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Quiksilver Inc. Message Board

  • a_millertime88 a_millertime88 Jan 16, 2013 10:23 PM Flag

    Warning - Don't Become a Bagholder

    I grew up in Southern California, very close to Quiksilver's HQ. I am very familiar with their company and have been for a few years now, as well as having known people that worked for them in various capacities, retail clerks through management. The reason why I mention it is because although I like Quiksilver and buy clothing of theirs at least a couple times a year, they are not in great financial standing as some have stated here and until the recent CEO change, their leadership has been stagnant and ineffective. They have implemented significant cost reducing measures, eliminated 1000's of positions, etc. this past year and their margins are still atrocious (especially when compared to industry averages). They also have an excessive amount of long-term debt and very little free cash flow. I could go on and on about their issues.

    I'm seeing a lot of wishful thinking, misinformation, and emotional buying out there. I just wanted to warn anyone who thinks that ZQK is a buy at these levels and can keep climbing that you are in for a very rude awakening. I'm sorry, but NYSE companies that have 13 straight green days with 50% run ups in less than a month do not stay there, period. Especially considering absolutely nothing has changed with the company's fundamentals except the hiring of Mooney. Companies take time to turnaround and become profitable again. However talented Mooney is, it won't be overnight that he rights the ship. It will take time to achieve better earnings and reflect those in the share price. Right now everything is hype and hot air. If you told me a company's share price surged over 50% based solely on hiring a new corporate officer I wouldn't even ask for the Co. name before I would say it's probably a good short shelling opportunity (sure enough, a few insider sales in the past couple days). Furthermore, Quiksilver's retail colleagues have had abysmal holiday sales numbers, many of whom sell Quiksilver merchandise. Same-store sales are reported down from last year. Guess what? It ain't going to be much better for ZQK. And considering how the stock has already made a huge run and appears overextended, I don't see this ending well for longs in the near term. Long-term it seems like a great buy and hold opportunity if you can get in at a more reasonable price ($4's, $5's).

    Just my .02 cents. Make of it what you will...just don't become a bagholder.

    -A

    Sentiment: Sell

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    • Yet more money in my pocket I'm not selling at all till ten if it starts underperforming dc shoes is huge and keeps growing I agree with some of your points but that is a major one you are not covering

      Sentiment: Buy

      • 1 Reply to tmatz6698
      • I didn't cover it because it isn't a major point. DC Shoes was acquired by Quiksilver in March of 2004. That was a LONG time ago. Since then Quiksilver has been through a major debt restructuring, saving it from the brink of bankruptcy. If that acquisition was so profitable then why did it do absolutely nothing to help grow their business and brand, let alone keep them afloat. Quiksilver has fewer employees, fewer stores, and smaller product lines since those years. Businesses are judged and priced in the market by their EARNING power. Quiksilver's earnings have been consistently disappointing, under industry standards, as well as their operating and profit margins being terrible for years. Buying DC did nothing to help that. Do your research. If you wanted a real idea of ZQK's condition you would analyze their financial statements and notice the crippling long term debt, small cash holdings, and weak earnings per share, among other things. Saying a company is going to blindly do well after having a mediocre last quarter just because they have some aging brand in their portfolio is not only a poor way to analyze a company's value and growth prospects, but is highly ridiculous.

        Sentiment: Sell

    • Well said! Let me also add my .02 cents worth by noting several points: (1) having visited a ZQK sales outlet, saw that ZQK charges premium prices, not a good sign at all even though the DC shoes segment may be experiencing increased sales (2) executives' pay and perks are mind-boggling for such an underperforming company (3) debt will soon overwhelm ZQK unless something is done quickly. Remember that some time ago, Rhone (controlling shareholder) saved ZQK from bankruptcy
      in my opinion by swapping debt for equity.

 
ZQK
1.72-0.12(-6.52%)Sep 30 4:03 PMEDT

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