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Deckers Q3 profit rises 86 percent, shares hit an all-time high
Third-quarter profit for Deckers Outdoor (Nasdaq: DECK) climbed 86 percent based on strong demand for Ugg brand products and overseas sales.
For the quarter ended Sept. 30, net income grew to $19.3 million, or $1.47 per share, from $10.4 million, or $0.81 per share in the prior year quarter. Revenue rose 57 percent to $129.4 million from $82.3 million in the third quarter of 2006.
Demand for the company’s products overseas also helped boost both revensue and profit. International sales increased 58.0 percent to $14.2 million compared to $9.0 million last year.
Ugg’s net sales for the third quarter increased 67.5 percent to $113.7 million compared to $67.9 million in the third quarter of 2006. Teva’s net sales were up 12.1 percent to $11.2 million compared to $10.0 million for the same period last year. Simple’s net sales remained status quo at $4.4 million.
Sales for the consumer direct business, which are included in the brand sales numbers, increased 82.3 percent to $10.6 million compared to $5.8 million for the same period a year ago, mostly due to an increase in Ugg Internet sales.
The company also said it expects its earnings per share to grow 15 percent from the fourth quarter of 2006 before charges. That implies earnings per share of $2.09. The company said its revenue would rise about 35 percent, implying revenue of $167.9 million.
For the year, the company said its earnings per share would rise about 35 percent to about $4.46 per share. The company added its revenue for 2007 would rise about 39 percent, implying revenue of $423.1 million.
Shares rose $31.11, or 27.51 percent, to $144.20 on Oct. 26, after earlier trading to a 52-week high of $144.75. The stock has traded between $48.18 and $120.69 during the past 52 weeks.
Columbia Sportswear’s Q3 profit up, stock drops on lowered Q4 expectations
Columbia Sportswear (Nasdaq: COLM) said its third-quarter profit rose 4 percent on strong sales in its sportswear division and Columbia brand. But added its fourth-quarter earnings will miss analyst estimates due to slower-than-expected revenue growth, causing its stock to drop to an all-new low.
For the quarter ended Sept. 30, net income grew to $62.6 million, or $1.72 per share, from $60.3 million, or $1.67 per share, in the prior-year quarter.
Revenue also rose 4 percent to $471.1 million from $454.1 million in the third quarter of 2006.
Compared to the third quarter of 2006, Columbia brand net sales increased 7 percent to $418.2 million, Mountain Hardwear net sales increased 14 percent to $29.5 million, Sorel net sales decreased 9 percent to $19.1 million, Montrail net sales decreased 28 percent to $2.6 million and Pacific Trail decreased 87 percent to $1.7 million for the third quarter of 2007.
The company forecast fourth-quarter earnings per share of $1 on sales growth of 3 percent, implying revenue of $372.7 million. Analysts expect earnings per share of $1.11 in the quarter on revenue of $381.8 million.
The company said that at Sept. 30, spring backlog was essentially flat at $414.4 million, and combined global fall and spring orders were also about flat at $692.7 million.
For fiscal 2007, the retailer said it will earn about $3.70 per share on sales growth of about 5 percent, or revenue of $1.35 billion. Analysts have predicted 2007 earnings of $3.69 per share on revenue of $1.36 billion.
The company also said that based on its spring backlog and other initiatives, it expects earnings per share of $0.60 in its fiscal first quarter on revenue growth of about 4 percent. Columbia said it will increase 2008 spending on marketing and advertising initiatives to boost brand awareness and stimulate consumer demand.
The company’s board of directors has approved an increased dividend of $0.16 per share, payable on Nov. 29, 2007, to shareholders of record on Nov. 15, 2007. During the third quarter, it did not repurchase any shares of common stock.
Shares fell $3.09, or 6 percent, to close at $48.15 on Oct. 26 after falling to a year low of $47.40 earlier in the day. The stock had traded between $48.50 and $70.93 during the past year.
Goldman Sachs analyst Margaret Mager said in a note to investors that results may be hampered short term, but long term the company’s retail strategy — which includes increasing advertising and adding new retail outlets and full-price stores — is on the right track.
