Shares of Huntington Beach-based Quiksilver Inc. were down nearly 18% at the close of trading Friday, a day after the clothing maker surprised Wall Street with a projected loss for the current quarter.
The maker of clothes inspired by surfing, skateboarding and snowboarding has a market value of about $300 million.
For the three months through October, Quiksilver forecast a loss “in the mid single digits” per share.
At five cents a share, Quiksilver’s forecast would be a $6.2 million loss for the quarter.
Analysts had been looking for an adjusted profit of $12 million for the current quarter.
Higher costs after reworking debt and the industry’s ongoing slump are seen driving the loss.
“Longer term visibility into revenues and earnings remains limited due to global economic conditions,” Quiksilver said.
The company said it expects to see a sales percentage decline in the “mid teens” from a year earlier.
At a 15% decline, Quiksilver’s forecast would be for sales of about $525 million.
Analysts had been projecting sales of $546 million for the quarter.
That dashed hopes for a revival at Quiksilver, which has been struggling with debt and slumping sales for the past year or so.
Quiksilver is trying to crawl back from 2005’s $560 million, ill-fated buy of French ski maker Rossignol.
The company sold the business late last year for about $50 million and has spent much of this year reworking debt left behind from Rossignol.
In June, Quiksilver said France’s Rh & #244;ne Group was lending it about $150 million over five years.
The deal includes $25.6 million in warrants that allow Rh & #244;ne to buy about 20% of Quiksilver’s shares.
The company said Thursday efforts to rework its European debt remain on track to wrap up in September.
Higher interest payments related to the company’s prior debt reworking are a big factor in its projected loss for the current quarter.
A loan and line of credit that finalized in July is expected to result in interest expense of $21 million for the quarter, up from $13 million in the prior quarter.
Quiksilver “seems to be getting the financial side of its business in order, although its financial situation is far from ideal,” Mitch Kummetz of Robert W. Baird & Co. said in a research note.
Meanwhile, Quiksilver’s business doesn’t appear to pulling out of an epic downturn that’s the worst for clothing makers and retailers in recent memory.
For the current quarter, sales in the Americas, Quiksilver’s largest market, are expected to be down 20% from a year earlier.
The poor outlook came after Quiksilver reported results for the three months through July.
Quiksilver met expectations for the recently ended quarter with a $3.7 million operating profit. Sales of $501.4 million surpassed the consensus Wall Street forecast of $480 million.
Sales were off 11% before factoring in currency exchange rates and down 5% after.
