Shares of Costa Mesa-based clothing designer Volcom Inc. were up nearly 4% near close of trading Friday as investors looked past a tepid outlook for the current quarter and latched onto the company’s upbeat comments about retailers that bode well for later in the year.
In a call with analysts Thursday, Chief Executive Richard “Wooly” Woolcott said he’s seeing encouraging signs from store chains selling Volcom clothes.
Retailers have come to grips with what’s been the worst industry downturn in recent memory and now are looking to put clothes in their stores that attract shoppers, according to Woolcott.
But the company doesn’t expect the new thinking to show up in results before the third quarter. For the current quarter, Volcom offered an outlook that fell short of what analysts had been expecting on average.
The company foresees breaking even to losing $741,000 in the quarter. Analysts had been looking for a profit of about $1 million.
Sales are seen coming at $47 million to $50 million, versus expectations of $58.9 million.
Later back to school buying by retailers was blamed for the shortfall. But that same late buying could boost results for the third quarter.
“While the environment remains challenging, a more positive shift appears underway in that retailers have a better understanding of consumer spending trends and appropriate inventory levels are being planned,” Caris & Co. analyst Claire Gallacher wrote in a research note that was reported on by Associated Press. “We believe second quarter will be the trough in sales and margin declines at Volcom.”
The outlook came after Volcom reported first-quarter results Thursday that beat expectations.
Profits came in at $4.2 million, down 55% from a year earlier but ahead of the $3.2 million analysts were looking for.
Sales were $68.3 million, down 15% from a year earlier, but ahead of the $63.4 million analysts expected.
