NEW YORK (AP) -- Quiksilver shares jumped in morning trading Friday after the retailer's third-quarter net income surpassed Wall Street expectations.
THE SPARK: Huntington Beach, Calif.-based Quiksilver reported earnings for the three months ended July 31 of $1.8 million, or a penny per share. That was down sharply from a year ago, but excluding restructuring costs, it said it earned 10 cents per share. Analysts, on average, expected adjusted profit of 6 cents per share, according to FactSet.
The company's revenue fell 3 percent to $495.8 million, and came in $9 million below estimates, but analysts saw positive signs.
THE BIG PICTURE: The company sells skateboarding- and surfing-inspired clothes, through its own and licensed stores, and also through department stores, skate shops and online. Quiksilver competes against other stores that target teens and young adults. Management is working on a turnaround and has put a new team in place, aimed at strengthening the company's brands and making its operations more efficient.
THE ANALYSIS: Stifel Nicolaus analyst Jim Duffy said Quiksilver's growth in Europe was better than he expected and its Asia-Pacific revenue declined less than he had anticipated.
Janney Capital Markets analyst Eric Tracy said he thinks the company's sales will be uneven until at least Fall 2014, as Quiksilver deals with economic concerns and makes changes to sales operations, and because its new management will need time to introduce new products.
However he said the Huntington Beach, Calif., company has a good turnaround strategy.
Duffy rates Quiksilver shares "Buy" and set a $9 price target. Tracy has a "Neutral" rating and a $6.50 target.
SHARE ACTION: Shares of Quiksilver Inc. climbed 91 cents, or 17.5 percent, to $6.11 in morning trading. The stock has traded between $2.90 and $8.14 in the past 52 weeks, and closed Thursday up 22 percent since the start of the year.