QUIKSILVER'S PROFIT UP, REWORKS CREDIT LINE 04.09.10
Quiksilver Inc. (USA) reported a quarterly profit that topped Wall Street’s expectations and said it had reworked a line of credit with a lower interest rate. Quiksilver reported a profit of US$12.5 million before charges for the three months through July. That was up from a profit of $3.7 million a year earlier. Analysts were looking for a profit of $3.7 million. Including restructuring and other charges, Quiksilver reported a profit of $7.8 million. Sales were $441.5 million, down 12% from a year earlier and shy of the $442.9 expected by Wall Street. Asia/Pacific net revenues decreased 1% to $54.5 million in the third quarter of fiscal 2010 from $55.1 million in the third quarter of fiscal 2009. In constant currency, Asia/Pacific segment net revenues decreased 10% compared to the prior year.
"We're very pleased to again deliver financial results that exceeded our prior expectations. Our team executed well in an economic environment that continues to present significant challenges around the world. We're also delighted to report substantial continued improvement to our capital structure, especially after completing the debt-for-equity exchange with Rhone in early August," said Robert B. McKnight, Jr., Chairman of the Board, Chief Executive Officer and President of Quiksilver, Inc.
Quiksilver continues to dig out of a hole it created for itself with 2005’s ill-fated buy of French ski maker Rossignol. Quiksilver bought money-losing Rossignol for $560 million and sold it in a 2008 fire sale for $50 million. Lingering debt from the deal coupled with the downturn nearly sunk Quiksilver last year. The company took another step away from the wreckage having reworked terms of a $150 million credit line with Bank of America Merrill Lynch and General Electric Co.’s GE Capital. The interest rate on the credit line was cut by about 150 basis points. Commitment fees to keep the unused line of credit open were cut by 50 basis points.
The reworking came after a debt-for-stock swap by Quiksilver. In August, Quiksilver exchanged shares for $140 million in debt in a move that bolstered the company’s once crippling balance sheet. Quiksilver exchanged approximately 31.1 million shares of Quiksilver common stock priced at $4.50 per share giving Rhone roughly 35% on its board of directors. The debt stems from a deal struck with Rhone last year that helped Quiksilver get a U.S. line of credit and consolidate its European debt. However, the deal has come at a price—Rhone now owns nearly a third of Quiksilver, up from 16% before the stock-for-debt swap. Quiksilver still carries $843 million in total debt, however it had approximately $167 million of availability under its credit lines in addition to approximately $156 million of unrestricted cash at the end of the third quarter.
Net revenues in the Americas decreased 9% during the third quarter of fiscal 2010 to $234.6 million from $256.8 million in the third quarter of fiscal 2009. As measured in U.S. dollars and reported in the financial statements, European net revenues decreased 20% during the third quarter of fiscal 2010 to $151.7 million from $189.0 million in the third quarter of fiscal 2009. In constant currency, European segment net revenues decreased 11% compared to the prior year.
Consolidated inventories decreased 19% to $270.9 million at July 31, 2010 from $334.2 million at July 31, 2009. Consolidated trade accounts receivable decreased 20% to $340.9 million at July 31, 2010 from $424.2 million at July 31, 2009.
Addressing its outlook for continuing operations, Quiksilver stated that based on current trends, 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 generate earnings per share on a diluted basis in the mid-single-digit cents range.
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ZUMIEZ INC. REPORTS AUGUST 2010 SALES RESULTS 02.09.10
Zumiez, one of action sports brands leading US retailers says its total net sales for the four-week period ended August 28, 2010 increased 14.9% to $59.4 million, compared to $51.7 million for the four-week period ended August 29, 2009. Zumiez, which has over 300 stores across the US vied briefly with Billabong in July to acquire West 49. The Company's comparable store sales increased 9.1% for the four-week period, versus a comparable store sales decrease of 12.1% in the year ago period. It’s a good sign for recovery in the ailing US market.
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ON THE MOVE - AUGUST 30.08.10
O’Neill South Pacific has moved to a new bigger site in Brookvale, NSW. According to GM Michael Heath, the company has outgrown its old space and O’Neill is investing in additional resources (both people and warehousing facilities) as part of a 5-year growth plan. The Sydney office will now be the regional office for O’Neill in the Asia Pacific, housing both its domestic (Australian) team and also an International team whose role will be to build the O’Neill brand further within the APAC region. The new facility will provide additional showroom space designed to showcase O’Neill’s expanded apparel, accessory, wetsuit and outerwear product ranges, along with new categories like eyewear and audio. The Brookvale location will provide state of the art communication and multi-media facilities. A grand opening is scheduled - according to Heath “We’ll be celebrating the opening of the new site in style with our key customers and the industry soon.”
Billabong Rings the Changes
Billabong has offered some staff redundancies or new positions as the company moves to restructure its business. This follows a string of international and national acquisitions. "We are currently working on the restructuring of some departments, including product design and development," said a Billabong spokesman. "This, in particular, is a response to a reduction in range sizes as retailers increase their buying focus on our more heavily marketed styles. At the same time we are growing other areas of our business, as has been foreshadowed with some recent acquisitions including the purchase of a neighbouring property, and this will result in an overall increase in staffing levels." Earlier this year, Burleigh Heads based Billabong International bought the neighbouring property owned by Cult Industries for $10.6 million. The long-term plan is to join it to its current headquarters, increasing its footprint on the Gold Coast.
