Garmin’s Q1 profit drops 67 percent, outdoor/fitness segment bright spot
Hit by slower consumer spending, Garmin (Nasdaq: GRMN) said first-quarter profits fell 67 percent, but its outdoor/fitness segment bucked the trend of its other segments and posted a 13-percent sales increase.
“The first quarter of 2009 represented Garmin’s most challenging quarter since becoming a public company in December 2000. Macroeconomic factors have contributed to a significant slowdown in consumer discretionary spending, which has been further exacerbated by ongoing channel inventory reductions by our retail partners in the PND industry,” said CEO Min Kao in a statement.
It reported earning $48.5 million, or $0.24 per share, versus $147.8 million, or $0.67 per share, during the same period a year ago. Excluding the effect of foreign exchange rates, Garmin said it would have earned $0.25 per share in the latest quarter.
Sales fell 34 percent to $437 million from $664 million.
North American sales dropped 36 percent to $265 million compared to last year’s $411 million, while European sales were down 32 percent ($144 million versus $211 million) and Asian sales were down 33 percent ($28 million versus $42 million).
Its outdoor/fitness segment posted a 13-percent revenue increase of $80 million, driven by the ongoing channel penetration and market share gains of fitness products, while sales for its line of automotive/mobile devices, which has been its strongest market in recent years, fell 43 percent during the quarter. Sales for marine and aviation devices fell by more than 30 percent each.
The company said it will focus on new products and further cost cutting to improve profitability in the second quarter.
Sport Chalet amends credit facility, releases prelim Q4 results
Sport Chalet (Nasdaq: SPCHA and SPCHB) said has amended and expanded its existing credit facility with Bank of America, N.A., giving the company additional financial flexibility. It also released early earnings results for the fourth quarter and 2009 fiscal year.
Under the terms of the amended credit agreement, the company’s availability increases up to an additional $10.0 million until October 2010. The amendment increases the revolver limit by more than 20 percent to $55.0 million from January to August and also allows for seasonal advances up to $75.0 million from September to December.
Also, Sport Chalet released preliminary financial results for Q4 and the 2009 fiscal year, saying its results reflect the difficult macro environment that began in the western markets in which it operates.
The company expects to report fourth-quarter net sales of $84.5 million compared to $96.8 million in the same period of the prior year. Comparable store sales declined 18 percent. Its net loss will be in the range of $10.4 million to $11.0 million, or $0.73 to $0.76 per diluted share, compared to a loss of $2.8 million, or $0.20 per diluted share.
For fiscal 2009, Sport Chalet anticipates net sales of $372.5 million compared to $402.5 million in the prior year. Comparable sales declined 13 percent from fiscal 2008. Its net loss will be in the range of $51.5 million to $52.1 million, or $3.58 to $3.61 per diluted share, versus $2.1 million, or $0.15 per diluted share, last year.
The company said in a statement: “To date in fiscal 2010, the company’s sales trends have improved compared to those in the last half of fiscal 2009. Sport Chalet’s sales and operating margin are exceeding its plan established with its lenders.”
Sport Chalet will report full financial results in early June.
–Compiled by Wendy Geister
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