Outdoor financials: Eddie Bauer to be acquired by private equity firms, plus Rocky Brands, Sport Chalet, Mammut to buy light company, Kellwood, Big 5, Outdoor Channel, Coleman, adidas, Johnson Outdoors
Eddie Bauer to be acquired by private equity firms, Rocky Brands 3Q profit slips, Sport Chalet reports second-quarter results, Mammut to buy Lucido light company, Kellwood lowers guidance, Q3 profit up 8.1 percent for Big 5, Outdoor Channel delays filing Q3 report to reclassify certain assets, Coleman parent prices public offering, Q3 profit up for adidas but cuts 2007 outlook, and Johnson Outdoors appoints VP/CIO.
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Eddie Bauer to be acquired by private equity firms
Barely a month after its listing on the Nasdaq, Eddie Bauer Holdings (Nasdaq: EBHI) has entered into an agreement to be bought by two private equity firms for $286 million in cash and go private.
Under terms of the deal, a holding company owned by affiliates of Sun Capital Partners and Golden Gate Capital will pay $9.25 per share in cash and assume $328 million in debt. The offer represents a nearly 5 percent premium over the $8.85 closing price of Eddie Bauer shares on Nov. 10 and a 12 percent premium to the prior four weeks’ average closing price.
Eddie Bauer said the acquisition is the result of a review of strategic alternatives begun in May 2006. “We believe that the transaction will provide Eddie Bauer with new resources and the time necessary to execute our turnaround strategy,” CEO Fabian Mansson said in a statement.
Eddie Bauer’s board of directors has unanimously approved the merger agreement and recommends that Eddie Bauer’s stockholders vote to approve the agreement. The company expects to file its preliminary proxy statement with respect to the transaction within 10 days. A Form 8-K with a copy of the merger agreement will be filed with the Securities and Exchange Commission later today.
The deal is subject to shareholder approval and is expected to close in the first quarter of 2007.
As of July 1, Eddie Bauer operated 267 retail stores and 108 outlet stores in the United States and Canada. During the quarter ended July 1, about 27 percent of its $225.7 million in sales came from catalog and online purchases.
Rocky Brands 3Q profit slips
Rocky Brands’ (Nasdaq: RCKY) third-quarter profit and sales were hit by weaker-than-expected results in outdoor footwear and apparel and a decline in footwear sales to the military.
For the quarter, Rocky recorded a profit of $4.2 million, or $0.78 a share, compared with $6.5 million, or $1.23 a share, for the same period last year. Sales fell 17 percent to $78.1 million, from $94.1 million a year earlier.
Military footwear purchases contributed $200,000 in sales during the quarter, compared with $9.4 million a year earlier. Rocky also said a $100,000 charge related to stock compensation, which wasn’t required during last year’s third quarter, also pulled down its profit.
Selling, general and administrative (SG&A) expenses were $22.6 million, or 28.9 percent of sales for the third quarter of 2006 compared to $21.8 million, or 23.2 percent of sales, a year ago. The increase of $800,000 is the result of a shift in the timing of certain advertising and professional expenses, Rocky said.
Income from operations was $9.5 million or 12.2 percent of net sales, compared to income from operations of $12.3 million or 13.0 percent of net sales in the prior year.
The company said it expects to earn $1.25 a share on $265 million in sales for the year.
Sport Chalet reports second-quarter results
Sport Chalet (Nasdaq: SPCHA and SPCHB) reported an 11.7 percent increase in sales for the second quarter, boosted by earnings from six new stores.
For its second quarter ended Oct. 1, 2006, sales were $91.3 million compared to $81.7 million for the quarter ended Sept. 30, 2005. Six new stores contributed $9.0 million in sales on a same-day basis. Same-store sales on a same day basis increased 3.0 percent in the second quarter. Sales for the quarter overall were $1.8 million lower due to the company’s calendar change. At the beginning of the fiscal year, the company changed its fiscal period so each quarter now ends on a Sunday.
