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Outdoor financials: Duofold parent to close 9 plants, cut 8,100 jobs, plus Garmin, Cabela's, Collective Brands

Duofold's parent said it would close 9 plants and cut 8,100 jobs, an analyst predicted a bumpy road for the rest of '08 for Garmin, Cabela's said it plans to open smaller stores going forward, and Collective Brands offered long-term growth targets.

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Duofold parent to close 9 plants, cut 8,100 jobs

Hanesbrands (NYSE: HBI), parent of Duofold, said it will close nine plants across five countries and cut about 12 percent of its work force as it restructures its operations in order to cut costs.

The moves will eliminate the jobs of about 8,100 workers in the United States and Central America, while the company plans to add 2,000 jobs in Asia. Hanes has about 50,000 employees in 25 countries.

It is expanding production in Asia and consolidating into fewer and larger plants in lower-cost countries. The moves will cost $76 million, with about two-thirds of that recorded in the third quarter of 2008.

With the latest restructuring costs, Hanesbrands says it has now taken about $204 million of the $250 million in such charges it expects to incur in the three years following its spinoff from Sara Lee Corp. in 2006.

As part of the current restructuring the company plans to close seven plants this year. Those include sewing plants in El Salvador, Honduras and Costa Rica, as well as two yarn plants in Eden, N.C., and Gastonia, N.C., a knit-fabric textile plant in Forest City, N.C., and an inventory storage warehouse in Rockingham, N.C.

By the end of next summer, it will close a sewing plant in Mexico and its last large knit-fabric textile plant in the U.S., located in Eden.

Textile production from the plants closed will be absorbed into existing plants in Central America. Most of the sewing production from Central American plants that are closing will be moved to the company’s Vietnam and Thailand plants. Hanesbrands expects to increase its work force in Asia from 4,000 today to 6,000 by the end of 2008.

The company is also building a textile fabric plant in Nanjing, China, which is expected to begin to ramp up production in 2009 to supply fabric to the company’s expanding Asian sewing network.

Analyst predicts bumpy road for rest of ’08 for Garmin

According to an industry analyst, Garmin (Nasdaq: GRMN) is likely to hit a few more business bumps through the rest of the year due to weaker consumer spending in the United States and abroad. The GPS maker is already smarting from having to delay the release of its long-awaited touch-screen Nuvifone until early 2009.

In a client note, RBC Capital Markets analyst Mark Sue cut his 2008 earnings estimates on Garmin to $3.68 a share from $3.82 a share, and also lowered his forecast for the company’s 2009 earnings to $4 a share from $4.26 a share, because of what he called “ongoing concerns regarding the consumer and PND [personal navigation device] market growth.” Sue left his sector perform rating on Garmin’s stock unchanged.

Sue said that Garmin’s earnings are likely to continue to feel pinched by an ongoing drop in PND prices, which fell about 25 percent in the first half of this year from a year ago, and which Sue expects will fall another 25 percent over the second half of the year from the same period last year. Sue said that despite the drop in prices, device shipments could weaken because of depressed consumer spending in the United States, where low-end PND devices are gaining traction, and in countries such as the U.K. and Spain, where the overall market is slowing down.

Because of the pressures expected on sales and earnings, Sue trimmed his 2008 sales forecast on Garmin to $3.85 billion from $3.95 billion, and also lowered his sales estimate for 2009 to $4.8 billion from $5 billion. Sue also cut his price target on Garmin’s stock to $40 a share from $42.

Cabela’s plans to open smaller stores going forward

Cabela’s (NYSE: CAB) said it plans to open slightly smaller retail locations in the future. New stores being developed will follow three size formats ranging from 80,000 square feet to 125,000 square feet.

Current Cabela’s stores average about 140,000 square feet, although its largest location is a 245,000-square-foot store.

Cabela’s opened eight new stores last year, but has opened only two stores this year — and says it has no further store openings planned in 2008. It expects to open between two and three sites in 2009.

Collective Brands offers long-term growth targets

Collective Brands (NYSE: PSS) said it expects long-term operating profit to grow in the mid-teens, although same-store sales may be hampered in the near term amid a difficult environment.

The company, which owns Saucony and Hind, said its operating profit forecast is based on anticipated same-store sales growth in the low single digits. It noted that as consumers cut back spending amid rising food and gas prices and a weakening economy, same-store sales might not meet the company’s long-term goal. It expects to offset sales weakness with inventory and expense control.

“While the near-term outlook remains clouded by weak consumer spending trends, we see controllable factors — supply chain reconfiguration, synergy cost savings, branding and sourcing — positioning Collective Brands for accelerated growth when consumer spending trends begin to improve,” wrote Soleil Securities Group analyst Jeffery Stein.

He kept his “Buy” rating and $25 price target on the stock.

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