Thumbnail photo artwork by artist Ryan Thomas for Volcom

Here we go again whereby a top brand in youth culture fashion loses revenue in the last quarter (Q3) dropping from $111.7 million in 2008 to $93.9 million in 2009, but beat financial analysts’ expectations, so it’s all good depending on which media outlet you read.

As reported yesterday, October 29, from Volcom’s Q3 financial report, their revenues have dropped mostly in the U.S., Canada, and Japan (from $72.8 million to $56.8 million) but less in Europe -from $31 million to $30.2million. As we reported in “The Decline of the Action Sports Lifestyle,” many (public) brands have to move outside of the saturated USA into potential new markets from Europe (and China) which remain the great hopes. (Read more from our story last week comparing youth consumer insights over 9 years, plus which demographics, brands, and retailers are in decline and why, plus which sports and lifestyles are poised to pop.)

CEO Richard Woolcott said, “We have worked diligently to capitalize on our company initiatives to create outstanding product and a cohesive brand message aimed toward capturing more market share. We have relied on the strength of the Volcom brand, global marketing programs, and sound capital structure to endure the past year and believe we have become a stronger organization. We are ready to compete and maintain our leadership position whatever pace or shape the economic recovery takes.”

This is an excellent statement by Woolcott making the brand sound strong and prepared, and compared with many brands in action sports (although Volcom crosses over into other genres), it’s one of the key brands to watch as an indicator. Obviously many brands are taking a hit with the economic recession, even strong brands like Volcom, but if you were to compare with Vans, H&M, and Uniqlo, then you’d see that not all brands are taking a hit, which begs the question of why is it considered a good thing when a brand meets expectations, but quite frankly, is losing revenue.

One way to forecast more effectively is by tracking consumer preferences and spending patterns as an indicator rather than retail sales data because you can forecast from the very people who buy the brand or potentially will consider the brand (via stores or online retail), vs. looking at past retail sales data which is often dependent on what store merchandising managers and buyers choose to carry vs. what they should be carrying.

The good thing for Volcom is that they have cash–$99.3 million–and no significant debt which is a nice position to be in. However their 4th quarter financial outlook is cautious based on what they describer as the “myriad complexities in accurately assessing the current state of the global retail environment amid this year’s economic weakness.”

For more information tracking Volcom and other top brands in action sports and youth culture fashion, check out our North American Youth Culture Study 2009 (free for Premium subscribers).