K2 Corp. Reports 10 Percent Sales Drop in 3Q

K2 Corp. reports third quarter net sales fell 10.1 percent to $149.4
million. The company will show a loss of $10.7 million for the quarter.

K2 has taken actions to reduce company costs and expenses through
restructuring and production facility moves, company CEO, Rich
Rodstein, stated in the 3Q earnings report.

Rodstein estimated the savings to the company at $15 million from a
600-person reduction in the workforce, which included mostly factory
workers in Washington, Minnesota, and Alabama, where K2, Hilton and
Stearns all closed facilities and moved production offshore to China.
Also included in that number was shutting down of the Dana Design
Bozeman, Mont., facility and the subsequent move of operations to
Washington.

Dana Design barely garnered a blip on the 3Q report by K2 so, being
curious, SNEWS® contacted John Rangel, K2’s senior vice president of
finance:

“We are very excited about Dana and believe we have a good solid core
group in place following the move from Bozeman,” says Rangel. “We are
especially pleased with designer Jesse Thompson and are giving him more
and more authority.

“We have some high expectations for growth in the pack market with
Dana,” adds Rangel. “Certainly our ski and snowboard sales are a real
positive too.”

Rangel pointed out that what hurt the company most this year was the
drop off in sales in the “small wheel business” — inline skates and
scooters.

“Scooter sales have bottomed out here in the U.S. especially,” says
Rangel. “In Europe, the sales have slowed way down, but there still
appears to be something of a market there with the older teens to
30-something consumers.”

SNEWS® View:
Little wonder that K2 is thrilled with Jesse, the wunderkind Dana
Gleason brought on board in the late ’90s while the Dana Design
company’s namesake was still on board. Jesse’s value has not been so
much realized with Dana, as pack and tent sales there were, well,
somewhat, ahh, ho-hum in 2001, according to company insiders. The value
has been in the snowboard pack line, which retailers and company
insiders tell us turned heads last year. For Dana to grow, that same
design energy must find its way into the specialty outdoor pack line.
The addition of Rick Saez, formerly of Eagle Creek, to head the sales
efforts will help to be sure, but he’s got to have a strong product
offering behind him, or retailers will once again yawn and sales growth
will remain a flat-line proposition.