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Columbia Sportswear posts loss in Q2 hurt by lower U.S. sales
Columbia Sportswear (Nasdaq: COLM), parent of Mountain Hardwear and Montrail, said a drop in sales and heavy investment in new marketing and retail plans affected second-quarter performance.
The company reported a net loss of $1.8 million, or $0.05 a share, for the quarter compared with net income of $10 million, or $0.27 a share, for the same quarter of the prior year.
Columbia said sales dropped 3 percent to $213.1 million for the quarter, hit by an 18-percent decline in U.S. net sales to $95.6 million. Currency exchange rates boosted sales 3 percent.
The company said the second quarter is typically its lowest volume quarter, but lower-than-expected net sales amplified the impact. The company also felt a hit from previously announced investments in marketing and retail expansion programs for the quarter.
The company saw its biggest drop in domestic sales but saw growth overseas, a market Columbia has worked aggressively to develop recently. It posted 13 percent growth in the Europe, Middle-East & Africa region to $63.4 million, 20 percent growth in the Latin America and Asia Pacific region to $40.1 million, and 18 percent growth in Canada to $14.0 million.
Compared with the second quarter of 2007, second quarter 2008 sportswear net sales declined 7 percent to $115.5 million, partially offset by a 5-percent increase in outerwear net sales to $41.8 million and a 12-percent increase in accessories and equipment net sales to $13.3 million. Second quarter footwear net sales of $42.5 million were equal to last year’s second quarter footwear net sales.
Second-quarter net sales for the Columbia brand decreased 3 percent to $194.1 million, partially offset by a 20-percent increase in Mountain Hardwear brand net sales to $13.8 million. Combined, net sales of Montrail, Sorel and Pacific Trail brand products did not comprise a significant percentage of sales in the second quarter of either year, it noted.
Looking ahead, Columbia said it now expects full-year revenue to fall 3 percent from 2007, down from April expectations of a 2-percent rise. A 3-percent drop from 2007 sales of $1.36 billion implies revenue of $1.32 billion.
The company now expects earnings of $2.60 to $2.70 per share for 2008, down from previous guidance of $3.15 to $3.20 per share. The cut is based on expectations for continued weakness in the U.S. retail environment.
During the second quarter, the company repurchased 107,000 shares of common stock at an aggregate purchase price of $4.4 million. Through June 30, 2008, the company has repurchased a total of approximately 7.7 million shares at an aggregate purchase price of $360.7 million since the inception of the current $400 million stock repurchase program in 2004.
The board of directors approved a dividend of $0.16 per share, payable on Aug. 28 to shareholders of record on Aug. 14.
Johnson Outdoors fiscal Q3 profit declines
Johnson Outdoors (Nasdaq: JOUT) said its fiscal third-quarter profit declined nearly 6 percent because of a weak U.S. economy and a soft domestic boat market.
Profit declined to $7.8 million, or $0.84 per share, from $8.3 million, or $0.89 per share, a year earlier.
Sales declined nearly 6 percent to $141.2 million from $149.9 million a year earlier because the domestic boat market softened and hurt sales in the company’s marine electronics unit.
Marine electronics revenue declined 12 percent, outdoor equipment revenue was essentially flat, and diving revenue rose 7 percent, helped by a weak U.S. dollar. Watercraft sales dipped 4.9 percent below the prior year quarter due to the effect of economic uncertainty on the retail marketplace.
Total company operating profit for the third quarter was $14.6 million compared to an operating profit of $14.8 million in the prior year quarter, which was negatively impacted by a one-time $4.4 million legal settlement. Due to business performance, Johnson Outdoors reversed accruals of $3.2 million dollars related to its discretionary bonus and compensation plans this quarter.
CEO Helen Johnson-Leipold said the company has curtailed production, restructured operations and is “aggressively” trying to cut costs.
“Growing economic uncertainty in the U.S. hit a peak just as the warm-weather season for our businesses was getting under way, and it has now impacted distribution channels in every business this quarter, with retailers being cautious and keeping their inventories to a minimum,” Johnson-Leipold said in a statement.
Rocky Brands posts Q2 profit on lowered expenses
Rocky Brands (Nasdaq: RCKY) swung into the black, posting a second-quarter profit helped by lower expenses and rise in wholesale gross margins.
Rocky Brands, which makes rugged, outdoor footwear, occupational footwear and casual shoes, earned $732,842, or $0.13 a share, for the quarter ended June 30. It posted a net loss of $1.4 million, $0.25 a share, last year.
