Quiksilver's Q3 profit plummets 53 percent
Quiksilver (NYSE: ZQK) said its third-quarter profit fell 53 percent as a drop in revenue offset its effort to cut costs.
For the three months that ended July 31, the company's net income was $1.4 million, or $0.01 per share, compared with $2.9 million, or $0.02 per share, a year earlier. Net income from continuing operations, excluding one-time items, was $0.03 per share.
Sales fell to $501.4 million versus $564.9 million for the same period last year.
Selling, general and administrative expenses decreased to $211.8 million from $232.1 million, and the cost of goods sold fell to $267 million from $280 million.
"The retail environment remains very challenging and we will continue to adapt our cost structure to this trend as we go forward," said CEO Robert McKnight Jr. in a statement.
The company said fourth-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 it expects to incur a loss per share on a diluted basis in the mid-single-digit range.
Also, it said the new financing with the company’s European banking partners remains on track and is expected to close before the end of September. Quiksilver previously announced that two separate transactions had closed and funded at the end of July.
With its new funding in place, Quiksilver noted that it has $147 million available under its credit lines and $117 million of unrestricted cash at the end of the third quarter.
In a client note, Baird analyst Mitch Kummetz wrote that Quiksilver "seems to be getting the financial side of its business in order," though he said its financial situation is "far from ideal." But, he added, Quiksilver continues to struggle with its operations.
"Much of this can be attributed to the environment as a whole, but the environment isn't entirely to blame for weakness in Roxy and some recent softness in DC Shoes," Kummetz wrote of the company's brands. He kept his "neutral" rating on the stock and cut his price target by $1 to $3.
Forzani swings to Q2 loss
Forzani Group (TSX: FGL) swung to a quarterly loss as a cold and wet summer bit "deeply" into the sales of warm-weather products at Canada's biggest sporting goods retailer.
Its second-quarter net loss was CDN $4.4 million (USD $4.07 million), or CDN $0.14 a share (USD $0.12), compared to a profit of CDN $1.6 million (USD $1.48 million), or CDN $0.05 a share (USD $0.04), a year earlier.
The company said results included some sales for the key back-to-school shopping period, though the majority of those revenues will be reflected in its third-quarter numbers.
For the three months ended Aug. 2, revenue increased slightly to CDN $296.5 million (USD $274.4 million) from CDN $295.6 million (USD $273.6 million) a year earlier.
"Our results were impacted by a cautious consumer and a wet and cold summer across much of Canada that cut deeply into the sale of seasonal items. We anticipate that this cautious consumer attitude will prevail for the remainder of the fiscal year," CEO Bob Sartor said in a statement.
Also, the company said it planned to consolidate its two outdoor and lifestyle banners -- Coast Mountain and Atmosphere -- under the Atmosphere name to improve efficiencies and reduce overlap.
Forzani also said it finished a technology harmonization project over the summer, which let it cut 28 jobs at its information technology group. It expects the move will trim annual expenses by CDN $3 million (USD $2.77 million).
(Conversion of Canadian dollars into U.S. dollars is for information only, is not necessarily relative to earnings, and is based on the currency rate as of Sept. 8.)
--Compiled by Wendy Geister
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