Quiksilver, Inc. (ZQK)

ZQK 
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Industry: Consumer Non-Durables
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Quiksilver (ZQK)

Q1 2013 Earnings Call

March 07, 2013 4:30 pm ET

Executives

Robert Jaffe

Andrew P. Mooney - Chief Executive Officer, President and Director

Richard J. Shields - Chief Financial Officer and Principal Accounting Officer

Analysts

Taposh Bari - Goldman Sachs Group Inc., Research Division

Jeffrey Wallin Van Sinderen - B. Riley & Co., LLC, Research Division

Jennifer Black

Erinn E. Murphy - Piper Jaffray Companies, Research Division

Andrew Burns - D.A. Davidson & Co., Research Division

Darla Shay

Mitchel J. Kummetz - Robert W. Baird & Co. Incorporated, Research Division

David M. King - Roth Capital Partners, LLC, Research Division

Presentation

Operator

Good afternoon, ladies and gentlemen, thank you for standing by. Welcome to the Quiksilver First Quarter Fiscal 2013 Results Conference. [Operator Instructions] I would like to remind everyone that this conference is being recorded. I'd now like to introduce Robert Jaffe, Investor Relations for Quiksilver, who will host this afternoon's call. Please go ahead.

Robert Jaffe

Thank you, operator. Good afternoon, everyone, and welcome to the Quiksilver First Quarter Fiscal 2013 Earnings Conference Call. Our speakers today are Andy Mooney, President and Chief Executive Officer; and Richard Shields, Chief Financial Officer. Bob McKnight, our Executive Chairman, is here also.

Before we begin, I'd like to briefly review the company's Safe Harbor statement. Throughout our call today, items may be discussed that are not based on historical facts and are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, statements regarding Quiksilver's business outlook and future performance constitute forward-looking statements, and actual results could differ materially from those stated or implied by those forward-looking statements as a result of risks, uncertainties and other factors, including those identified in our filings with the Securities and Exchange Commission, specifically under the section titled Risk Factors in our most recent annual report on Form 10-K and in our quarterly reports on Form 10-Q.

All forward-looking statements made on this call speak only as of today's date, March 7, 2013, and the company undertakes no duty to update any forward-looking statement.

In addition, this presentation may contain references to non-GAAP financial information. A reconciliation of non-GAAP financial information to the most directly comparable GAAP financial information is included in our press release, which can be found in an electronic form on our website at www.quiksilverinc.com.

With that out of the way, I'd like to now turn the call over to Andy Mooney.

Andrew P. Mooney

Thank you, Robert, and good afternoon, everyone, and thank you for joining our call today.

But before sharing my comments, I'd first like to acknowledge Bob, who's here today. Bob has hosted more than 100 investor calls over 25-plus years, leading Quiksilver as a public company, a pretty remarkable milestone. He's done an incredible job over that time, building Quiksilver into a global company with over $2 billion in revenues. My goal, of course, is to build on that foundation, strengthen the company, grow it and continue to make it more profitable.

As this is my first conference call as CEO, I'd like to begin by sharing some initial thoughts about our company, our brand and the opportunities. Our brands, as you know, are among the most recognizable and sought-after brands in action sports. Over the last 60 days, I visited all major business units around the world, met with the global management team and held a weeklong summit with the senior leadership group to begin development of a detailed operating plan to guide the company as we move forward.

I anticipate delivering that operating plan to our Board of Directors in April. We will share highlights of the plan and related financial outlook over the next few quarters.

While we continue to develop the plan, I believe it's appropriate to share its key theme, which is focus. The 3 core strategies we consistently communicated: strengthening our brands, expanding sales and driving operational efficiency, will continue to guide our efforts. Bringing focus to our organization will accelerate progress against these 3 strategies, and we began to take steps to do just that.

We will increase our focus, energies and resources on our 3 flagship brands of Quiksilver, Roxy and DC. Within these brands, we will further focus on critical product categories. To that end, we have clarified the brand positioning and gender focus of each brand, with Quiksilver being a male brand for surf and snow; Roxy, our flagship brand for women; and DC, refocused on skateboarding and snowboarding.

We announced the closure of the VSTR brand last month and have passed the management of the Summer Teeth brand back to its owner, surfer and marquee Quiksilver athlete Dane Reynolds. At the category level, we are focusing down on priority categories within each brand and evaluating ultimate business models for peripheral product categories. And we've clarified what sports will provide the inspiration for each brand.

Over the last few weeks, we reduced the number of athletes under contract to free up resources to better promote those athletes who can best drive our brand and product messages effectively. A key athlete should be household names, known well beyond the universe of core fans.

We continued to close underperforming retail stores in the first quarter and recorded asset impairments on others.

More recently, we made significant organizational changes with these strategies keenly in mind. Specifically, we have appointed Tom Hartge as Global Head of Footwear and named Kasey Mazzone as Global Head of Supply Chain. Tom is highly regarded in the footwear world, having spent 28 years at Nike, where among his many accomplishments, he has helped lead Nike's highly successful running shoe business. Kasey brings more than 20 years of global supply chain experience across multiple product categories and distribution channels. She also brings extensive expertise gained on leadership positions at Land's End, American Eagle, GAP and Levi Strauss. These appointments are part of a larger senior management reorganization, which includes Pierre Agnes, President of Quiksilver Europe, taking on additional responsibilities as Global Head of Apparel, and the recruitment of a Chief Marketing Officer.

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