Net income for the second quarter was $1.7 million, or $0.12 per diluted share, compared to a net loss of $5.2 million, or $0.38 per diluted share, for the second quarter last year. Excluding the after-tax charge of $7.8 million related to the company’s recapitalization, net income for the quarter ended Sept. 30, 2005, was $2.6 million, or $0.19 per diluted share.
Gross profit as a percent of sales increased to 32.2 percent from 31.8 percent in the second quarter of last year. Sport Chalet said that the 40 basis point improvement was primarily due to fewer markdowns as a result of continued improvements in inventory management.
Selling, general and administrative expenses as a percent of sales increased to 29.1 percent from 26.4 percent last year, excluding expenses from the recapitalization in fiscal 2006. SG&A for the second quarter ended Sept. 30, 2005, included expenses of $8.6 million related to the company’s recapitalization. The company reported that the increase was a result of reduced leverage on modest sales from mature stores as well as increased costs related to Sarbanes Oxley compliance, utilities, infrastructure investments and personnel.
Mammut to buy Lucido light company
In a deal that will be complete on Jan. 1, 2007, Swiss-based Mammut Sports Group said it is buying Lucido, the makers of LED lights and headlamps, from Invia Sportartikel Vertriebs GmbH of Eurasburg, Germany.
Mammut said the plan is to merge Lucido’s LED expertise with its outdoor know-how to create products for the outdoor sector. Lucido product management and development will transfer to the head office of the Mammut Sports Group, where further development will be coordinated.
Lucido cool light was established by Thomas Strobl (Invia) in 1999. Mammut said the brand is strong in the development of new technologies and leads the LED headlamp segment. Its latest product — the TX1 head lamp — won the OutDoor Industry Award at OutDoor 2006.
Kellwood lowers guidance
As a result of selling its New Campaign unit, Kellwood Co. (NYSE: KWD) lowered its earnings forecast for the third quarter and full year to account for discontinued operations.
It now expects profit from ongoing operations in the third quarter of approximately $16.8 million, or $0.64 per diluted share, down from a previous forecast of $18.0 million, or $0.69 per diluted share. For fiscal 2006, it expects a profit of about $1.63 per share, down from about $1.75.
Kellwood said it would sell its New Campaign unit, which produces Polo, Ralph Lauren, Lauren, and Chaps belts and small leather goods, to Polo Ralph Lauren Corp. for about $9 million.
Q3 profit up 8.1 percent for Big 5
Big 5 Sporting Goods (Nasdaq: BGFV) reported an 8.1 percent rise in third-quarter profit and a similar increase in revenue. But its shares dropped in aftermarket electronic trading after the company issued a disappointing guidance.
Big 5 earned $7.8 million, or $0.34 per share for the period ended Oct. 1, compared with $7.2 million, or $0.32 per share, for the same quarter in 2005. Revenue grew to $223.3 million from $206.8 million in the year-ago period. Same-store sales increased 3.8 percent for the third quarter.
The results included a charge of $4 million, or $0.02 per share, in stock-option expenses this year, while the 2005 quarter included a $1.8 million gain related to an eminent domain action.
Company officials credited the results to positive sales and controlling expenses.
Big 5 said it expects to post a fourth-quarter profit of $0.34 to $0.40 per share, including $0.02 per share in stock-option expenses. Analysts, on average, expect a profit of $0.40 per share, including stock-option expenses. For the full-year 2006, the company said it expects to earn $1.27 to $1.33 per share, including about $0.06 per share in stock-option expenses. Analysts expect a profit of $1.32 per share, including stock options.
Big 5 shares sank as much as $1.94, or 8.1 percent, to $21.92 in aftermarket electronic trading before regaining some ground to trade at $23.37, down $0.49, or 2.1 percent, from their Nasdaq regular session close at $23.86.
The company opened five new stores during the third quarter of fiscal 2006, bringing its store count at the end of the third quarter to 334 stores.
