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Big Jump in Profit Puts Quiksilver on the Crest

Strong sales in Europe help push revenue up 40% and net income up 67% for Huntington Beach-based maker of beach and surf apparel.

June 06, 2003|Hanah Cho | Times Staff Writer

Showing no signs of wiping out anytime soon, Quiksilver Inc. said Thursday that its profit rose 67% in the fiscal second quarter as its beach and surf apparel continued to captivate young shoppers.

The Huntington Beach-based company -- the world's largest surfwear maker -- said net income in the quarter ended April 30 climbed to $22.6 million, or 40 cents a share, from $13.5 million, or 28 cents, in the year-ago period.

Revenue jumped 40% to $262.2 million with particularly strong European sales.

A consensus of Wall Street analysts had predicted 39 cents a share.

"The positive momentum we have experienced in the first two quarters of fiscal 2003 is encouraging," Chief Executive Robert B. McKnight Jr. said. "We believe we are well positioned to continue our success in the second half of the year."

On the heels of strong sales in the first quarter, the apparel maker completed a 2-for-1 stock split last month and raised its second-quarter earnings projections.

Quiksilver has been riding a wave of strong earnings growth since last year. Analysts say that's partly because of the variety in the company's brands, including Roxy for girls, Hawk for boys and Leilani swimwear for women.

Although surfwear has become trendy for teens and preteens, Quiksilver brands fill more than a niche market, said Jeffrey Klinefelter, an analyst with U.S. Bancorp Piper Jaffray. "Its products and brands with certain stylings appeal more and more to the masses," he said. "On top of that, there's a lot of demand for board sports-related products."

Quiksilver is hoping to increase demand worldwide. The company recently struck a deal with a Hong Kong-based apparel manufacturer to open stores and distribute products in China. By early next year, the company hopes to open five to 10 Quiksilver Boardriders Club stores in Shanghai.

Sales jumped 45% in the recent quarter in Europe; North America and South America sales were up 15%.

Fall orders increased 11% compared with the year-earlier period, the company said. Inventory grew 49% on a constant dollar basis, which Quiksilver attributed partly to a recent decision to put its men's lines on a three-season schedule instead of four.

Quiksilver shares rose 70 cents to $17.90 on the New York Stock Exchange. The stock has gained 46% in the last year. The company released earnings after the market closed.

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