However, she said that given Columbia’s guidance for the next two quarters and flat order growth, 2008 might not be the year the plan will “bear fruit.” She rates the stock “Neutral.” She lowered her estimates for fiscal 2008 to $3.85 from $4.20 per share and for fiscal 2009 to $4.27 from $4.60 per share. She also cut her 12-month price target to $58 from $61.
Wachovia Capital Markets LLC analyst John Rouleau, on the other hand, was not convinced higher marketing expenses will result in better sales growth. He lowered his earnings expectations for 2008 to $3.81 from $4.08 due to higher expenses related to the marketing program and affirmed his “Market Perform” rating.
Norwegian investment group buys majority share in Dale of Norway
Norwegian-based investment group Propago has purchased a 67 percent share of Dale of Norway, injecting $5 million into product development. The Winder Group, previously sole owner of Dale of Norway, retains a third of the company as part of the new deal.
Propago said it injected $5 million into product development intent on pushing the brand and growing the collection.
“Dale of Norway is one of the few Scandinavian apparel brands that is recognized throughout Europe and North America,” said Ole-Bjørn Gjerde, who, along with Tor Andersen, co-manages Propago, in a statement. “We believe there are excellent opportunities to grow the brand and will focus our efforts in maximizing future growth.”
Henrik Lumholdt, president of Dale of Norway North America, added, “Having these new owners closely involved with the company along with the addition of funds into growing our product portfolio will ensure the competitiveness of the brand and reinforce its value for the success of our retailers.”
Founded 128 years ago, Dale of Norway produces and distributes Norwegian wool sweaters using its own facilities for most of the knitwear production process, from raw wool to finished product. In North America, Dale of Norway products are available in more than 600 sales outlets.
Pricing pressure, increased expenses ding Rocky Brands’ Q3 profit
Rocky Brands (Nasdaq: RCKY) posted a lower-than-expected third-quarter profit and more than halved its fiscal 2007 profit view, hurt by pricing pressure and increased expenses, sending its shares tumbling more than 24 percent. Brands in its portfolio include Rocky Outdoor Gear, Georgia Boot and Durango.
Rocky Brands, which makes rugged, outdoor footwear, occupational footwear and casual shoes, saw a 550 basis point decline in gross margin during the quarter. Selling, general and administrative expenses rose to $25.1 million from $22.6 million, a year ago.
The company blamed the extreme hot, dry weather early in the hunting season, which has caused cancellations from its customers and caused pricing pressures.
Also, the company said its retail operating expenses rose as it was capitalizing on opportunities created by the bankruptcy of a key competitor, Iron Age. It noted that it had a 25 percent sales increase through the quarter by taking up new businesses as a result of Iron Age’s bankruptcy. It invested in seven new retail stores that it bought from Iron Age.
For the third quarter, Rocky earned $1.1 million, or $0.21 a share, compared with $4.2 million, $0.76 a share last year. Net sales increased 5.4 percent to $82.3 million versus net sales of $78.1 million in the third quarter of 2006. The company said the increase in sales was primarily driven by a 25.0 percent increase in retail revenues, combined with a slight increase in wholesale sales.
For fiscal 2007, Rocky Brands now expects earnings of about 30 cents a share, down from its earlier view of about $1.16 a share.
The company, whose shares have fallen more than 40 percent this year, excluding fall on Oct. 23, raised its fiscal 2007 sales outlook to about $280 million, from its prior view of about $277 million.
Rocky Brands shares were down $2.31 at $6.97 in afternoon trade on Oct. 23, making them the third biggest percentage loser on the Nasdaq. They hit a year-low of $6.72 earlier in the session.
West Marine preliminary Q3 profit surges, SEC probes its restatement
West Marine (Nasdaq: WMAR) said its preliminary third-quarter profit jumped 83 percent in part on lower costs and improved merchandise assortments.
Net income for the period ended Sept. 29 climbed to $5.3 million, or $0.24 per share, compared with $2.9 million, or $0.14 per share, in the previous year. The prior-year’s results were hurt by a $1.5 million, or $0.04 per share, charge to close stores.
