Quiksilver Inc (NYSE:ZQK) might be quick on rebound
As per the United States Census Bureau, Americans are now shopping more at the country’s accessories and clothing stores. Sales have risen 3.5% to $133B in the 1st seven months of the current year. The teen retail segment has faced some rough weather and companies like Quiksilver, Inc (NYSE:ZQK) generated much lower sales in the 2013 financial year. Even dominants such as Aeropostale and American Eagle Outfitters have hit 52- week lows as a result of dipping sales for the products they sell.
A ray of hope
As far as Quiksilver, Inc (NYSE:ZQK) is concerned, investors are getting a light whiff of a potential turnaround and have started bidding higher for its shares over the last one year. The question remains about whether this company is a good bet. It is mainly a wholesale-designer of accessories and casual clothing and its target consumer base is the teen segment.
It has a product mix of hoodies, broad shorts and shirts that are inspired by the skateboarding and surfing heritage. Its wholesale operation is complemented by its network of retail stores that are largely positioned in various overseas markets. It is very closely linked with action sports such as skateboarding and surfing. It also sponsors athletes and markets sporting events despite the fact that maintaining these kind of activities costs a great deal of money.
In the 2013 financial year, the company reported dipping sales which were down by 4.7% in that period. There was also a sharp dip in the operating income. The main cause of this profitability slump has been the drop in gross margin. This has been a result of discounting that is necessary to keep the inventory moving. This is especially true in the U.S and European markets.
The main reason why investors are excited about the company’s uptick in the adjusted-profitability is its most-recent quarter. Quiksilver, Inc (NYSE:ZQK)’s management announced a profit improvement plan in May via which it will be reducing its overhead costs.