Quiksilver Management Discusses Q2 2012 Results - Earnings Call Transcript

Let me turn now to the high level financial highlights for the second quarter. Revenues in Q2 were up 5% when compared to last year in constant currency reflecting that we have broad appeal for all 3 of our brands, Quiksilver, Roxy and DC, solid growth in our emerging markets, revenue growth and positive comparable store sales in each of our geographic regions and continued strong growth in our e-commerce channel.

Gross margins declined to 49.2% of sales. Our 2012 internal plan anticipated a number of headwinds that would adversely impact our Q2 year-over-year gross margin comparison. Our actual margins were, however, somewhat below our plan. SG&A of $224 million was up approximately $7 million compared to the second quarter a year ago. The resulting pro forma adjusted EBITDA in the second quarter was $39 million, which, as we anticipated, was well below last year's second quarter results.

Rich will take you through a more detailed look at our financial performance in a few moments. But first, I'd like to provide a brief update on our 3 flagship brands. Let's start with Quiksilver.

Revenues in Q2 for the Quiksilver brand grew 4% compared to the same quarter a year ago in constant currency. This growth was fueled by strong sales of warmer weather goods including boardshorts, Amphibians, walk shorts, hats and tank tops as temperatures began to rise in connection with the arrival of spring. During the quarter, we stepped up our collaborations with a major North American sports links, product for additional NFL teams, shipped into wholesale marketplace, and sell-through was exceptionally strong in tourist destinations. NBA boardshorts will follow with some teams introduced this summer and a deal with the NHL has been recently signed, and Canadian NHL team boardshorts will be shipped in Canada this fall. We're also expanding the program into Australian football leagues. These collaborations allow Quiksilver to reach new customers, new accounts and new channels of distribution while delivering authentic products that are designed using already existing resources.

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