Revenue for the quarter declined 4 percent to $187.5 million from $195.6 million. Selling, general and administrative expenses fell to $48 million from $51 million.
The company said that the current period’s results also benefited from a change in the timing of compensation-related expense accruals.
West Marine added that it is lowering its full-year profit and revenue outlooks, in part on higher-than-expected expenses. It now expects 2007 net income in a range of $0.14 to $0.18 per share, down from its prior forecast for earnings between $0.24 and $0.34 per share.
It also trimmed its full-year sales guidance to a range of $681 million to $684 million. It previously forecast revenue between $683 million and $688 million. And, it narrowed its same-store sales guidance to a decline between 1.5 percent and 2 percent. It previously forecast a decrease between 1.5 percent and 2.5 percent.
The company said its revised outlook also reflects a reduction in gross profit margins.
Additionally, the Securities and Exchange Commission is investigating West Marine’s restatement of financial results, the retailer said in a regulatory filing.
In a filing with the SEC, the company said it restated financial results for the fiscal years 2002 through 2005 and quarterly financial statements for fiscal 2005 and the first three quarters of fiscal 2006 after the company evaluated costs included in inventory cost and the company’s adoption of a new accounting standard in fiscal 2003.
The SEC said in August they were conducting an informal inquiry into the restatement. The company gave information about the restatement to the SEC earlier this month and said it intends to continue to cooperate with the SEC.
West Marine said it expects the inquiry will result in selling, general and administrative expenses related to responding to the SEC’s requests.
Shares of West Marine hit a new 52-week low on Oct. 26 as analysts expressed caution over the retailer’s lowered full-year profit and sales outlooks as well as the continuing SEC informal inquiry.
Morgan Joseph & Co. analyst Jeffrey Blaeser said in a client note that the inquiry is likely to result in legal fees for West Marine of about $1 million in the fourth quarter and possibly more next year. He maintained a “Hold” rating on the shares and revised his fourth-quarter earnings estimate to a loss of $0.47 per share from a loss of $0.24 per share. He also trimmed his full-year earnings estimate to $0.19 per share from $0.37 per share.
Shares of West Marine shed $0.37, or 3.3 percent, to $10.80 in midday trading. The stock hit a new low of $10.61 earlier in the session.
Jarden shares rise on analyst upgrade
Shares of Jarden Corp. (NYSE: JAH) jumped on Oct. 23 after a Citi Investment Research analyst upgraded the consumer products maker to “Buy” on its attractive valuation and expected margin improvement. Jarden is the parent of Coleman, Campingaz and all of the K2 properties.
Jarden shares gained $1.75, or 5.7 percent, to close at $32.74. The stock had dropped to a 52-week low of $28.87 in September from its high of $45.09 in mid-June.
“Like most other discretionary consumer names, expectations for Jarden are very low,” said Citi analyst Gregory Badishkanian in a research note to investors. But he added that he is more optimistic and expects Jarden to beat the third-quarter earnings forecasts of other analysts.
Badishkanian predicts Jarden will book quarterly earnings of 73 cents per share, compared with analyst estimates of 70 cents per share. He expects the company to report quarterly revenue in line with analyst estimates of about $1.29 billion.
Badishkanian said he also expects “decent margins from a favorable product mix, price increases, and synergies related to the K2 acquisition.” Jarden completed its $765.9 million acquisition of outdoor sporting goods company K2 Inc. in August.
Badishkanian raised the company’s target price to $42 from $34 and said he expects the share price to increase as investors gain confidence in earnings forecasts.
Amer Sports reports decrease in sales
Net sales for Amer Sports from January-September 2007 decreased 5 percent to EUR 1.154 billion (USD $1.656 billion) from EUR 1.211 billion (USD $1.738 billion) in 2006. Net sales in local currency terms matched the corresponding period last year. Amer is the parent company of Salomon, Arc’Teryx, Atomic and Suunto.
