Quiksilver, Inc. (NYSE:ZQK), today announced operating results for the second quarter and six months ended April 30, 2000.
Consolidated net sales for the second quarter of fiscal 2000 increased 10.9% to $142,139,000 as compared to fiscal 1999 second quarter consolidated net sales of $128,128,000. Consolidated net income for the second quarter of fiscal 2000 increased 16.1% to $11,309,000 or $0.49 per share on a diluted basis as compared to $9,742,000 or $0.41 per share on a diluted basis for the second quarter of fiscal 1999.
Robert B. McKnight, Jr., Chairman of the Board and Chief Executive Officer of Quiksilver, Inc., commented, “We are pleased with our performance during the quarter, particularly our solid earnings growth, which represents the 12th consecutive quarter of double digit bottom line expansion over the past four years. We also negotiated what should prove to be the most important deal in the Company’s history, namely, the letter of intent to acquire Quiksilver International Pty Ltd, the Australian owner of the worldwide trademark rights to the Quiksilver brand name. Other major highlights during the quarter included Quiksilver Europe’s acquisition of the Gotcha licensee for Europe and the successful completion of the Hawk acquisition.”
Domestic net sales during the second quarter of fiscal 2000 increased 12.6% to $93,529,000 as compared to fiscal 1999 second quarter domestic net sales of $83,093,000. As measured in French francs, European net sales increased 22.2% for those same periods. As measured in U.S. dollars and reported in the financial statements, European net sales increased 7.9% during the second quarter of fiscal 2000 to $48,610,000 as compared to fiscal 1999 second quarter European net sales of $45,035,000. (All references to shares and per share amounts reflect a three-for-two stock split effected April 23, 1999.)
The gross margin for the second quarter rose to 41.0% versus 40.8% in the year-ago quarter, while SG&A as a percentage of sales improved 70 basis points to 25.8% versus 26.5% for the same period last year. As a result, the Company’s operating margin rose during the second quarter to 14.4% from 13.6% in the comparable period of fiscal 1999.
Mr. McKnight further commented, “Despite a relatively difficult retail environment, particularly in April, we achieved positive gains across all channels of distribution and we are encouraged by solid back-to-school bookings. We also improved our operating margin by controlling expenses during the quarter.”
“On the retail front, we opened six Boardriders Clubs during the quarter and have signed an agreement to open our first company-owned mall-based Boardriders Club sometime this fall,” Mr McKnight continued. “We also entered into an agreement to open the first Hawk store in New Jersey, and construction is currently underway for a company-owned Roxy store at South Coast Plaza, in Costa Mesa, California. We continue to believe that retail not only serves to raise the profile of our brands, but will also contribute meaningfully to our profitability.”
Consolidated net sales for the first six months of fiscal 2000 increased 13.1% to $242,068,000 as compared to fiscal 1999 first six months consolidated net sales of $214,075,000. Consolidated net income for the first six months of fiscal 2000 increased 17.5% to $15,388,000 or $0.66 per share on a diluted basis as compared to $13,096,000 or $0.56 per share on a diluted basis for the first six months of fiscal 1999. Domestic net sales during the first six months of fiscal 2000 increased 15.5% to $156,179,000 as compared to fiscal 1999 first six months domestic net sales of $135,238,000. As measured in French Francs, European net sales increased 23.6% for those same periods. As measured in U.S. dollars and reported in the financial statements, European net sales increased 8.9% during the first six months of fiscal 2000 to $85,889,000 as compared to fiscal 1999 first six months European net sales of $78,837,000.
Consolidated inventories increased 0.2% to $72,360,000 at April 30, 2000 from $72,207,000 at October 31, 1999, and increased 7.8% compared to April 30, 1999. Inventory turnover increased during the quarter in comparison to the second quarter of fiscal 1999. Consolidated trade accounts receivable increased 14.0% to $122,729,000 at April 30, 2000 from $107,619,000 at October 31, 1999, and increased 21.3% compared to April 30, 1999. These increases in accounts receivable are generally consistent with the increases in net sales.
Mr. McKnight concluded, “We have made great strides over the past few years to diversify our business and create new and exciting growth vehicles to promote long-term prosperity. More importantly, we have achieved all of this while consistently growing our top and bottom line without sacrificing the integrity of our products or our brand name. In fact, we believe the Quiksilver name is stronger today than it has ever been in the past. We have truly evolved from a one-dimensional brand to a multi-dimensional, global lifestyle company. Our prospects for the future are bright, and we look forward to capitalizing on the many opportunities that lie ahead.”
Quiksilver, Inc. designs, produces and distributes clothing, accessories and related products for active-minded people and develops brands that represent a casual lifestyle – driven from a boardriding heritage. Quiksilver’s authenticity is evident in its innovative products, events and retail environments across the globe.