Volcom Releases 10-K

Volcom, Inc. filed its 10-K statement on March 16.

There are some interesting points in the document, and if you haven’t been following the company’s performance this would be a good place to start.

To see the entire document, click Here.

Here’s a condensed look at some of the more interesting excerpts from the 10-K:

Revenue:

“Our revenues increased from $113.2 million in 2004 to $334.3 million in 2008. In June 2007, we began direct distribution of our product in Europe, which has contributed to our increase in sales … In addition, several of our largest retailers have opened additional stores and those store openings likely have contributed to an increase in our product revenues; however, period-over-period increases in our product revenues as judged solely by additional store openings by our largest retailers may not be a useful or accurate measure of revenue increases because our products may not be carried in every new store.”

Pac Sun:

“Sales to Pacific Sunwear increased 7%, or $3.4 million, for 2008 compared to 2007. Our sales to Pacific Sunwear may decrease in the future and we currently expect a decrease in 2009 revenue from Pacific Sunwear compared to 2008. Pacific Sunwear remains an important customer for us and we are working both internally and with Pacific Sunwear to maximize our business with them. We believe our brand continues to be an important part of the Pacific Sunwear business. We also recognize that any customer concentration creates risks and we are, therefore, assessing strategies to lessen our concentration with Pacific Sunwear.”

Inventory:

“We value inventories at the lower of the cost or the current estimated market value of the inventory. We regularly review our inventory quantities on hand and adjust inventory values for excess and obsolete inventory based primarily on estimated forecasts of product demand and market value. Demand for our products could fluctuate significantly. The demand for our products could be negatively affected by many factors, including the following:

-weakened economic conditions
-changes in consumer preferences
-buying patterns of our retailers
-retailers cancelling orders
-unseasonable weather

Gross Margin:

“If the current economic downturn persists or worsens in 2009, we may determine it to be necessary to offer additional discounts, which may reduce our gross margins and could adversely impact our financial performance and results of operations. Our gross margins have also historically been seasonal, with the first quarter having the highest margin. However, with the introduction of our direct European business and our Electric subsidiary, the seasonality of our gross margin may change. If we misjudge forecasting inventory levels or our sourcing costs increase and we are unable to raise our prices, our gross margins may decline.
“

Cost Of Goods:

“With the passage of the Consumer Product Safety Improvement Act of 2008, there are new requirements mandated for the textiles and apparel industries. These requirements relate to all metal and painted trim items and certain other raw materials used in children’s age 12 and under apparel … We will continue to monitor the situation and intend to abide by all rules and changes made by the CPSC. This could have a negative impact on the cost of our goods and poses a potential risk if we do not adhere to these requirements.”

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