Tags: Quiksilver | ZQK | sportswear | stocks

Quiksilver Looks for Retail Rebound

By Constance Gustke   |   Wednesday, 03 Aug 2011 12:06 PM

This June, retail sales began to surge at national clothing chains. One bellwether fund, the SPDR S&P Retail (XRT), hit an all-time high. Skate, snow, and surf clothing retailer Quiksilver (ZQK) also notched big gains and regained much-needed momentum.

Not bad for hip Quiksilver, once bedeviled by a sluggish industry and financial woes that nearly beached it. Yet the worldwide sportswear lifestyle company, which operates 835 stores, has far outgrown its humble original vision: making the best surfboard shorts.

Quiksilver’s work isn’t done yet. Second quarter fiscal sales grew only 2 percent to $478.1 million, versus $468.3 million a year ago. Sales were strong in the United States but weak in Asia. More worrisome, Quiksilver posted a loss of 51 cents per share compared to a profit last year. The reason: asset impairment and income tax charges.

But there’s a bright side. Sales are higher for the first time in three years. Quiksilver CEO Robert McKnight Jr. added that future growth can stem from its Roxy brand, which makes girls’ sports apparel. To spur growth, Quiksilver is marketing more aggressively. The mission is to grow sales to $3 billion in the next five years. Last year, sales were $1.84 billion.

Stronger balance sheet

Analysts aren’t diving in just yet. Of the 10 analysts tracked by Thomson/First Call, one had a strong buy recommendation and two had buys, with five holds, one underperform, and one sell.

Jefferies analysts disagree with the naysayers. They have a buy rating on the stock, citing Quiksilver’s restored balance sheet, renewed strategic focus, rock-solid lifestyle brands, and strong merchandising prowess. The company next reports in early September.

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This June, retail sales began to surge at national clothing chains. One bellwether fund, the SPDR S P Retail (XRT), hit an all-time high. Skate, snow, and surf clothing retailer Quiksilver (ZQK) also notched big gains and regained much-needed momentum. Not bad for hip...
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2011-06-03
 

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