Quiksilver Net Up in Q4, Down in ’06

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NEW YORK – Quiksilver Inc. cruised to a hefty increased in fourth-quarter profits as its Rossignol acquisition paid dividends, but earnings were down for the year.

Additionally, the company said that Heidi Ueberroth, president of global marketing partnerships and international business operations for the National Basketball Association, had joined the firm’s board of directors.

Net income for the three months ended Oct. 31 skyrocketed 94.5% to $65.3 million, or 51 cents a diluted share, matching analysts’ consensus estimate. In the year-ago quarter, earnings were $33.6 million, or 27 cents.

Revenues rose 22.1% to $778.4 million from $637.4 million in the 2005 quarter. Rossignol was acquired on July 31, 2005, the end of Quiksilver’s third quarter, so the fourth-quarter figures are the first Quiksilver has released in which the ski brand’s results have been comparable.

Gross margin trended down slightly in the quarter – to 44.9% of sales from 45.1% a year ago – as cost of goods sold accelerated more quickly than sales, rising 22.4% to $428.6 million.

In the quarter, Quiksilver enjoyed revenue improvements in all three of its geographic divisions, with sales up 28% in the Americas to $1.08 billion, ahead 43% in Europe to $1.02 billion and 19% better in Asia/Pacific at $263.2 million.

The company didn’t break down its business by brand, but Bernard Mariette, president, said in a release that its Quiksilver, Roxy, DC and Rossignol businesses “are all performing at a high level.”

He also noted that the company has high expectations for its upcoming launch of Rossignol apparel. The ski brand in 2007 celebrates its 100th anniversary, which will be marked by a series of events, marketing initiatives and special product ranges.

For the full year, earnings dropped 13.2% to $93 million, or 73 cents a diluted share, from $107.1 million, or 86 cents, on a small increase in operating income, up 1.5% to $183.9 million. Interest expense more than doubled, to $50.8 million from $22 million.

Revenues crossed the $2 billion milestone, leaping 32.6% to $2.36 billion from $1.78 billion.

Quiksilver pointed out that 2005 results included only four months of Rossignol’s operations and that the acquired business tends to lose money during the summer period, not included in prior-year results.

Robert McKnight Jr., chairman and chief executive officer of the company, commented, “As a global leader with a highly diversified business model, we expect to see growth in every region of the world, across tiers of distribution, within a range of demographic customer groups, with a variety of brands for a wide range of specific outdoor lifestyles.”

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