Outdoor financials: Gander Mountain, ACS/Confluence, Dick's, Phoenix, Sportsman's Guide, Sport Chalet, Outdoor Channel, Amer, Eddie Bauer Holdings, Wellman
Gander's net loss narrows, but not enough for analysts, ACS pumps $19 million more into Confluence, Dick's Q1 sales up 57 percent, Phoenix to restate balance sheets, Sportsman's Guide investor voices dissatisfaction with secondary offering, Sport Chalet to restate select quarterly financials for SEC, Outdoor Channel files for public stock offering, Amer reports '05 guidance unchanged, Eddie Bauer Holdings announces board of directors, Wellman declares dividend
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Gander’s net loss narrows, but not enough for analysts
Gander Mountain’s (Nasdaq: GMTN) first-quarter net loss is on its way down, but still didn’t beat estimates causing its stock to fall in trading.
Net loss for the quarter was $17.6 million, or $1.23 a share, compared with $18.1 million, or $10.65 a share, for the year-ago quarter. Also, the number of common shares outstanding rose to 14.2 million from 1.7 million from a year ago following the company’s April 2004 initial public offering and the conversion of preferred stock into common shares.
Analysts had predicted it would lose $0.65 per share during the quarter. As a result in the day’s trading, its shares fell as much 6.5 percent — 72 cents to $10.38.
Also for the first quarter, its sales increased to $135.1 million from 2004’s $98.7 million — an increase of 37 percent. Same-store sales decreased 1 percent after an increase of 8.7 percent in the first quarter of 2004. Results for the first quarter include a $2.5 million payment received in connection with the termination of its co-branded credit card arrangement. Gander said the payment has been reflected as a reduction of general and administrative expenses in the accompanying condensed statements of operations.
Gander opened six new stores, including one relocated store, in the quarter, bringing its total store count to 87. It expects to open 18 to 20 stores during the year, including three or four store relocations and consolidations.
For 2005, Gander expects sales to exceed $850 million, an increase of at least 32 percent over fiscal 2004, with same-store sales to rise 2 percent.
ACS pumps $19 million more into Confluence
American Capital Strategies (Nasdaq: ACAS) said it has invested an additional $19 million in its portfolio company Confluence Holdings to support the acquisition of the watersports business assets of Watermark Paddlesports. American Capital’s new investment is in the form of a senior term loan and senior subordinated debt. In addition to the new investment, American Capital owns senior subordinated debt, junior subordinated debt, junior unsecured subordinated debt and equity. American Capital’s total current investment in Confluence is $61 million.Â GMAC Commercial Finance LLC is providing a revolving credit facility. Following the transaction, American Capital owns approximately 95 percent of Confluence on a fully diluted basis. American Capital has invested over $2.4 billion in the last 12 months, nearly $760 million year to date and over $350 million quarter to date. For more information, visit www.americancapital.com.
Dick’s Q1 sales up 57 percent
Dick’s Sporting Goods (NYSE: DKS) reported net income for the first quarter, excluding merger integration and store closing costs, of $12.2 million, or $0.23 per share, as compared to earnings guidance of $0.18 to $0.20.
Including after tax merger integration and store closing costs of $19.5 million, or $0.36 per share, the company reported a net loss for the first quarter of $7.3 million, or $0.15 per share as compared to earnings guidance of a loss of $0.19 to $0.21 per share including merger integration and store closing costs. In 2004, it posted a net profit of $10.6 million, or $0.20 per share.
Total sales for the quarter increased 57 percent over last year to $570.8 million due to a comparable store sales increase of 3.2 percent, the opening of new stores, and the inclusion of the former Galyan’s operations in this year’s quarterly results. Dick’s said the conversion, re-merchandising, and grand re-opening of the former Galyan’s stores to Dick’s stores is essentially complete this quarter. The former Galyan’s stores will now be included in the comp store sales base beginning in the second quarter of fiscal 2006. Dick’s continues to expect total merger integration and store closing costs of approximately $70 million, of which $20 million was incurred in 2004.
During the first quarter, the company opened seven stores, and closed five stores — four Dick’s stores and one Galyan’s store all of which were stores in overlapping trade areas due to the Galyan’s acquisition. As of April 30, it is operating 236 stores, with approximately 13.6 million square feet, in 34 states. Also, Dick’s announced that Douglas Walrod has joined the company as the senior vice president of real estate and development. He was formerly with Sears, Roebuck & Co.
On May 17, it opened at $36.25 and closed down 38 cents at $35.87.
Phoenix to restate balance sheets
Phoenix Footwear Group (Amex: PXG), parent of Royal Robbins and H.S. Trask, is restating two balance sheets to revise its accounting in regard to prior acquisitions. It said the restatement will not impact its historical net sales, net income, earnings per share, net assets or stockholders’ equity.
During review of Form 10-Q for the quarter ending April 2, 2005, Phoenix’s new independent auditors, Grant Thornton LLP, identified a required correction in the company’s accounting for its purchased intangibles resulting from prior acquisitions. As a result, Phoenix said it intends to record on the restated consolidated balance sheets both a deferred tax liability (which will account for the tax result of the differences between the book and tax basis of these assets) and a corresponding increase in goodwill. This amount will be $1.5 million on the company’s December 27, 2003, consolidated balance sheet and an additional $5.6 million (or $7.1 million in total) on its January 1, 2005, consolidated balance sheet.
