Can Quiksilver Earnings Surf Past Zumiez and Pacific Sunwear?

Quiksilver (NYSE: ZQK  ) will release its quarterly report on Thursday, and investors have been impressed with the surf-apparel retailer's recent performance. As the vital holiday season enters full swing, though, will Quiksilver be able to sustain its momentum against Zumiez (NASDAQ: ZUMZ  ) and Pacific Sunwear (NASDAQ: PSUN  ) and keep its share price climbing higher?

Quiksilver faces an ultracompetitive environment, having to keep up with the fickle fashion trends of younger shoppers while remaining true to its core values in order to retain its base of loyal long-term customers. In addition to fellow specialists like Zumiez and Pacific Sunwear, Quiksilver also faces competition from opportunistic retailers looking to take advantage of hot trends without making long-term commitments to them. That raises the question of how Quiksilver can take its past success and carry it into the future. Let's take an early look at what's been happening with Quiksilver over the past quarter and what we're likely to see in its report.

Stats on Quiksilver

Analyst EPS Estimate

$0.04

Change From Year-Ago EPS

(43%)

Revenue Estimate

$516.19 million

Change From Year-Ago Revenue

(7.7%)

Earnings Beats in Past 4 Quarters

1

Source: Yahoo! Finance.

Can Quiksilver earnings keep up their positive momentum?
In recent months, analysts have gotten more cautious about Quiksilver earnings, cutting their estimates for the quarter ended in October by $0.02 per share and pulling back on their full-year fiscal 2014 projections by a penny per share. Still, the stock has soared more than 50% since early September.

Quiksilver dazzled investors early in the quarter, crushing earnings estimates even as revenue fell 3% from the year-ago quarter. Improving conditions in Europe and Asia helped pave the way, while refinancing the company's extensive debt to reduce interest expenses and other cost-cutting measures helped bolster margins and put Quiksilver on more stable financial footing.

But over the longer run, Quiksilver and its competitors have had a much harder time producing growth. Pacific Sunwear has had to push its demographic focus up in age in order to capture more customers, and it has boosted name-brand merchandise from Vans and other well-known manufacturers to increase shopper interest. Zumiez saw relatively strong results earlier in the year, but its quarterly report last week showed a year-over-year decline in net income even as comparable-store sales rose 1.5% for the quarter ended in October.

Quiksilver has sought to take advantage of other distribution channels to bolster growth. In addition to its own network of stores, Quiksilver has used partnerships with Tilly's, as well as department-store chains, to get its teen activewear in front of more customers. Yet Tilly's also plunged recently, with weak traffic and comp declines pointing to a potentially tough holiday season for the retailer, and by extension its suppliers.

In the Quiksilver earnings report, see if the retailer is able to boost performance from its own stores as well as eking more sales from distribution partnerships. If the company can't duplicate its positive surprise from September, then shares could tumble quickly from their current lofty heights.

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 11, 2013, at 9:13 AM, djcard1 wrote:

    Hey Buddy, Quiksilver does not compete with Zumiez or Pac Sun. Both retailers actually sell Quiksilver who is a manufacturer. Terrible.

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