Huntington Beach-based Quiksilver Inc. has a lot riding on its financial results due Wednesday.
Unlike past quarterly results, company watchers are less concerned with how Quiksilver did in the three months through January.
Instead, they’re looking at bigger questions about the company’s survival.
Quiksilver, which designs clothes inspired by surfing, skateboarding and snowboarding, faces a severe retail downturn and a crushing debt from 2005’s $560 million buy of French ski maker Rossignol.
The company sold money-losing Rossignol in a $50 million fire sale late last year that did little to alleviate long-term debt incurred to buy the business or short-term borrowing it did to keep Rossignol afloat before the sale.
The company had $1 billion in short- and long-term debt at the end of October. Quiksilver’s market value is off nearly 90% in the past year to $145 million at recent check.
More than results for the January quarter, “What matters much more than this is whether or not the company is able to restructure its uncommitted debt, and we would expect to get an update on this issue,” analyst Mitch Kummetz of Robert W. Baird & Co. said in a note to clients this week.
Kummetz and other company watchers have been eagerly awaiting word on Quiksilver’s efforts to rework its near-term debt.
The company said in December it is working with its lenders in Europe to refinance debt, including a $71 million credit line due in March.
Quiksilver also said it expects to strike a $20 million credit line in Australia and is working on a loan with its U.S. lenders.
In January, the company said it is on track to restructure debt by February.
“However, the company has yet to confirm anything now that February is over,” Kummetz said.
Meanwhile, speculation continues about the potential sale of Quiksilver’s DC Shoes line of skateboarding-inspired shoes and clothes.
A deal could be in the works to sell DC Shoes to pay down debt, some company watchers believe.
In January, the Business Journal and Women’s Wear Daily reported that North Carolina’s VF Corp., which owns rival skateboard shoemaker Vans Inc. in Cypress, could be looking at DC Shoes.
A sale of DC Shoes would speak to Quiksilver’s plight: The company would be reluctantly parting with a brand that made up 20% of sales and that “led the pace” in the October quarter, Chief Financial Officer Joe Scirocco said in a December conference call with analysts.
As for results for the January quarter, analysts on average expect Quiksilver to lose $12.7 million, versus a profit of $7.6 million a year earlier.
Sales are seen coming in at $435.7 million, down 12% from a year earlier.
