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Big 5’s SEC filings up to date, hopes to regain BGFV symbol
After many fits and stalls, Big 5 Sporting Goods (Nasdaq: BGFVE) had filed reports for the first and second quarters of 2005, setting the stage for it to comply with Nasdaq listing rules. Now current with its SEC filings, the company said it expects the fifth character “E” will soon be removed from its ticker symbol on Nasdaq and its trading symbol will be restored to “BGFV.”
The company said it expects that changes in the application of accounting methodologies as part of the restatement may continue to have an impact on previously issued earnings guidance for the remainder of fiscal 2005. As a result, previously issued full-year guidance should not be relied upon, it said.
Restated net income for the first quarter of 2005 decreased to $6.4 million, or $0.28 per diluted share, compared with previously restated net income of $7.9 million, or $0.34 per diluted share, in the year earlier quarter. Before the restatement, originally the company had reported preliminary first quarter net income of $7.2 million, or $0.32 per diluted share.
For the second ended in June 2005, net income decreased to $6.1 million, or $0.27 per diluted share, for the fiscal 2005 second quarter, compared to restated net income of $7.7 million, or $0.34 a diluted share, in the year-ago period.
The latest first-quarter results included pretax charges of around $800,000, or $0.02 per diluted share, for legal and audit fees related to the company’s restatement along with a flood loss at one of the company’s store locations.
These results were hurt by new allowances to cover returned inventory. The application of these new allowances and the volume of returned goods inventories cut pretax first quarter 2005 earnings by about $600,000, or $0.02 per diluted share. However, 2004 first-quarter pretax results were boosted by about $900,000 or $0.02 per diluted share.
Net income for the 2005 first quarter was boosted by revised inventory capitalization accounting methods by about $400,000, or $0.01 per diluted share. The same change added $800,000, or $0.02 a diluted share, to 2004’s first quarter.
Net income for the 2004 second quarter included a pretax charge of about $800,000, or $0.02 per diluted share, tied to the redemption of $15 million principal amount of the company’s 10.875 percent senior debt.
Second-quarter 2005 results included pretax charges of $1.9 million (pretax), or $0.05 per diluted share, tied to legal and audit fees related to the restatement and other matters. It also reflected another roughly $700,000, or $0.02 per diluted share, tied to the recognition of rent and other costs for starting the transition of operations to the company’s new distribution center. The company had previously had believed it would not be required to recognize rent for the new distribution center until the third quarter of 2005.
Looking ahead, the company also said it expects to realize same-store sales growth in the low to mid-single digit percentage range for the third quarter of fiscal 2005.
Sport Chalet shareholders get down to business at annual meeting
Sport Chalet (Nasdaq: SPCH) had an eventful annual meeting of stockholders, resulting in an election of Class 1 directors, a stock dividend and a new Class B ticker symbol, among other things.
At the meeting, the stockholders approved an amendment of the company’s Amended and Restated Certificate of Incorporation that increases the authorized number of shares of all classes of capital stock from 17 million to 50 million, consisting of 46 million shares of Class A Common Stock, 2 million shares of Class B Common Stock and 2 million shares of preferred stock. The amendment establishes the rights, preferences and privileges of, and the restrictions on, the Class A Common Stock and the Class B Common Stock, and reclassifies each outstanding share of Common Stock as 0.25 share of Class B Common Stock.
It also elected Al McCready, Eric Olberz and Frederick Schneider as Class 1 directors to hold office until the 2008 meeting; approved a transfer of shares of Class B Common Stock by The Olberz Family Trust to Craig Levra, chairman and CEO, and Howard Kaminsky, CFO; approved amendments of the company’s 1992 Incentive Award Plan and 2004 Equity Incentive Plan; and ratified the appointment of Moss Adams LLP as the company’s independent registered public accounting firm.
The board also declared a stock dividend payable on Sept. 29, 2005, to stockholders of record on Sept. 22, 2005. Under the terms of the stock dividend, each stockholder received seven shares of Class A Common Stock for each share of Class B Common Stock held on the record date.
Sport Chalet also announced that its Class B common stock will trade under a new ticker symbol — SPCHB. The commencement of trading of Class B Common Stock follows the approval of the company’s recapitalization plan at the annual meeting of stockholders which resulted in the reclassification of each outstanding share of common stock into 0.25 shares of Class B Common Stock. Sport Chalet anticipated that on Sept. 30, 2005, the Class B Common Stock will start trading ex-dividend of the Class A Common Stock dividend. After Sept. 30, 2005, the Class A Common Stock will trade under the ticker symbol SPCHA.
