Outdoor financials: Gander Q1 loss sends share price down, plus Galyan's, Johnson, Dick's, Kellwood, Wellman, GSI

Gander Q1 loss sends share price down
New-to-Nasdaq retailer Gander Mountain (Nasdaq: GMTN) posted a larger quarterly loss on rising store operating costs and other expenses, initially sending its shares down as much as 16 percent but settling to an 8 percent decline on May 19.

Gander, which began trading on Nasdaq in late April, said its loss widened to $17.9 million, or $10.52 per share, in the first quarter ended May 1, 2004, from $15.4 million, or $15.80 per share, a year earlier. With the proceeds of the IPO and the conversion of preferred shares into common at the beginning of the latest quarter and year-ago period, Gander said its first-quarter loss widened to $12.7 million from $10.7 million. Per-share losses on this basis were unchanged at 89 cents because the number of average common shares had increased.

Total sales for the 2004 first quarter increased 42 percent, or $29.3 million, to $98.7 million. Comparable store sales increased 8.7 percent. The net loss for the quarter was $13.6 million compared with a net loss of $11.2 million in the first quarter of fiscal 2003.

“We were satisfied with Gander Mountain’s progress in the quarter. Strong sales growth reflects our emphasis on both comparable store performance and new store development,” said Mark Baker, president and CEO of Gander, in a statement. “Gander Mountain is a highly-seasonal business both because of our hunting, fishing and camping emphasis and because of the concentration of our current stores in northern states. First-quarter results were consistent with our expectations and keep us on track to meet our overall financial plan for 2004.”

Gander opened two stores in the quarter — Middletown, N.Y., and Novi, Mich. — bringing it up to 67 stores in nine states. It also said it expects to open 15 new stores this year.

Galyan’s reports Q1 net loss
For the first quarter of fiscal 2004, Galyan’s Trading Co. (Nasdaq: GLYN) reported a net loss of ($4.5) million, or ($0.26) per share on a fully diluted basis, compared to a net loss of ($2.6) million, or ($0.15) per share on a fully diluted basis in 2003. The first quarter of fiscal 2004 included $0.05 net loss per diluted share for expenses associated with the resignation of Galyan’s former CEO and chairman.

Net sales rose 21.7 percent to $157.7 million, from the $129.6 million reported in the same quarter last year. Comparable store sales decreased 1.4 percent primarily due to weaker results in the outdoor equipment, outdoor apparel and accessories categories, which were partially offset by stronger results in athletic equipment, athletic apparel and footwear.

Gross margin as a percentage of sales improved to 27.3 percent for the first quarter of fiscal 2004 versus 26.0 percent in the first quarter last year. The increase in gross margin was primarily due to a higher adjustment for EITF 02-16 and leveraging of distribution cost versus fiscal 2003.

Rick Leto is joining Galyan’s as its new president and chief merchandising officer. CEO Edwin Holman said, “With Rick’s extensive merchandise and marketing background, he will be instrumental in enhancing our store merchandising and marketing strategies and execution.”

During Q1, Galyan’s opened new stores in Hoover, Ala.; Middleton, Wis.; Virginia Beach, Va.; and Lakewood, Colo., bringing its grand total to 47.

Johnson Outdoors’ family extends bid to buyout company
Johnson Outdoors (Nasdaq: JOUT) said that two members of its founding family have extended their bid to buy out the company for $18 per share. Helen Johnson-Leipold, chairman and CEO of Johnson, and Samuel C. Johnson, majority shareholder and director of Johnson, are extending their non-binding proposal to acquire the outstanding public shares of the company. The proposal was originally made on Feb. 20 and was scheduled to expire May 21. The proposal pertains to all shares of Johnson not already owned by Johnson-Leipold and Johnson, or any member of their family or entities controlled by them. The offer is being reviewed by a special committee of independent directors, which is based in Racine, Wis.

Dick’s reports high net income, but Q2 forecast drags it down
Dick’s Sporting Goods’ (NYSE: DKS) net income for the first quarter ended May 1, 2004, increased 64 percent to $10.9 million and earnings per share increased 50 percent to $0.21 per diluted share as compared to net income of $6.7 million and earnings per share of $0.14 per diluted share in 2003. Total sales for the quarter increased 20 percent to $364.2 million. Comparable store sales increased 4.6 percent.

During the first quarter, Dick’s opened six new stores and had a total of 169 stores in 27 states by May 1. Four of the stores opened were in new markets (three in the Indianapolis, Ind., metropolitan area and one in Myrtle Beach, S.C.), while two were opened in existing markets: Niles, Ohio, and Plainville, Conn.

Second-quarter estimates project a net income between $16.8 million to $17.2 million. Comparable store sales are expected to increase 2 percent to 3 percent, with no new stores planned to open in Q2. Dick’s said it expects second-quarter earnings per share of $0.32 to $0.33, below analyst’s average estimate of $0.36. Subsequently, Dick’s shares were down $1.23, or 4.6 percent, at $25.30 in morning New York Stock Exchange trade after falling as low as $24.65 earlier in the session. The company’s stock was among the top percentage losers on the exchange May 18.

In other news, Dick’s appointed Jay Crosson as senior vice president of human resources. Crosson has 25 years of human resources experience under his belt and has worked with Office Depot and Sherwin Williams.

Kellwood gets ratings boost from S&P
Standard & Poor’s Ratings Services recently affirmed its ‘BBB-‘ corporate credit and senior unsecured ratings on Kellwood Co. — parent of Sierra Designs, Kelty, Slumberjack and Wenzel — upping its outlook from negative to stable.

Kellwood’s total debt outstanding was about $274.6 million as of Jan. 31, 2004.

“The outlook revision follows our review of Kellwood and reflects the company’s improving operating performance,” a Standard & Poor’s credit analyst said. “Kellwood’s revenues, margins, and financial measures have improved during the past several years despite a difficult retail environment and a weak economy.”

In recent years, Kellwood has outsourced most of its production, implemented strict inventory and working capital management, and also realigned its infrastructure to support a more centralized and efficient operation. As a result, its operating margins have improved, and cash flow generation has increased. The company has used its cash flow to reduce debt; since January 2001, debt has declined by more than $150 million. Standard & Poor’s expects modest improvement in financial measures for fiscal 2005 as a result of continued cost-cutting measures and improved operating efficiencies.

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 to stockholders of record as of the close of business on June 1.

GSI Commerce reorganizes and names co-presidents
GSI Commerce Inc. (Nasdaq: GSIC) is creating a new organizational structure and naming two co-presidents. The company is organzing into three groups: business management, technology and information services, and operations; sales, strategic planning and corporate development; and corporate support and governance. GSI has brought in Robert Blyskal to be co-president and COO. Blyskal will report to Michael Rubin, chairman, CEO and now co-president of GSI Commerce. In connection with the reorganization, Mark Reese, executive vice president and chief operating officer, has decided to leave GSI Commerce to pursue other opportunities.

West Marine makes board appointment
West Marine, Inc. (Nasdaq:WMAR) has appointed Diane Greene, executive vice president of EMC Corp. and president of VM Ware, to its board of directors. She is based in Palo Alto, Calif.

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