The group’s EBIT was EUR 38.5 million (USD $55.2 million) versus EUR 50.5 million (USD $72.4 million) last year. Amer said the decrease was caused by the decline in net sales of wintersports equipment and from the slower-than-expected development of Wilson’s Team Sports business.
Earnings before taxes were EUR 22.9 million (USD $32.8 million), or EUR 0.23 per share (USD $0.33), compared to EUR 32.2 million (USD $46.2 million), or EUR 0.33 per share (USD $0.47), in the same period a year before.
Net financial expenses totaled EUR 15.6 million (USD $22.3 million) compared to EUR 18.3 million (USD $26.2 million) last year, reduced by interest-rate swaps executed in May, which resulted in a gain of EUR 6.4 million (USD $9.1 million).
In the July-September quarter, Amer’s net sales decreased 2 percent to EUR 462.8 million (USD $664.3 million) from EUR 471.9 million (USD $677.3 million) in the same period a year before. In local currency terms, net sales were on par with the previous year. EBIT was EUR 59.1 million (USD $84.8 million) compared to last year’s EUR 57.9 million (USD $83.1 million).
For the nine-month January-September time period, the Salomon Group’s net sales remained unchanged form last year at EUR 379.3 million (USD $544.4 million). Salomon’s EBIT was a loss of EUR 5.4 million (USD $7.7 million) compared to a loss of EUR 16.7 million (USD $23.9 million) last year. The breakdown of net sales was: wintersports equipment, 32 percent; apparel and footwear, 46 percent; and Mavic, 22 percent.
Amer said it benefited from a clear improvement in apparel and footwear sales, lower expenditures in wintersports equipment and better Mavic sales.
Salomon’s net sales of wintersports equipment decreased 11 percent in local currency terms. Last year’s net sales for the corresponding quarter were affected by logistics issues. The net sales forecast for 2007 remains unchanged. Sales are expected to be some 20 percent lower than the previous year.
Net sales of apparel and footwear increased 26 percent in local currency terms, boosted by strong sales of Salomon trail running shoes and both Salomon and Arc’Teryx apparel. The spring/summer 2008 pre-orders for apparel and footwear are in the final stretch and point to continued good development in sales.
For the quarter, the Salomon Group’s net sales were up 9 percent to EUR 195.8 million (USD $281.0 million) from EUR 179.6 million (USD $257.8 million) last year. EBIT was up 54 percent to EUR 36.3 million (USD $52.1 million) from EUR 23.6 million (USD $33.8 million).
For the nine-month period, Atomic’s net sales were down 34 percent to EUR 80.5 million (USD $115.5 million) versus EUR 122.6 million (USD $175.9 million) last year. EBIT declined to a loss of EUR 13.2 million (USD $18.9 million) compared to EUR 1.8 million (USD $2.5 million) last year.
For the quarter, net sales also took a hit — dropping 32 percent to EUR 63.2 million (USD $90.7 million) from EUR 93.3 million (USD $133.9 million) last year. EBIT was down 52 percent to EUR 11.2 million (USD $16.0 million) from EUR 23.4 million (USD $33.5 million).
Amer said the exceptionally mild winter weather in the first quarter weakened this year’s outlook for the wintersports business. Pre-orders for the 2007/2008 winter season fell short of expectations in all of Atomic’s key market areas. The net sales forecast for 2007 remains unchanged. Sales are expected to be more than 20 percent lower than the previous year.
For the nine-month period, net sales were up 12 percent to EUR 65.4 million (USD $93.8 million) versus EUR 58.5 million (USD $83.9 million). Suunto’s EBIT in local currencies decreased 22 percent to EUR 4.3 million (USD $6.1 million). Last year’s EBIT included EUR 2.5 million (USD $3.5 million) in insurance compensation.
For the quarter, net sales were up 18 percent to EUR 21.6 million (USD $31.0 million) from EUR 18.3 million (USD $26.2 million) last year. EBIT was up 40 percent to EUR 1.4 million (USD $2.0 million) from EUR 1.0 million (USD $1.4 million).