Outdoor Channel delays filing Q3 report to reclassify certain assets
Outdoor Channel Holdings (Nasdaq: OUTD) said it is delaying the filing of its third-quarter report to reclassify certain intangible assets. The reclassification is related to the 2004 acquisition of the Outdoor Channel.
The resulting re-valuation and amortization will not impact revenue or cash flow for the company for any period. However, the amortization of the revised value will result in a non-cash expense for periods after September 2004.
The company did release some preliminary numbers. It said its third-quarter revenue rose 15.6 percent to $13.2 million from $11.4 million in the year-ago quarter.
Also, its subscriber fees grew 13.1 percent to $4.3 million from $3.8 million in the same period a year ago. Advertising revenue, generated primarily from the sale of advertising time on The Outdoor Channel, rose 21.0 percent to $6.8 million in the 2006 third quarter from $5.7 million in the prior-year period. Membership income, derived from the company’s related businesses, increased 4.6 percent to $2.0 million, from $1.9 million in the year-ago third quarter.
Coleman parent prices public offering
Jarden Corp. (NYSE: JAH), parent of Coleman and Camping Gaz, priced a public offering of 11.5 million shares at $36.25 apiece to raise $416.9 million. Net proceeds, after payment of underwriting discounts and other expenses, are expected to total about $138 million.
Investment company Warburg Pincus and its affiliates are selling 7.5 million shares and will now own less than 10 percent of Jarden stock. Jarden will not receive proceeds from the sale of Warburg Pincus’ shares.
Jarden will issue the remaining 4 million shares of stock on offer.
The company said it plans to use net proceeds for debt repayment, potential future acquisitions and general corporate purposes.
Underwriters have 30 days to purchase up to about 1.7 million shares to cover overallotments for the deal that is expected to close on Nov. 14.
The company recently reported its third-quarter results, saying net sales for the 2006 quarter increased 10 percent to $1.0 billion compared to $938 million for the same period in the previous year. Net income was $51.3 million, or $0.78 per diluted share, for the 2006 quarter, compared to $24.0 million, or $0.40 per diluted share, in the third quarter of 2005.
Q3 profit up for adidas, but cuts 2007 outlook
Third-quarter profit for adidas rose 13 percent, but the company warned that its 2007 profit growth will fall short of previous forecasts because of costs related to the acquisition of rival Reebok.
adidas said net income growth would approach 15 percent in 2007, as it continued to put money into Reebok. But that was down from its earlier forecast of 20 percent earnings growth in 2007. The company said it expects Reebok to show improvement by 2008.
The company said net income for quarter was up to Euro 244 million (USD $311 million), compared with 215 million euros in the same period a year earlier.
Quarterly sales rose 54 percent to Euro 2.95 billion (USD $3.77 billion) from 1.92 billion euros because of the World Cup in Germany and demand for adidas-branded lifestyle apparel and by improved growth in Europe, Asia and North America.
Without Reebok, sales rose 12 percent to nearly Euro 2.2 billion (USD $2.81 billion) from 1.9 billion euros.
Strengthening Reebok will be the main goal of adidas through 2007, the company said, with plans to invest Euro 50 million (USD $63 million) in the brand.
Additionally, adidas said it expects a 2006 full-year net profit of between Euro 480 million to Euro 490 million (USD $613.3 million to $626.02 million), up from the Euro 383 million it earned in 2005. Full-year sales are expected to reach Euro 10 billion (USD $12.8 billion), lifted in part by the consolidation of Reebok into adidas.
Shares of adidas fell 7.2 percent on Nov. 9 to close at Euro 38.07 (USD $48.65) on the Frankfurt exchange after sinking as much as 11 percent earlier in the day.
(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 Nov. 9.)
Johnson Outdoors appoints VP/CIO
Johnson Outdoors (Nasdaq: JOUT) has named John Moon vice president and chief information officer, responsible for leading the company’s information technology function, and defining and implementing the company’s strategic use of information technology worldwide.
Moon joins the company following a successful 21-year career with Baxter International where he held a variety of information technology positions of increasing responsibility before being named corporate vice president and CIO in 2000.
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