Ski and surf retailer Quiksilver (NYSE:ZQK) will report second-quarter 2007 financial results on Thursday, June 7. Will it navigate through the trees, or run headlong into another stand?

What analysts say:

  • Buy, sell, or waffle? Seventeen analysts still cover Quiksilver with opinions moderating only slightly: 10 say hold now, six rate it a buy, and one thinks investors ought to get off the slopes with a sell.
  • Revenues. Sales are expected to catch a wave, rising 11% to $574 million.
  • Earnings. Earnings, however, are predicted to turn to a loss of $0.04 per share, down from the profit of $0.03 per share recorded last year.

What management says:
Chairman and CEO Robert McKnight knows Quiksilver is in for a tough time. Last quarter when it had to take a powder on its earnings results, he downplayed the prospects for the rest of the year as well. "We are experiencing poor reorders, heavy markdowns, and a significant reduction in the order book for next season and the effects of that can be expected to continue throughout the year." But that's just for the winter gear. Its eponymous brand, along with Roxy and DC, all of which account for some 73% of revenues, are still popular and selling well.

What management does:
While there are still plenty of opportunities for growth, one has to wonder just how bad things are getting at Quiksilver. Its CFO and COO resigned, and back in April it issued a one-sentence press release stating that one of its board members resigned. Laurent Boix-Vives was a close, personal friend of Quiksilver president Bernard Mariette and had been the board chairman of Rossignol at the time of its sale to the clothing retailer for $320 million. The golf industry has also been finding itself in the rut lately and Quiksilver's Cleveland Golf chain is looking for a mulligan.

Margin

01/06

04/06

07/06

10/06

01/07

Gross

45.7%

45.7%

45.9%

45.8%

46.0%

Operating

10.1%

8.3%

6.9%

8.7%

7.8%

Net

5.6%

3.9%

2.8%

3.9%

3.2%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Following the disappointing earnings report last quarter and the resulting sell-off, I thought the stock looked like a good buy. It has rebounded nearly 30% since those lows. Now it will need to show financial performance to justify the higher price.

Quiksilver has had a rougher time than competitors like K2 (NYSE:KTO), despite similar international profiles, though the latter is being acquired by Jarden (NYSE:JAH).

The Roxy brand remains as popular as ever and should continue to provide growth opportunities, as should DC. The Rossignol acquisition will continue to drag down performance, though, since the warm winter dried up sales, sales that the cold snap in April probably wouldn't help since the season was all but over. With the stock's price recovered, it's probably prudent to wait to see whether sales performance can measure up.

Related Foolishness:

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Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.