The company said sales of wrist-top computers increased 32 percent in the review period, boosted especially by solid demand for T-series products. Suunto’s net sales are expected to increase in 2007 following the new product launches, Amer added.
(Conversion of Euros into U.S. dollars is for information only, is not necessarily relative to earnings, and is based on the currency rate as of Oct. 24.)
Forzani conducts common stock buyback
The Forzani Group Ltd. (TSX: FGL) said it plans to buyback a portion of its common stock, believing that its common shares are undervalued in the market and are a good investment for the company at current prices.
From March 27, 2007, to March 26, 2008, Forzani is permitted to purchase up to 2.3 million common shares. Under the normal course issuer bid, Forzani has purchased 462,900 common shares since March 27, 2007, at an average price of CDN $21.40 (USD $22.20).
The Forzani Group is Canada’s largest national retailer of sporting goods, operating stores under the corporate banners: Sport Chek, Coast Mountain Sports, Sport Mart and National Sports. The Forzani Group is also a franchisor of The Fitness Source.
Wellman initiates patent infringement lawsuit against Eastman Chemical
Wellman (NYSE: WLM) said it initiated a patent infringement lawsuit against Eastman Chemical for infringing on two patents that relate to its PET resins.
The patenst cover titanium catalyzed polyethylene terephthalate (PET) resins and the preforms made from titanium catalyzed PET resins. The complaint alleges that Eastman infringes Wellman’s ‘317 patent with its ParaStar resins that are made from its IntegRex process and Eastman is inducing third parties, including its customers, to infringe Wellman’s ‘863 patent when they make preforms using ParaStar resin.
GSI narrows Q3 loss
GSI Commerce (Nasdaq: GSIC) reported a third-quarter net loss of $6.1 million, or $0.13 a share, compared with a loss of $6.2 million, or $0.14 a share, in the year-earlier period.
The company’s net revenue increased 16 percent to $137.3 million in the quarter from $118.5 million a year ago. Merchandise sales increased 36 percent to $315.8 million from $233.0 million.
Loss from operations was $11.5 million this quarter compared to a loss of $6.1 million. Adjusted EBITDA was a loss of $200,000 compared to a profit of $1.5 million last year.
Backcountry.com-parent to reclassify common stock
Liberty Media Corp. (Nasdaq: LINTA and LCAPA), parent of Backcountry.com, said charter amendment proposals authorizing the reclassification of its Liberty Capital common stock into two new tracking stocks have been approved by its shareholders.
The issuance of the new Liberty Capital and Liberty Entertainment tracking stocks approved at a recent meeting is subject to the completion of the exchange of Liberty Media’s stock in News Corporation for stock in a newly formed corporate subsidiary of News Corporation that will hold News Corp’s DirecTV holdings, three regional sports networks and cash.
Cabela’s uses $50 million credit facility
Cabela’s (NYSE: CAB) said it used a promissory note for a $50 million short-term credit facility. The company said it used the note, payable to the U.S. Bank National Association, to increase its cash capacity and flexibility. Advances from the note will be used for general business purposes, it added.
Exel expects Q3 loss
Ahead of the bell, Exel is reporting that a negative impact of EUR 4.2 million (US $6.0 million) will be recorded in its upcoming third-quarter results impacted primarily by its Sports Brands business. Exel Group will show a third-quarter loss before taxes of EUR 2.9 million (US $4.1 million) as a result of the weak development in Sports Brands, as well as various write-offs relating to outsourcing issues in China.
In the interim report for second quarter released in July, Exel said it expected the full year profit before taxes to improve compared with the 2006 profit before taxes and non-recurring items. Due to the write-offs and impairment losses of EUR 4.2 million (US $6.0 million), Exel now expects the profit before taxes for 2007 to be lower than the 2006 profit before taxes and non-recurring items — about EUR 6.0 million (USD $8.6 million). Still, the profit before taxes and non-recurring items is expected to be better than in 2006.
Exel will report its third-quarter results on Oct. 30.
(Conversion of Euros into U.S. dollars is for information only, is not necessarily relative to earnings, and is based on the currency rate as of Oct. 23.)
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