Phoenix is submitting a late filing form with the SEC, and plans to have the updated 10-Q to it by May 23.
Sportsman’s Guide investor voices dissatisfaction with secondary offering
Last week, the Sportsman’s Guide (NasdaqNM: SDGE) said it would sell as many as 2.9 million shares of its stock in a secondary offering, but Marathon Partners LP — which owns a 7.1 percent stake — is taking the company to task about it worried that it may dilute its value.
Mario Cibelli, managing member of the New York hedge fund, said in a May 18 letter to the board of directors: “The timing of this announcement was peculiar; it was only two weeks ago that management announced that the board was withdrawing the 2005 stock incentive plan and authorizing a share repurchase. We are suspicious that the most recent announcement might simply be an ‘end-run’ around the dismissed option plan, and could, in effect be viewed as ‘retaliation’ for the shareholders failing to approve the proposal.”
In a regulatory filing, Sportsman’s Guide said proceeds from the offering will be used to repay a $5 million loan and could be used to make an acquisition. In his letter to the board, Cibelli noted that cash bonuses for executives are tied to the earnings of the company, who would end up earning larger bonuses if the funds are used for acquisitions.
Cibelli wrote that given a choice between a “dilutive secondary offering and an outright sale of the company, Marathon Partners would prefer a sale of the company” and a sale is the “best course of action at this time.”
Since the announcement of the secondary offering, shares of the Sportsman’s Guide have been down 12 percent.
Sport Chalet to restate select quarterly financials for SEC
Another retailer caught up in the SEC’s revamp of lease accounting practices, Sport Chalet (NasdaqNM: SPCH) is reviewing its financials and expects to restate its previously filed annual and quarterly financial statements.
The effect on the its previously released Consolidated Statements of Income will be an increase in net income of $97,000 for the fiscal year ended March 31, 2004, and a reduction of net income of $117,000 and $353,000 for the fiscal years ended March 31, 2003, and March 31, 2002, respectively. The impact on previously released earnings per share is expected to be an increase of $0.01 for the fiscal year ended March 31, 2004, and a reduction in earnings per share of $0.02 and $0.05 for the fiscal years ended March 31, 2003, and March 31, 2002, respectively. The restatement of previously issued consolidated financial statements will not have an impact on total net cash flows during any of the periods amended, it said.
Outdoor Channel files for public stock offering
Outdoor Channel Holdings (Nasdaq: OUTD) has filed a registration statement with the Securities and Exchange Commission for a public stock offering by the company and certain stockholders in the amount of $94.3 million. Outdoor Channel Holdings will use the proceeds from the offering for sales and marketing efforts to increase its subscribers, for internally produced programming, and for general corporate purposes. The company currently has about 18.5 million common shares outstanding. Bear, Stearns & Co. will act as the lead managing underwriter of the offering. Other managing underwriters are A.G. Edwards and Jefferies & Co.
Amer reports ’05 guidance unchanged
Amer Sports hosted a Capital Markets Day for investors and analysts in London to brief the attendees about its strategy, financial and divisional highlights, as well as on the proposed acquisition of Salomon. CEO and President Roger Talermo confirmed that prospects for 2005 are unchanged: Amer Sports’ comparable full-year net sales in local currencies are expected to grow by 3 percent to 5 percent compared with last year. Earnings per share for 2005 are forecast to be Euro 0.90-1.05, compared to 2004’s Euro 0.96. For more information, go to www.amersports.com and check out the Investor Relations section – Reports and Presentations.
Eddie Bauer Holdings announces board of directors
A board of directors has been named for Eddie Bauer Holdings, Inc., the corporation to be established as the new parent company of retailer Eddie Bauer upon the company’s emergence from Chapter 11 reorganization. The confirmation date hearing with the U.S. Bankruptcy Court for the plan of reorganization proposed by Spiegel, Inc., Eddie Bauer’s current parent company, is scheduled for May 25.
The nine-member board includes experts in management, finance, merchandising, marketing, human resources and communications, andWilliam End, former chairman and CEO of Cornerstone Brands, will serve as chairman of the board. The board also includes: John Brouillard, chief administrative and CFO, H.E. Butt Grocery Company; Howard Gross, former CEO, Hub Distributing, Millers Outposts, Levi’s Outlet Stores, divisions of American Retail Group, Inc.; Paul Kirincic, executive vice president, human resources, communications and corporate marketing, McKesson Corp.; Fabian Mansson, president and CEO, Eddie Bauer; Kenneth Reiss, former managing partner of the New York Office, assurance and advisory practice, of Ernst & Young, LLP; Laurie Shahon, president and founder, Wilton Capital Group; Edward Straw, vice admiral, US Navy (retired) and former president, global operations, Estee Lauder Companies; and Stephen Watson, former president and CEO, Gander Mountain LLC.
Wellman declares dividend
Wellman’s (NYSE: WLM) board of directors declared a quarterly dividend of $0.05 per share on the outstanding shares of the company’s common stock. This dividend is payable on June 15, 2005, to stockholders of record as of the close of business on June 1, 2005.
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