Outdoor financials: Brokerage starts VF coverage with buy rating, plus Johnson Outdoors, Quiksilver, Stride Rite, West Marine

July 7, 2006

Brokerage starts VF coverage with buy rating
Nollenberger Capital has initiated coverage on VF Corp. (NYSE: VFC) with a buy rating and a target price of $76. In a research report, analysts noted the company’s diversified brands and supply chain, as well as its growth prospects.

VF shares have steadily grown this spring. In mid-April it was trading in the mid-$50s, with a closing price of $55.99 on April 13. Since then, it has climbed to the mid-$60s and higher. It was trading at $68.02, a new 52-week high on July 3, and closed the day at $67.25.

VF, parent of The North Face, JanSport and Eastpak, is scheduled to announce its second-quarter earnings July 19.

Johnson Outdoors’ plant damaged by flooding, awarded military order
After temporarily closing its Binghamton, N.Y., plant and administrative offices due to flooding from heavy rains, Johnson Outdoors (Nasdaq: JOUT) said damages will exceed $1.2 million. Eight counties in New York were declared federal disaster areas after heavy rains swamped a large swath of the region last week.

Binghamton is home to the company’s Outdoor Equipment Group business, which makes and markets consumer, commercial and military tents and camping equipment. Its finished goods warehouse has been unaffected by the flooding and remains open, with shipments expected to resume once local roads have reopened next week.

The customer service center is back on-line, and administrative offices reopened at a temporary location on July 10.

In other news: Johnson Outdoors was awarded a $2.0 million order for the Modular General Purpose Tent System (MGPTS) with anticipated delivery in the fourth quarter of calendar 2006. The company has now received 11 separate orders totaling $19.5 million awarded under the multi-vendor, multi-product contract announced in September 2005. The company now expects fiscal 2006 military sales will be in the $30 million to $35 million range.

Quiksiler to form apparel retailing joint venture in Russia
Quiksilver, parent of Rossignol, has formed a joint venture with clothing retailer Sprandi International Ltd. to sell its Quiksilver and Roxy brands of clothing and equipment in Russia. The venture, which replaces a license and distribution agreement between the two companies, plans to establish a chain of retail stores and a wholesale business to tap what Quiksilver (NYSE: ZQK) expects to be a growing market for its products. Quiksilver will own a majority of the venture and plans to use it as a platform to expand into Eastern Europe. Sprandi is a sports apparel retailer in Russia and Eastern Europe.

Stride Rite Q2 profit up 44 percent
Second-quarter profit for Stride Rite, parent of Saucony and Hind, jumped 44 percent, as the company paid a lower tax rate and higher sales of its kids’ and running shoes offset weakness in other brands.

The company’s net income for the quarter increased to $16.9 million, or $0.45 per share, from $11.8 million, or $0.32 per share, in the previous year. Sales grew 22 percent to $194 million from $159.6 million. Excluding acquisition and related integration costs, the company said it earned $0.46 per share in the quarter.

During the quarter, a tax audit’s favorable outcome meant the company paid a tax rate of 19.3 percent, compared with 36.1 percent in the previous year’s second quarter. The company expects to pay an annual rate of about 32 percent for the full year.

The company noted that the Saucony brand was one of two divisions that performed especially well for the quarter.

West Marine reports Q2 sales
West Marine (Nasdaq:WMAR) reported that second-quarter net sales were $264.5 million, an increase of 4.3 percent from net sales of $253.5 million for the same period a year ago. Same-store sales increased 2.3 percent.

“While we are encouraged by the positive comparable store sales results, they are below our expectations and internal projections. Most of our stores reported positive comp sales in the second quarter,” said Peter Harris, CEO of West Marine, in a statement. “However, the majority of our northeast and mid-Atlantic locations were negatively impacted by unusually heavy rainfall during June, which is our biggest revenue month. Additionally, we experienced mixed results from our new initiatives.”

He added that the company was possibly looking to revise its full year 2006 guidance and would announcement adjustments on its Aug. 8 conference call.

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