Rossignol names location of new European headquarters
Quiksilver’s (NYSE: ZQK) Rossignol subsidiary has selected the Centr’Alp 2 site near Voiron in Isere, France, to build Rossignol’s new worldwide headquarters. In bringing together all company departments, which are currently fragmented over many sites, into a single 15-acre campus, Rossignol said it aims to promote synergies and creativity among staff by offering an environment conducive to better internal communication.
The choice of location is in line with the strategy that Quiksilver has always followed — to develop its brands as near as possible to the natural environment they are linked to. Quiksilver’s European headquarters are located at St. Jean de Luz in France’s surf region on the Atlantic coast, the location for Rossignol’s new American headquarters is planned for Park City in Utah ski country, while Rossignol’s worldwide head office will be located in the heart of the Alps.
It is in the process of selecting an architect, and is planning the office opening to coincide with Rossignol’s 100-year anniversary in 2007.
Johnson Outdoors gets more advice from Dolphin, lands military tent order
Dolphin Limited Partnership I LP said that it sent a letter in mid-August to Johnson Outdoors (Nasdaq: JOUT), advocating actions that it believes would increase value for shareholders. Dolphin added that the letter was recently forwarded to the entire board and the board “will be discussing the proposals outlined in the letter at its upcoming meeting.”
In the letter, Dolphin, which owns 4 percent of Johnson Outdoors shares with an affiliate, urged the company to initiate a one million share $19 to $21 per share Dutch Auction Tender offer that it believes would be an accretive way to deploy the company’s sizable amount of low yielding cash. Dolphin also suggested the implementation of a 2-for-1 stock split to enhance liquidity in the Class A common stock and the initiation of an appropriate quarterly cash dividend. Dolphin said it believes these steps in conjunction with appropriate accretive acquisitions and more detailed public disclosure of the company’s five-year strategic plan would generate short and long-term value for all shareholders. Dolphin said it’s waiting for the results of the board’s deliberations on the matters.
In other Johnson Outdoors news, the company said it has received five separate military tent orders totaling $3.6 million. All five orders are for Modular General Purpose Tent Systems with anticipated delivery in early 2006. The orders are from the multi-vendor, multi-product contract it announced on Sept. 7. Despite the order, its outlook for military tent sales in fiscal 2005 and fiscal 2006 remains unchanged.
Saucony parent reports 4 percent increase in net sales
The Stride Rite Corp. (NYSE: SRR), parent of newly acquired Saucony and Hind, reported a 4 percent increase in third-quarter net sales, which were $146.2 million versus $140.4 million last year. The results beat Wall Street estimates and the company’s shares climbed almost 5 percent in pre-market trading to $12.95.
Operating income was $11.1 million, an 18 percent increase from the prior year’s quarter. Net income for the third quarter totaled $7.7 million, or $0.21 per diluted share, an increase of 24 percent compared to the net income of $6.2 million or $0.16 per diluted share in the third quarter of 2004.
Operating expenses in the third quarter of 2005 increased 13 percent compared to the same period last year, mostly due to higher advertising costs and the Stride Rite Children’s Group retail store expansion. Excluding those costs, operating expenses increased 3 percent versus last year.
Sales of Sperry Top-Sider shoes jumped 53 percent, driven by men’s, women’s, outdoor and marine shoes, the company said. International sales rose 33 percent for the quarter.
Stride Rite completed the sale of Saucony and its brands in mi-September and is moving ahead quickly to implement its integration plans.
“Saucony expands Stride Rite’s portfolio of nationally recognized footwear brands, and has excellent long-term growth potential,” David Chamberlain, chairman and CEO of Stride Rite, said in a statement. “We expect the Saucony acquisition to be accretive to earnings starting in 2006 before any non-cash purchase accounting inventory impact. In the fourth quarter of 2005, the acquisition is expected to be dilutive to earnings by approximately $.04 per share before the non-cash purchase accounting inventory impact.”
NRF forecasts jolly holiday season for retailers
Total holiday retail sales are expected to increase 5 percent over last year, bringing holiday spending to $435.3 billion, according to the National Retail Federation. In comparison, holiday sales in 2004 rose 6.7 percent to $414.7 billion — the strongest holiday season in five years.
“A combination of many factors, including energy prices, the job market, disposable income, and consumer confidence, will ultimately affect retailers’ sales this holiday season,” said NRF Chief Economist Rosalind Wells. “Though it might be easy to label gas prices as the make-or-break factor for the holidays, it is crucial for analysts to look at the big picture instead of isolating one economic indicator to project sales.”
One-fifth of retail industry sales (19.9 percent) occur during the holiday season. This year, retailers will struggle with tough comparisons over 2004, which will make significant gains more difficult to achieve, NRF said. Additionally, the effects of Hurricane Katrina and high prices at the pump play a role in the tempered outlook. However, NRF maintains that steady consumer spending and strong second- and third-quarter gains indicate potential for a solid holiday season.
