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Quiksilver Profit Increases 40%

Fiscal first-quarter sales climb 33%, and the surf wear maker boosts its earnings and revenue forecasts for the year.

March 11, 2004|Leslie Earnest | Times Staff Writer

Riding a swell that it caught almost two years ago, Quiksilver Inc. said its fiscal first-quarter profit surged 40% as young shoppers continued to snap up its surf wear and other products.

Net income rose to $9.2 million, or 16 cents a share, in the quarter ended Jan. 31, from $6.6 million, or 12 cents, a year earlier. That was a penny more than analysts expected, according to Thomson First Call.

It was the company's seventh straight quarter of earnings growth.

Sales jumped to $256.1 million from $192.1 million, an increase of 33%.

Quiksilver, based in Huntington Beach, also boosted its sales and earnings expectations for the year. The world's largest surf wear maker anticipates per-share earnings of $1.22 to $1.25 for the current fiscal year on sales of $1.1 billion. Analysts were expecting annual earnings of $1.22 per share.

In a conference call with analysts, Chief Executive Robert B. McKnight Jr. heralded the company's recent accomplishments, including the opening of its first store in mainland China and an agreement to buy Vista, Calif.-based skate shoe maker DC Shoes.

Sales are expanding along the coast and in the nation's heartland, McKnight said. Internationally, Quiksilver is further penetrating the French and British markets and sees growth potential in other parts of Europe and in Asia, he said.

What's more, orders for summer products were up, on average, a better-than-expected 8%.

"Far as I'm concerned, that tells everything," said analyst Jeffrey Klinefelter of Piper Jaffray & Co. "Business is picking up across almost every channel of distribution in apparel." Further, Quiksilver has managed to sell more goods at full price while controlling expenses.

"It's a great situation to be in," Klinefelter added.

Quiksilver, which has a stable of brands that includes Roxy, Hawk and Fidra, sells its products through a global distribution network that facilitates expansion. At the same time, the company continues improving its merchandise while keeping a tight rein on inventory, said Dorothy Lakner, an analyst with CIBC World Markets.

"All of that is very, very powerful," she said. "Here you have a brand that's accepted basically all over the world."

Analysts were hard-pressed to spot dark clouds on Quiksilver's horizon, although Lakner said investors keep asking: "Isn't surf over?"

"I think the fact that they've had so many strong quarters, in a way, answers that," she said.

Shares fell 57 cents to $20.27 on the New York Stock Exchange.

Earnings were released after the market closed.

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