Q1 2012 Earnings Call
March 08, 2012 4:30 pm ET
Bruce Thomas - Vice President of Investor Relations
Robert B. McKnight - Co-Founder, Executive Chairman, Chief Executive Officer and President
Joseph Scirocco - Chief Financial Officer
Craig Stevenson - Chief Operating Officer and Global Brand President
Jeffrey Wallin Van Sinderen - B. Riley & Co., LLC, Research Division
Taposh Bari - Jefferies & Company, Inc., Research Division
Jennifer Black - Black & Company Inc., Research Division
Christian Buss - Crédit Suisse AG, Research Division
Diana Katz - Lazard Capital Markets LLC, Research Division
Carla Casella - JP Morgan Chase & Co, Research Division
Mitchel J. Kummetz - Robert W. Baird & Co. Incorporated, Research Division
William M. Reuter - BofA Merrill Lynch, Research Division
David E. Griffith - Roth Capital Partners, LLC, Research Division
Adam F. Engebretson - Piper Jaffray Companies, Research Division
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Thanks, operator. Good afternoon, everyone, and welcome to the Quiksilver First Quarter Fiscal 2012 Earnings Conference Call.
Our speakers today are: Bob McKnight, our Chairman, President and Chief Executive Officer; and Joe Scirocco, our Chief Financial Officer. Also joining us are Craig Stevenson, our Global Brand President and the Chief Operating Officer of Quiksilver, Inc; and Rob Colby, our Americas Region President.
Before we begin, I'd like to briefly review the company's Safe Harbor language. 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 results could differ materially from those stated or implied by these 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.
All forward-looking statements made on this call speak only as of today's date, and the company undertakes no duty to update any forward-looking statements. 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 electronic form on our website at www.quiksilverinc.com.
With that out of the way, I'd like to turn the call over to Bob McKnight.
Robert B. McKnight
Thanks, Bruce. Good afternoon, everyone, and thanks for joining us for our first quarter call today.
I'm pleased to report Q1 financial performance that exceeded our expectations when the quarter began on both top line revenues and bottom line profitability. In delivering another quarter of solid performance despite a number of challenging conditions around the world, we've again demonstrated that the diversification of our business remains a valuable asset in the pursuit of our long-term plans. Our 2012 business plan targets solid growth in each of our regions and continued growth in each of our brands. We cater to teens of both genders, and our products appeal to many age groups. We have fantastic long-term relationships with our wholesale clients while improving in our company-owned retail channel are driving strong sales comps in each of our global regions.
Our e-commerce business is rapidly growing driven by the teenagers who love our products, who live online and who are connected by the Internet and social media. And our 3 great brands, Quiksilver, Roxy and DC continue to resonate with consumers and grow in popularity. Even through the first fiscal quarter -- I'm sorry, even though the first fiscal quarter is historically our smallest seasonal quarter of the year, we're off to a good start, solid start to fiscal 2012, and we remain solidly on track to deliver our long-term plans.
Let me turn now to the high level of financial highlights from the first quarter. Revenues in the first quarter were $415 million, up 6% when compared to last year reflecting the improvements we've made to our global retail business, as well as the broad appeal for our products, all this despite the late arrival of winter in several key markets. And additionally, our e-commerce business continued its strong growth with revenues up sharply in each of our 3 regions. Gross margins declined 170 basis points to 50.7% of sales, the result of higher sourcing costs and an increase in the amount of clearance business.
The pro forma SG&A of $229 million was 90 basis points higher as a percentage of sales than the first quarter 1 year ago as we continue to invest in our long-term growth initiatives ahead of revenues. The resulting pro forma adjusted EBITDA in the first quarter was $20 million, which was better than our expectations when the quarter began.
I'd now like to take you on a brief tour of our regions providing some brand updates along the way.
Starting with the Americas. Our business continues to thrive. Sales in our owned retail stores comped up 11% in the first quarter, continuing a long string of solid same-store sales performance. Each of our brands performed well at retail, and we're especially encouraged by the continuing recovery of the Roxy brand, whose best performing categories in the first quarter were swim and sportswear. The Americas e-commerce business delivered strong performance through the holiday selling season and was up roughly 50% over last year.