Outdoor financials: Gander Mountain lowers 3Q outlook, plus post-election stats indicate strong holiday sales season, Cabela's, West Marine

Gander Mountain lowers 3Q guidance, takes a hit on Nasdaq
Gander Mountain (NasdaqNM: GMTN) took a hit last week when it lowered its 2004 outlook to a range of $8 million to $13 million from the prior guidance of $16 million to $21 million. Its shares dropped $4.84, or 26.1 percent, resting at $13.71 on the Nasdaq — the second biggest loser on a percentage basis.

The retailer cited weaker-than-anticipated sales of outerwear and footwear because of unseasonably warm weather. Also, co-branded credit card promotions in 2004 were not as effective in driving sales of high-ticket items as the 2003 promotions, when the credit card program was introduced.

Gander said it expects its comparable store sales comparison for the year to be slightly negative, versus prior guidance of a 3 percent to 5 percent gain. And, total revenue for the 2004 fiscal year is now expected to be in the range of $640 million to $670 million, compared with $490 million in the prior year.

The retailer expects to report that total revenue in the third quarter increased 24 percent to approximately $178 million, reflecting the addition of new stores, while comparable store sales declined 7.5 percent compared with an increase of 12.5 percent in the third quarter of the previous year. The company expects to report that year-to-date comparable store sales declined 0.7 percent.

A conference call to discuss the third-quarter results and the outlook for the fourth quarter will be held Nov. 17.

Cabela’s announces public offering
On Nov. 11, Cabela’s (NYSE: CAB) announced the public offering of 10.5 million of its shares of common stock, all being sold by selling stockholders. The price per share was $22.50. The underwriters have an option to purchase up to an additional 1.5 million shares, to cover over-allotments, if any, from the selling stockholders. Cabela’s will not receive any of the proceeds from the sale of the shares. Credit Suisse First Boston and JP Morgan are acting as joint book-running managers with Wachovia Securities, Stephens Inc. and William Blair & Company serving as co-managers for the offering.

Post-election stats indicate strong holiday sales season
Since the reelection of President Bush, companies analyzing retail numbers are reporting that retail sales are continuing to gain momentum and anticipate stronger selling seasons for November and December.

A survey by retail consulting firm Unity Marketing found U.S. consumers’ spending plans have changed since President Bush’s reelection on Nov. 2. Before the election, consumers expected they would spend 4.5 percent more during the holidays, but a post-election survey found that had increased to 5.6 percent. They now plan to spend $678 on gifts this season, up from $648 last year.

A cold snap in November has also spurred sales — especially of winter coats and footwear. “It has been colder this November than last year, creating a better retail environment, which will boost November sales, particularly apparel sales,” said Jim Gagne, senior vice president of Planalytics, which provides weather forecasts to retailers to help them with planning.

CIT Group Inc.’s CEO Jeff Peek is forecasting a slightly stronger holiday season this year based on his company’s role in financing inventory build-ups, with concerns over the election and rising interest rates calming. “All those uncertainties have gone away so people are now back and focusing on their business,” Peek said at a recent conference.

The tide may have been turning a little earlier than the election as the National Retail Federation reported that October 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) increased 6.2 percent from the same period last year and rose 1.1 percent month-to-month.

October retail sales 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) rose 0.2 percent seasonally adjusted for the month. Retail sales rose 5.6 percent unadjusted year-over-year.

Since Sept. 22, NRF has forecast a 4.5 percent increase in holiday sales (defined as GAFS sales in the months of November and December). Consumers are expected to spend $220 billion this holiday season.

West Marine adjusts 3Q earnings up, CEO to retire
Boat retailer West Marine, Inc. (Nasdaq:WMAR) adjusted its third-quarter earnings up to $0.32 a share compared to the previously reported $0.29 per share. “In our prior earnings release dated October 28, we reported, and our independent auditors concurred, that third quarter earnings should be reduced by a $1.2 million pre-tax, or $0.03 per share after-tax, charge related to an extinguishment of debt on October 14, 2004 in connection with replacing our bank credit facility. Upon further review of the applicable accounting rules, again performed in conjunction with our independent auditors, we have determined that this charge should be recorded instead as a reduction to fourth quarter earnings when the prior debt was extinguished. This change increases third quarter earnings and decreases fourth quarter earnings by the same amount; therefore, earnings for the full fiscal year 2004 will not be affected.”

The corrected net income for the third quarter (ended Oct. 2, 2004) was $6.9 million, compared to net income of $8.1 million, or $0.39 per share, a year ago. Net income for the 39 weeks ended Oct. 2, 2004, as corrected, was $29.0 million, or $1.36 per share, compared to net income of $21.7 million, or $1.08 per share, for the same period a year ago.

In other company news, CEO John Edmondson has announced his plans to retire from his current role. West Marine’s board of directors has appointed a Search Committee to find his replacement. Edmondson will continue with the company until the search is concluded and his replacement has been fully integrated into the company.

Sears surveys consumers are shopping preferences
Sears is living the good life as a national online survey conducted for the retailer found a few stats that will help it — and other retailers — during the holiday selling season. Insight Express, which polled consumers on their shopping preferences, found that more than three-fourths of all consumers surveyed cited good value, and friendly, helpful staffs as the two most important factors in determining where they will shop this holiday season. The survey, which was conducted for Sears, also found that mom plays Santa with about two-thirds of moms most likely to be the main gift buyer in their families. More than half of all respondents plan to do their holiday shopping alone, with two-thirds of all respondents planning ahead and intending to complete their shopping between now and Dec. 15. Not many last-minute shoppers here: another 10 percent already have completed their shopping.

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