Outdoor financials: Q3 sales and profit drop for Wolverine, plus Quiksilver
Wolverine World Wide said its third-quarter profit dropped 14 percent on lower sales, restructuring charges and the stronger dollar, while the credit-rating agency Moody's Investors Service said it lowered its rating on a part of Quiksilver's debt.
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Q3 sales and profit drop for Wolverine
Wolverine World Wide (NYSE: WWW) said its third-quarter profit dropped 14 percent on lower sales, restructuring charges and the stronger dollar. Its brand portfolio includes Merrell, Chaco and Patagonia Footwear.
For the quarter ended Sept. 12, net income slid to $26.8 million, or $0.54 per share, versus $31.2 million, or $0.62 per share, a year ago. Excluding $0.08 per share in restructuring charges and $0.05 per share for the stronger dollar, profit was $0.67 per share.
Wolverine said sales were down 10 percent to $286.8 million from $318.9 million on difficult trading conditions in most major markets and the stronger dollar.
Despite the drops, company CEO Blake Krueger said in a statement he was pleased with the results amidst the challenging economic environment.
“Our key strategic objectives remain unchanged as we stay focused on growing our proven brands via greater wholesale penetration, expanding our consumer-direct initiatives and further extending into apparel and accessories,” he added.
The company cut operating expenses to $77.8 million from $82.4 million during the quarter and also decreased inventory by 5.2 percent. It noted that it expects to continue to lower its inventory through the end of the year.
The company increased its full-year adjusted profit forecast to $1.65 to $1.75 per share from a previous guidance of $1.55 to $1.73 per share. It also narrowed its annual sales outlook to a range of $1.08 billion to $1.11 billion. The company’s prior forecast was for revenue in a range of $1.07 billion to $1.12 billion.
Moody’s adjusts Quiksilver debt ratings
Credit-rating agency Moody’s Investors Service said it lowered its rating on a part of Quiksilver’s (NYSE: ZQK) debt because the company refinanced some of its European assets.
Moody’s cut Quiksilver’s senior unsecured notes rating one notch to “Caa2” from “Caa1.” Both are highly speculative ratings that indicate the notes are below investment grade or “junk bonds.” The cut stems from Quiksilver’s granting of liens over a “substantial” part of its European assets to secure $318 million in new European credit facilities.
On the flip side, Moody’s upgraded Quiksilver’s speculative grade liquidity one notch to “SGL-3 from “SGL-4” as a result of the company closing new credit facilities in Europe and other recent loans. Moddy’s said in a statement the actions have “significantly extended the company’s debt maturity profile and providing higher levels of committed longer term availability.”
–Compiled by Wendy Geister
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