Oakley South Pacific appoints Beau Emerton
World Championship Tour veteran Beau Emerton has joined Oakley and will be responsible for surf, skate, MX and wake sports marketing. Beau comes to Oakley after three years’ experience at Red Bull and will be based in Oakley's Queensland office. "I'm really excited to be employed by one of my original sponsors and I'm looking forward to helping guide the careers of Oakley's riders." said Emerton.
Turf N Surf
Sydney based Turf N Surf (distributors of Sanuk, Ando and Brixton) has employed Rebecca Johnston head of marketing (formerly from Woolworths) and Matt Paull as assistant brand manager (formerly from Tracks and Waves).
Unit Announces New Global Sales Manager [photo]
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GLOBE RESULTS FY09-10. CASHED UP, PROFIT UP, REVENUE DOWN 26.08.10
Globe International Limited (GLB) today announced a net profit after tax (NPAT) of $1.3 million for the financial year ended 30 June 2010. This result, while modest, is a significant improvement compared to the loss of $8.9 million reported for the year ended 30 June 2009 (the prior year). But the real highlight today was the news the group has cash of $14.9m and no debt, compared to $11.3m net cash at the end of the prior year.
Total revenues for the year were $91.7 million, 22% below the $117.6 million reported in the prior year. Like other brands operating in this space, Globe’s decline in revenues was predominantly due to the impacts of foreign currency translation. In constant currency terms, net sales were 9% below the prior year, excluding the impact of the discontinuation of the Australian retail business (PSC). This represents a reduction in the rate of decline, compared to the 14% decline in constant currency terms reported as at the end of the prior year.
Despite the reduction in total revenues, the Group generated $5.5 million of earnings before interest, tax, depreciation and amortisation (EBITDA), compared to a loss of $4.5 million in the prior year. This $10 million turn-around in profitability is directly attributable to the restructuring undertaken during 2009 and the refined approach to working capital management and on-going cost control at all levels within the business. On a regional basis, all operating segments reported a significant improvement in profitability compared to the prior year.
The strength of the Group’s financial position continued to improve, with $6.0m cash generated from operations during the financial year. As at the end of the financial year, the Group had cash of $14.9m and no debt, compared to $11.3m net cash at the end of the prior year.
Directors declared a fully-franked final ordinary dividend of 5.0 cents per share. Globe International Limited Chief Executive Officer, Matt Hill, said that the performance was in line with expectations.
“We are pleased with this result and the turn-around in underlying performance that has been delivered, particularly given that this has been achieved in the midst of such challenging global economic conditions.
“This performance reflects the benefits of our restructuring and cost rationalisation, and we now have a sustainable global cost base that generates positive cash flows from earnings at current revenue levels. It is pleasing that as a direct result of this Globe is now in a position to pay a dividend to shareholders,” said Matt Hill.
“The past financial year has provided the stabilised base from which Globe can now focus its resources on developing its brands and revenue growth strategies. However, we expect that conditions in FY11 will continue to be volatile and, as such, revenue growth is difficult to predict.”
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WEST 49 SHAREHOLDERS AGREE ON BILLABONG 26.08.10
Shareholders of West 49 have approved the sale of the company to Billabong International, which faced a brief contest to acquire the Canadian retailer in July by one of its major US retailers in the USA - Zumiez. Shareholders of West 49 voted nearly unanimously for Billabong’s $93 million buyout. The deal is set to close later this month or in early September.
West 49, based near Toronto, runs a chain of 138 mall stores in Canada and is said to be Billabong’s second largest customer in North America including Canada. Billabong vied briefly with Zumiez Inc. to buy West 49. However, Zumiez, dropped its bid for West 49 in July after it failed to reach agreement with the company on a review of its books. The deal stands to more than double Billabong’s North American stores to 230.
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RUSTY INVESTOR HAS CASE THROWN OUT 25.08.10
A Perth barrister behind a $2.7 million lawsuit against the directors of Rusty has had his case dismissed. Philip George Clifford will also have to pay his opponents' legal costs after Federal Court Justice Michael Barker found neither Rod Hart nor Geoffrey Backshall had duped Mr Clifford into buying shares in Vegas Enterprises in late 2006. Mr Clifford - a barrister who worked on the highly publicised Rothwells conspiracy trial in the 1990s - had accused the pair in his 2009 claim of deceiving him about the financial status of the company when they invited him to become a substantial shareholder. Justice Barker handed down his decision this afternoon after hearing Mr Clifford's case in March and April this year. Outside court, Mr Backshall said he was "stoked" to be able to put the case behind the company.The claims had been an unwanted distraction. Mr Clifford did not appear in court for the verdict. His lawyer, Alan Rumsley, said he and his client would examine the 113-page judgment before deciding whether to appeal against the decision.
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