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Quiksilver Still Riding Wave of Strong Sales

The surfwear maker beats expectations and doubles its profit as teens snap up its labels.

March 07, 2003|Leslie Earnest | Times Staff Writer

Quiksilver Inc. continued riding a wave it caught last year, doubling its profit in its fiscal first quarter and beating Wall Street expectations.

The Huntington Beach-based company -- the world's largest surfwear maker -- said Thursday that net income in the quarter ended Jan. 31 was $6.6 million, or 24 cents a share, compared with $3.1 million, or 13 cents a share, in the same period the year before. Revenue was up 31% to $192.1 million with sales strong in all divisions.

A consensus of analysts surveyed by Thomson First Call had predicted that the per-share figure would be 19 cents.

"This is a great start to our year," Chief Executive Robert B. McKnight Jr. told analysts during a conference call.

With strong momentum as the spring selling season starts, and with summer orders up 15% over last year, Quiksilver raised its earnings projections for both the current quarter and full year.

It said its per-share income should be $1.86 to $1.90 in 2003 on sales of $875 million to $890 million. The company earlier had said it was shooting for $1.78 a share.

Quiksilver's strength lies, in part, in its wide range of labels, including Roxy for girls, Hawk for boys and Fidra for golfers. Surfwear is popular with teens and preteens, particularly girls who increasingly have been snapping up the extremely casual styles.

Quiksilver said it is continuing to make inroads with its new entertainment division, which helped launch the "54321" show on Fox Sports Net, a daily program devoted to action sports that began airing in January. The company also is working on an unscripted show for MTV about a group of female surfers that is expected to air this spring.

In addition, Quiksilver and HarperCollins Publishers Inc. plan to publish a series of books about a girl called Luna Bay.

Although a frigid winter in much of the country has hurt sales for many retailers, Quiksilver was somewhat weather-proofed this year because the West Coast accounts for about 51% of domestic sales.

International sales, responsible for half of revenue, have been playing an increasingly important role. In South America and North America, sales were up 14% in the quarter, while European sales jumped 38%.

Quiksilver had a strong year in 2002, with earnings 34.2% higher than in 2001, to nearly $37.6 million. Sales were up 15%. Its stock did well last year too, and at Thursday's close was up 32% from a year ago.

"What you see with Quiksilver is real consistency," said Jennifer Black, an analyst with Wells Fargo Securities. "They just consistently plug away."

Executives have reaped the benefits, according to Securities and Exchange Commission documents filed this year.

McKnight received a bonus of nearly $1.8 million last year, on top of a 20% raise that boosted his salary to $725,000. Bernard Mariette, president since December 2001, saw his salary nearly double to $500,000; his bonus was $1.3 million.

"If you like pay-for-performance, they sure have performed," said Graef Crystal, a compensation expert.

Quiksilver's stock closed Thursday at $26.26, up 48 cents, in New York Stock Exchange trading. The earnings announcement came after the market's close.

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