Quiksilver’s Rating Cut
B.Riley & Co. forecast that sales will be weak for the Back-to-School season, and an analyst for the Los Angeles–based financial-services company cut his rating for Quiksilver Inc. from “buy” to “neutral.”
“Without mincing words, the environment for apparel retailing in the youth segment fell off a cliff in July,” B. Riley’s Jeff Van Sinderen wrote in an Aug. 12 research note. He also noted that there’s been a lack of compelling merchandise and much of Quiksilver’s product is on discount rather than full-price, which could cut into the company’s profits. Van Sinderen said that Quiksilver’s core brands—Roxy, DC and Quiksilver—continue to hold “tremendous value.”
The Back-to-School season also was forecast to decline by a National Retail Federation survey that was released on July 18. Families with school-age children will spend an average of $634.78 on apparel, shoes and supplies, compared with $688.62 spent on Back-to-School in 2012.
Quiksilver’s stock price declined 1.41 percent to $5.61 per share on the New York Stock Exchange a day after its B.Riley rating had been cut.
B.Riley’s downgrade arrived a couple of months after an ambitious profit-improvement plan was announced by Andy Mooney, Quiksilver’s president and chief executive officer, who was hired in January. He believes that the plan will increase profits by improving the company’s supply chain, boosting e-commerce efforts and making the brand more prominent in emerging markets. Mooney said the plan will bear fruit in 2016 and possibly save Quiksilver $150 million.