European economy slows, data shows

Quiksilver European revenues increased 23 percent to $284.5 million in the quarter ended April 30, with some benefit from exchange rates. Volcom's European revenue in the quarter ended March 31 reached $25.2 million, above the $21 million plan. Billabong's European revenue rose 19.6 percent in constant currency terms for the six months ended Dec. 31, 2007.

But recent economic data shows that a slowdown has started in several European countries.

A key measurement, the Purchasing Managers Index (PMI) for the Euro zone manufacturing sector contracted in June for the first time in three years, the Wall Street Journal reported.

Unemployment also increased for the second straight month in May in the Euro-zone.

Denmark technically slipped into a recession after gross domestic product contracted in the first quarter, the second consecutive quarter of contraction.

Economists believe Italy, Spain, Portugal and Ireland are most at risk of following Denmark into recession. The gross domestic product fell in Ireland and Portugal in the first quarter, and Italy just missed a second consecutive GDP contraction in the first quarter.

In the U.K., which is outside the Euro zone, the PMI fell in June to 45.8, down from 49.5 in May. A PMI reading below 50 signals a contraction in manufacturing.

The U.K. is facing falling housing prices and tightening credit conditions.

Retail data there show consumers are still spending, but appear to be switching to less-expensive food and clothing stores.

In May, U.K. retail sales rose a healthy 3.5 percent from April, the Wall Street Journal reported. Asda, a discount chain owned by Wal-Mart, reported a sales increase of 7.5 percent for the quarter ended June 15.

However, upscale British retailer Marks & Spencer, the largest clothing retailer in the U.K. which also operates high-end food stores, reported a larger than expected 5.3 percent drop in same-stores sales for the quarter ended June 28. In all stores, sales fell 0.5 percent.

Marks & Spencer CEO Stuart Rose said he expected the tough conditions to last two years.