Net sales increased 2.9 percent to $60.5 million versus net sales of $58.8 million in the second quarter of 2007.
The company said its wholesale gross margins rose 250 basis points, reflecting an increase in sales price per unit and a drop in manufacturing costs.
Selling, general and administrative expenses fell 8.4 percent to $20.9 million as a result of reductions in compensation expense and professional fees, the company said.
“Our recent initiatives will enable us to post continued year-over-year margin improvement and drive increased profitability over the remainder of this year even though our top-line will be challenged,” CEO Mike Brooks said in a statement.
Separately, Rocky Brands said it entered into a multi-year agreement with Helsinki, Finland-based Rapala VMC Oyi for the distribution of its Rocky Outdoor branded hunting boots in Eastern Europe. The initial terms of the agreement include distribution in Finland, Russia, Estonia, Lithuania, Slovakia, Czech Republic, Latvia, Poland, Belarus, Kazakhstan, and Moldova.
Rapala makes fishing lures, hooks, rods, and fishing line, and sells its products in more than 120 countries. It also distributes hunting products such as guns and optics.
Last week, Rocky Brands had said it received a $6 million extension to an existing contract in addition to a new $1.2 million contract from the U.S. military. During the latest second quarter, the company’s military segment sales rose to $1.8 million, from $0.3 million in the same period last year.
Crocs lowers guidance for Q2, shares fall 50 percent in after-market trading
Crocs (Nasdaq: CROX) lowered its second-quarter guidance and projected a weak third quarter on July 24, sending shares plummeting after the market closed.
The company said it expects earnings per share of $0.03 to $0.07 for the second quarter, significantly lower than the $0.42 to $0.47 per share previously expected. The company cited weak sales in the United States.
Crocs also said it expects its revenue to be in the $218 million to $223 million range for the second quarter, instead of $247 million to $258 million as previously announced.
Crocs also projected third-quarter income of $0.01 to $0.05 per share. The company guided for quarterly revenue of $195 million to $205 million.
Furthermore, Crocs reduced its full-year outlook. The company now expects to break even in the fiscal year, including a charge of $0.16 per share related to the shutdown of the company’s Canadian operations.
In aftermarket activity, Crocs shares fell $4.55, or 50.8 percent, to $4.40. During the regular session, the stock lost $0.93, or 9.4 percent, to $8.95. The stock has ranged from $6.75 to $75.21 over the past year.
Despite lower full-year expectations, Crocs said it believes its inventories at the end of the quarter will be down 15 percent compared to the first quarter.
“The domestic marketplace proved to be more challenging during the second quarter than we had originally anticipated,” said Ron Snyder, CEO and president of Crocs, in a statement. He added that retailers across the board were “extremely cautious” with their level of reorders, trying to keep their inventories lean as consumer spending tightens.
The company said it saw major growth overseas, but it remained below the company’s initial projections.
West Marine Q2 profit drops on hefty charges, weak U.S. economy
West Marine’s (Nasdaq: WMAR) second-quarter profit tumbled 79 percent as hefty charges and a soft economy pummeled its results.
Profit for the second quarter was $4.4 million, or $0.20 per share, from $20.8 million, or $0.95 per share, a year earlier.
The latest quarter was hurt by a $14.6 million tax accounting charge, which lowered profit by $0.66 per share. Also, cooperation with a Securities and Exchange Commission investigation cost the company a penny per share, and an asset impairment charge totaled $0.06 per share.
Excluding items, profit declined only slightly to $20.5 million, or $0.93 per share, from $20.8 million, or $0.95 per share, a year earlier.
Sales also dropped to $226.7 million from $247.1 million, and same-store sales were down 7.8 percent.
The company lowered its 2008 outlook to a loss of $0.32 to a loss of $0.42 per share, from prior expectations for a profit between $0.02 and $0.09 per share.
The results do not include $0.37 per share for a business restructuring; a lower anticipated tax rate that will have an impact of $0.43 per share; and $0.66 per share for a $14.6 million non-cash valuation allowance.
Including these items, the company will record a loss of $1.78 per share to a loss of $1.88 per share.
Same-store sales are now expected to decline between 7 percent and 8.5 percent. Previously, the company had predicted a decline of 3.5 percent to 5 percent.
The company also cut its sales outlook to $625 million to $635 million, from its prior expectations of $660 million to $670 million in sales.
In 2007, the company posted a loss of $2.30 per share on sales of $679.6 million.
West Marine said it expects continued softness in the industry in the near-term.
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