NRF added that retailers are expected to be aggressive in their pricing strategies throughout the entire holiday season, planning holiday sales and promotions. But, NRF added, discounted prices won’t have a negative effect on profits.
Forzani reports strong back-to-school sales
Sales for the Forzani Group (TSX: FGL) during the six-week back-to-school period rose 20 percent on strong sales and margins over last year. Taking out the recent additions of Nevada Bob’s and National Sports, retail system sales were up 8.4 percent.
Overall comparable store sales for the six-week period increased 5.0 percent, compared to a 3.9 percent decrease last year. Corporate comparable store sales were up 4.7 percent compared to a 6.2 percent decrease last year, while the franchise network enjoyed solid results for the same period, with comparable store sales up 5.6 percent versus 2 percent last year. The company said corporate store margins rebounded strongly, as expected, and were considerably higher than the prior year, driven by its Sport Chek stores.
The Forzani Group Ltd. is Canada’s largest national retailer of sporting goods, operating stores under four corporate banners: Sport Chek, Coast Mountain Sports, Sport Mart and National Sports.
GSI hires VP of global operations
GSI Commerce (Nasdaq: GSIC) has named Robert Wuesthoff to the position of executive vice president of global operations, heading the company’s fulfillment, customer care and business operations. Prior to joining GSI Commerce, Wuesthoff served as the senior vice president of customer operations for Medco Health Solutions since 1999.
Oakley’s Jim Jannard relinquishes CEO role
Oakley (NYSE: OO) said it named Scott Olivet as CEO, replacing founder Jim Jannard, who will continue as chairman. Jannard, at Oakley’s helm since founding the company in 1975, said in a statement that he was stepping down to focus on design and invention.
Olivet has served as Nike’s vice president of subsidiaries — Cole Haan, Converse and Starter — and new business development since 2001. Before that, he worked in management at Gap Inc. and management consulting firm Bain & Co.
Wellman plant to re-open in November
Wellman’s Pearl River, Miss., facility is expected to resume PET resin production in November. The company said the facility didn’t sustain any major structural damage during Hurricane Katrina; however, many pumps, drives and electrical controls need to be refurbished or repaired as a result of storm water at the site. The facility is expected to operate at less than full capacity until transportation and other support infrastructure is completely operational. The lack of production from the facility is expected to reduce Wellman’s total sales by 15 percent to 20 percent from the time of the shutdown before the hurricane until the plant resumes operations. Wellman also expects the start of a resin expansion at Pearl River to be delayed from the first quarter of 2006 until the second quarter.
Martinez takes position on Deckers’ board
Angel Martinez has been appointed to the board of directors of Deckers Outdoor Corp. (Nasdaq: DECK). Martinez is presently president and CEO of the company.
Consumer confidence index hits a new low
The consumer confidence index fell to 86.6 in September from 105.5 in August, according to the Conference Board, a consumer research center. It’s the lowest level since October 2003. The decline was larger than expected, as economists were expecting the index to decline to 94.9. Other consumer surveys, including the University of Michigan survey, have shown dramatic declines in consumer confidence because of Hurricane Katrina.
Economists said it would be premature to conclude that consumer spending will follow confidence down. The key to the spending outlook are higher energy prices. Fuel prices have remained high in the wake of Katrina and Hurricane Rita. This will curb spending in the short run, the Conference Board said. As rebuilding efforts take hold and job growth gains momentum, consumers’ confidence should rebound and return to more positive levels by year-end or early 2006, it added.
Amer’s acquisition of Salomon delayed
Amer Sports said the completion of its acquisition of the Salomon business segment from adidas-Salomon AG has been delayed until mid-October. The sale was originally expected to close in September. Amer said the change is due to the EU competition authorities’ revised processing schedule and will not impact the financial terms of the transaction. Salomon consolidation within Amer is still expected to start on Oct. 1.
Gander ups credit
Gander Mountain Company (Nasdaq: GMTN) expanded its credit facility with Fleet Retail Group, a Bank of America company. The facility was increased from $225 million to $275 million as permitted under the terms of an agreement signed in February 2005. The facility may be increased to $300 million subject to certain terms and conditions.
West Marine downgraded
West Marine (Nasdaq: WMAR) was downgraded by RBC Capital Markets on Oct. 3. Formerly, RBC had give it an “outperform” rating but has now changed it to “sector perform.”
VF reviewing ad agencies
VF Corp. (NYSE: VFC) is reportedly reviewing the companies that now handle its advertising purchasing and looking to consolidate all of its media buying at a single agency, according to AdWeek.com. At least four different ad agencies that now do work for VF are involved in the review, it said. A decision is expected in October.
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