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Quiksilver stock drops then bounces back (a little)

 

 

Industry Updates

Quiksilver CEO Andrew Mooney amasses 100,000 shares

Surfersvillage Global Surf News, 10 June, 2014 - Recently Quiksilver stock nosedived 40% on a terrible earnings report. But then, a day after the big drop, the shares gained 10% on rumors that Quiksilver may be bought out by VF Corporation (NYSE: VFC  ) , the parent company of brands like Wrangler, Lee Jeans, the North Face, Vans, and Timberland. Should investors consider adding Quiksilver to their portfolios on buyout rumors, or should they stick to the sidelines?

Quiksilver reported a net loss of $0.15 per share for the quarter, considerably more than Wall Street's projected loss of $0.02 per share. Sales during the quarter ended on April 30 fell by 10.5% to $408 million, versus $456 million in the same quarter during the prior year.

More disturbingly, Quiksilver saw declines in major global markets. Sales in the Americas declined 18% to $186 million, while sales in constant currency fell 16%. Sales in Europe, the Middle East, and Africa fell 2% to $162 million from $165 million, and were down 5% in constant currency. Net revenue in the Asia-Pacific region was down by 6% to $60 million, but up 3% in constant currency.

The lone bright spots for the quarter were improving sales in e-commerce and emerging markets. E-commerce sales rose by 23% versus the prior year. Quiksilver also realized strong growth in countries such as Brazil, Russia, and Mexico with 28% growth in emerging markets revenue during the quarter.

Insiders also took the opportunity to load up on more shares of Quiksilver at a discounted price after the free-fall. Quiksilver CEO Andrew Mooney has amassed 100,000 shares at $3.40 per share, while CFO Richard Shields also snapped up 100,000 shares. Insider buying is often a good sign as management could be expressing confidence in the company's prospects. Quiksilver insiders may essentially be saying, "There is no better place to pour my money into than my own company."

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