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8. QUIKSILVER INC.

Headquarters: 15202 Graham St., Huntington Beach

Employees: 9,657; 1,558 in OC

Business: clothing maker

Market value, as of April 1: $1.3 billion

Revenue for 12 months ended Jan. 31: $2.5 billion, up 14%

Loss for 12 months ended Jan. 31: $146 million, versus a profit of $77 million in the year-ago period


Year in review:

Cleaning up ski wreck Rossignol. Quiksilver spent the past year looking for ways to improve Rossignol, the ski maker it bought in 2005, and calming Wall Street’s concerns. The business has been a drag on Quiksilver, prompting widespread disenchantment among investors.

A tough snow season in late 2006 and early 2007 hit Rossignol hard.

Wall Street became especially concerned late last year after Quiksilver said it was committed to righting the brand and warned about a loss for the quarter ended January. Quiksilver’s shares took a big hit on the news.

The company since has indicated it plans to sell Rossignol (more on that below).

One bright note: the recent sale of Roger Cleveland Golf Co. to Japanese sporting goods retailer SRI Sports Ltd. for $132.5 million. Money from the sale went toward paying down debt and allowed the company to focus on its core business.

The company also saw the departure of Bernard Mariette, Quiksilver’s No. 2 and a key force behind the company’s Rossignol buy. At the time of his departure, rumors swirled that Mariette could try to acquire the struggling ski brand.


What’s ahead:

More Rossignol. Quiksilver has now said it is committed to “reduce or eliminate” its winter sports equipment business. Earlier this year, the company hired JPMorgan Chase & Co. to handle a possible sale of Rossignol.

Late last month, a report said France’s Look Cycle International, a maker of bicycling equipment, could bid for the skis business. Look Cycle’s chief executive, Dominique Bergin, told France’s Le Figaro newspaper that he’s looking at Rossignol.

Look Cycle could work with an investment fund to bid on Rossignol, according to Le Figaro.

The surfwear maker also is branching out with a clothing line aimed at twentysomething women. The line is set to be sold this summer in Nordstrom Inc. and Quiksilver’s stores.

Earnings for the three months through January also improved,thanks to strong clothing sales. For the quarter, clothes sales rose 19% to $500 million.

Investors jumped on the encouraging clothes sales and looked past Quiksilver’s slumping ski and snowboard business.

Clothes sales were “amazingly strong given the environment, a testament to the strength of the portfolio,” Brad A. Stephens, a Morgan Keegan & Co. analyst, wrote in a note to investors.

Quiksilver lost $14.9 million in the quarter, excluding results from the company’s golf gear business that was sold off last year. Analysts had expected a loss of $12.5 million.

Wall Street shook of the wider loss after the company said consensus forecasts for earnings of $73 million for 2008 and revenue of $2.6 billion “should be achievable.”


Wall Street’s Take:

Get rid of Rossignol. With a sale of Rossignol looking possible and Quiksilver committed to getting out of the business, analysts have been more upbeat on the company. Add to that strong sales excluding the Rossignol business and things are brighter for the surfwear maker. Shares are up 19% so far this year.

Brian Sozzi, a research analyst for Wall Street Strategies, said in a Seeking Alpha article that there are a couple ways to assess Quiksilver at the present time.

One of those is to “view the business excluding the Rossignol Skis operation that has been a drag on returns since the 2005 acquisition,” he wrote. “On this basis, the company performed reasonably well given the challenging consumer discretionary spending backdrop. Brands such as Quiksilver, Roxy, and DC Shoe continue to lead globally in their respective market niches.”

,

Alisha Gomez







WHO’S IN CHARGE


ROBERT MCKNIGHT


Chairman, chief executive, Quiksilver


Education:

bachelor’s in business from University of South-ern California


Career:

Founded company in 1976 with Aussie Jeff Hakman


Notable:

Is said to have a personal collection of more than 200 baseball bats signed by Major League baseball players. Expected he would join his father’s business, a trading company, after college, before the company went bankrupt.

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