fatter margins on its weaker sales.
It has been a tough year for retailers as consumers have curtailed spending. The late onset of winter in the southern hemisphere has also helped fuel heavy discounting, promotional sales and shrinking order books for next season's stock.
Last month Billabong, which competes with Quiksilver in the youth sports market, reported sliding profits for the 2010 financial year and said early signs of a recovery in the US and Europe were being tarnished by a protracted downturn in Australia.
It said Australia was proving to be a more volatile market for sports apparel retailers than the US.
The Quiksilver chairman and chief executive, Robert McKnight, said the junior end of the sports fashion market in particular was very difficult. "Retailers continue to order cautiously and are planning their businesses conservatively," he said.
Quiksilver, which created its first boardshorts in the Victorian coastal town of Torquay more than 30 years ago and is now based in California, is hoping to capture a greater share of young people through its female action sportswear brand Roxy.
In the Americas, Quiksilver said a contraction in wholesale was being slightly offset by modest growth in retail stores.
Frequently Asked Questions about this Article…
What trading warning did Quiksilver issue to investors about the branded apparel market?
Quiksilver warned of tough trading conditions for branded surf, skate and snowboard apparel, especially among youth-aligned retailers. The company said Australia was performing as poorly as recession-hit markets in the US and Europe, and flagged weak consumer demand in the Asia‑Pacific region.
By how much did Quiksilver expect fourth-quarter revenue to fall and what were the main causes?
Quiksilver expected fourth-quarter revenue to be as much as 15% lower. Management attributed the drop to adverse currency translation (a weaker euro) and weak sales in the Asia‑Pacific region, with Australia singled out as a primary source of market weakness.
What were Quiksilver's reported third-quarter sales and regional performance?
Quiksilver posted a 12% fall in third-quarter revenue to US$441 million. Revenue in the Americas fell about 9%, while the Asia‑Pacific region declined roughly 10%, primarily because of market weakness in Australia.
How did Quiksilver record a higher profit despite weaker sales?
Quiksilver recorded a quarterly profit of US$8.3 million, up from US$1.4 million a year earlier, largely due to benefits from a company restructure and fatter margins on lower sales volumes.
What seasonal and consumer trends are affecting surf and youth sports apparel retailers?
The article notes consumers have curtailed spending, and a late onset of winter in the southern hemisphere led to heavy discounting, promotional sales and shrinking order books for next season's stock—pressures that hurt retailers' top lines and inventory planning.
How does Billabong's recent performance compare with Quiksilver's situation?
Billabong, a direct competitor in the youth sportswear market, reported sliding profits for its 2010 financial year and said early signs of recovery in the US and Europe were being tarnished by a protracted downturn in Australia—mirroring the regional weakness Quiksilver described.
What strategic focus is Quiksilver using to try to capture more young customers?
Quiksilver is aiming to capture a greater share of young people through its female action sportswear brand Roxy, using that line to broaden appeal in youth and female segments.
What metrics should everyday investors watch in future Quiksilver and Billabong updates?
Investors should monitor revenue trends (quarterly sales), regional performance in Australia and the Asia‑Pacific, currency translation impacts, profit margins and restructuring effects, retailer ordering patterns, and signs of discounting or inventory pressure—these were the key issues highlighted in the article.
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