Volcom posts Q4 2008 results, cut jobs & salaries

20 Feb '09

4 min read

Volcom Inc announced financial results for the fourth quarter ended December 31, 2008.

For the 2008 fourth quarter, total consolidated revenues were $69.6 million compared with $69.1 million in the fourth quarter of 2007. Total revenues in the company's U.S. segment, which includes revenues from the U.S., Canada, Japan and most other international territories outside of Europe, as well as the company's branded retail stores, were $54.9 million compared with $58.9 million in the prior year period. Total revenues in the company's Europe segment were $10.9 million compared with $10.2 million in the same period in 2007. Total revenues in the company's Electric segment, which Volcom acquired in January 2008, were $3.8 million.

“While the ongoing global macroeconomic turmoil affected our results for the 2008 fourth quarter and full year, the underlying strength of Volcom is well intact,” said Richard Woolcott, Volcom's chairman and chief executive officer. “In the face of this economic uncertainty, we are working to maintain a healthy balance between being aggressive when we see opportunities and pulling back where we can, including reducing our cost structure. We have a solid cash position and a strong global brand with a devout following. Further, we believe that our product line-up for 2009 is one of our best ever. We plan to approach the year with discipline, commitment and focus, and we remain confident in our ability to ride this period out and prevail as an even stronger company.”

The company noted that as part of its cost reduction measures it has recently concluded a cutback of approximately 8% of its domestic, in-house workforce, including its Electric subsidiary; announced decreased salaries throughout the company; and, implemented company-wide spending cuts.

Consolidated gross profit for the 2008 fourth quarter was $30.9 million, equal to 44.4% of total revenues, compared with $30.0 million, or 43.4% of total revenues, in the fourth quarter of 2007.

Selling, general and administrative expenses on a consolidated basis were $26.5 million in the 2008 fourth quarter versus $19.3 million in the comparable period in 2007.

The company reported a pre-tax, non-cash impairment charge on goodwill and intangible assets amounting to $16.2 million, or approximately $0.46 per share. This charge was identified in connection with the company's annual impairment test and relates to its 2008 acquisitions of Electric Visual and two Laguna Surf and Sport retail stores, which had impairment charges of $14.8 million and $1.4 million, respectively.

Additionally, the company reported a foreign exchange loss in the 2008 fourth quarter of $1.4 million, or approximately $0.04 per share, related to the strengthened U.S. dollar against the company's Canadian dollar denominated receivables.

Adjusted consolidated net income for the 2008 fourth quarter, which excludes the above-mentioned non-cash impairment charge and the foreign exchange loss on the company's Canadian dollar denominated receivables, was $3.3 million, or $0.14 per diluted share. Including the impairment charge and foreign exchange loss on the company's Canadian dollar denominated receivables, consolidated net loss for the fourth quarter of 2008 was $8.7 million, or $0.36 per share. The company reported net income of $7.1 million, or $0.29 per diluted share, in fourth quarter of 2007.

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