Outdoor financials: Gander insiders buy up shares, plus Phoenix Footwear, NRF

Gander insiders buy up shares
According to analysts, company insiders usually take advantage of an IPO of stock to unload shares, but directors and executives at Gander Mountain Co., which went public in April, are doing the reverse. Seven company insiders spent $275,966 to buy shares of the Minneapolis sporting-goods retailer in the last month, paying an average price of $20.14 a share, according to data compiled by information provider Washington Service.

Ronald A. Erickson, a member of the controlling family who is on the company’s board, was one of the recent buyers, paying $76,430 for 4,000 shares.

“Basically, the reason they are buying stock is people are very supportive of the company,” said Shannon Burns, Gander Mountain’s director of investor relations. “They have a lot of confidence.”

Meanwhile, the company’s IPO lockup agreement will expire soon. As is common in IPOs, most of Gander Mountain’s pre-IPO shares are governed by an agreement under which they can’t be sold for at least six months without the approval of the offering’s underwriters. After that six-month period, which will end in October, there are still significant legal restrictions on the number of shares that can be sold at a time, but 7.6 million shares will be released from the lockup. Gander Mountain has about 14.2 million shares outstanding.

Burns said the majority of the shares emerging from the lockup are held by affiliates of the Erickson family, which holds a controlling interest in the company. She said the Ericksons are long-term holders and knowledgeable investors who aren’t likely to sell large numbers of shares suddenly.

On analyst said he was more impressed by the insider purchases than he is troubled by the possibility of future sales, saying, “It’s a big statement for insiders to take money out of their own pockets and buy stock.” Another analyst agreed it was a positive move, but won’t be following the insiders’ lead, adding that retailers are subject to the vagaries of consumer preferences as well as changes in the overall economic picture — matters that are less subject to the special expertise of insiders.

In related Gander news, the company recently confirmed it is looking at St. Paul, Minn. for a relocation of the company headquarters. According to a report in the Pioneer Press, “St. Paul is dangling as much as $1.5 million in economic development funds in front of Gander. The money would come from the city’s Strategic Investment Fund, which pays companies that relocate to St. Paul. The Capital City Partnership, a CEO-led group that pushes for downtown development, helps administer the investment fund for St. Paul. Under the program, companies can be eligible for up to $3,000 per job they bring to the city. The money would come in the form of a “forgivable loan,” which, if the company agrees to stay a certain amount of time — say, 10 years — does not have to be repaid.”

Phoenix re-evaluates FY2004 guidance
Phoenix Footwear Group (AMEX:PXG), parent of Royal Robbins, H.S. Trask and Trotters, said Sept. 16 that it will not meet its predicted full year guidance of $1 to $1.10 per diluted share for 2004. Several factors are affecting the company including changes to the timing of contracts and product deliveries for the Altama Footwear brand and a softening of its Trotters brand.

Also, for the third quarter of 2004, Phoenix expects to report fully diluted GAAP EPS that is slightly below the $0.26 fully diluted GAAP per share reported for the third quarter of 2003, after giving effect to the 2.7 million newly issued shares associated with the company’s secondary offering and Altama acquisition, completed earlier this year. It expects to provide updated guidance for the full 2004 year when it reports third quarter results in October.

During the third quarter, Phoenix extended its contract with the Department of Defense through September 2005. Orders, though, under this extension are not expected to be received until the early fourth quarter and there is no assurance of the ultimate number of combat boots that will be purchased under this extension.

“We fully expect our remaining brands, including SoftWalk, Trask and Royal Robbins to report pro forma organic growth on a combined basis during the current quarter,” James Riedman, chairman of Phoenix, said in a statement. “We are confident in our ability to address the Trotter’s brand performance. Overall, we believe we are well positioned to implement our strategy of building a portfolio of profitable and sustainable niche brands. Following several acquisitions during the past two years that more than tripled the size of the company, our primary focus is on driving organic growth, while maintaining our margins and profitability.”

NRF releases August retail sales report
According to the National Retail Federation (NRF), August retail sales in the GAFS category (general merchandise stores, clothing and clothing accessories stores, furniture and home furnishings stores, electronics and appliances stores, and sporting goods, hobby, book and music stores) rose 2.0 percent over last year but dipped 0.4 percent over July.

“August represented another notch in a schizophrenic summer for retail sales,” said NRF Chief Economist Rosalind Wells. “Retailers are hoping that fall and winter sales are more consistent and predictable.”

August retail sales recently released by the U.S. Commerce Department show that total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) dipped 0.3 percent seasonally adjusted over July and increased 4.6 percent unadjusted year-over-year.

Despite the overall decline, several retail sectors saw strong sales in August. Sales at sporting goods, book, hobby, and music stores rose 1.4 percent adjusted over July and 3.0 percent unadjusted over last year. Hardest-hit sectors in August included clothing and clothing accessories stores, which saw a slight decline in sales with a decrease of 1.4 percent over July and a 0.4 percent drop over last year. Sales at general merchandise stores were also down 0.4 percent over July though they increased 1.4 percent over a year ago.

First quarter GAFS sales increased 9.9 percent and second quarter sales rose 6.8 percent. The NRF has forecast 2004 GAFS sales to grow 6.0 percent over last year.

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