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Quiksilver’s business worse than expected

Bob McKnight, chairman and CEO
Bob McKnight, chairman and CEO of Quiksilver, Inc.
By Tiffany Montgomery
January 15, 2008 2:04 PM

It was just yesterday I wrote it seemed like the bad economic news keeps coming.


Well here's some more today. Industry leader Quiksilver said this afternoon its first quarter loss will be wider than expected. Previously, the company predicted a small loss in Q1. Now, it's forecasting a loss of 9 to 12 cents a share.


The reason: a weaker than expected retail environment and a weak winter hardgoods market.


Here's words you hate to hear. The company said it is taking action to "reduce expenses" and discretionary capital spending.


However, executives also said they are looking to sell more of its hardgoods business, which has severely impacted results lately.


Here's the release:


HUNTINGTON BEACH, Calif.--(BUSINESS WIRE)--Quiksilver, Inc. (NYSE: ZQK - News) today announced that it has revised its expectations for the first fiscal quarter, due to both softer than expected reorders for wintersports equipment and a challenging global retail environment. The Company had previously expected a small loss in the first quarter. The Company now expects a first quarter fiscal 2008 loss per share of between $0.09 and $0.12.


Robert B. McKnight, Jr., Chairman of the Board and Chief Executive Officer of Quiksilver, Inc., commented, "Our first quarter is proving to be more difficult than anticipated. The holiday season has demonstrated broad-based weakness at retail which has affected our wider business, including our company-owned stores both in the United States and in Europe. Additionally, wintersports retailers appear to be taking the opportunity brought about by good ski conditions in all major markets to clear the channel of inventory and achieve liquidity and are therefore delaying reorders. In anticipation of continuing weakness in consumer spending, we are taking incremental action to reduce expenses and discretionary capital spending, in order to maximize free cash flow and reduce debt levels."


The Company further noted that it intends to, if necessary, update its full year outlook when it reports first quarter results in March.


In addition, following the successful sale of Cleveland Golf in December 2007, the Company is reviewing alternatives with respect to its other equipment businesses, including possible sales, and has hired JPMorgan to assist with this process.


Quiksilver also announced today that the Company will be presenting at the 10th Annual ICR XChange Conference. The Quiksilver investor presentation will be webcast live at 10:05 a.m. Pacific Time on January 16, 2008. The broadcast will be hosted at www.quiksilver.com/investor.


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