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Outdoor financials: Jarden board approves shareholder rights plan, plus Dick's Sporting Goods, Quiksilver, Hibbett Sports

Jarden's board approved a shareholder rights plan, Dick's Sporting Goods' Q3 profit dropped 40 percent, Moody's lowered Quiksilver's ratings on debt levels, and Q3 profit slipped for Hibbett Sports.

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Jarden board approves shareholder rights plan

The board of directors of Jarden Corp. (NYSE: JAH) has approved the adoption of a stockholder rights plan designed to protect shareholders in the event of a takeover attempt.

The plan grants a dividend of one stock right for each share of common stock held as of Dec. 1, 2008, that entitles the holder to buy one one-thousandth of a share of a new series of junior participating preferred stock for $51, subject to adjustment.

The rights will be exercisable only if a person or group acquires 10 percent or more — or in the case of certain institutional investors, 15 percent — of Jarden’s common shares

If that happens, shareholders will be entitled to buy shares of the company’s stock or the acquiring person having a market value of twice the exercise price.

The stock rights may be redeemed by the company in response to a proposed takeover if it deems that to be in the best interests of stockholders. Otherwise, the rights will expire Nov. 19, 2011.

“The adoption of the rights plan is not in response to any current accumulation of shares or specific effort to acquire control of Jarden, but rather the potential for exploitation given the current macro market conditions,” Martin Franklin, Jarden’s chairman and CEO, said in a statement.

Jarden is the parent of Coleman, Campingaz, K2 and Marmot, among others.

Dick’s Sporting Goods Q3 profit drops 40 percent

Dick’s Sporting Goods (NYSE: DKS) said its fiscal third-quarter profit fell 40 percent on acquisition-related costs.

For the period ended Nov. 1, net income dropped to $7.4 million, or $0.06 per share, compared with $12.2 million, or $0.10 per share, a year earlier. Excluding costs related to the 2007 acquisition of Golf Galaxy, earnings were $9.2 million, or $0.08 per share.

Quarterly revenue grew 10 percent to $924.2 million from $838.8 million on the November 2007 acquisition of Chick’s Sporting Goods and new store openings.

Same-store sales fell 2.8 percent in the quarter and do not include results from Chick’s.

Dick’s reduced its full-year adjusted earnings forecast, citing uncertainty over consumer holiday shopping and economic conditions. It now expects a full-year adjusted profit between $1.13 and $1.20 per share, which excludes Golf Galaxy acquisition-related costs. It previously predicted adjusted net income of $1.27 to $1.36 per share.

Dick’s expects 2008 same-store sales will be down about 4 percent to 5 percent, which excludes results from Golf Galaxy and Chick’s Sporting Goods stores.

The company said it expects fourth-quarter adjusted earnings between $0.49 and $0.56 per share. It predicts a quarterly same-store sales decline of about 6 percent to 10 percent, which includes Golf Galaxy stores and excludes Chick’s stores.

The company operates more than 350 Dick’s stores in 38 states, plus 80 Golf Galaxy stores in 30 states and 15 Chick’s Sporting Goods stores in southern California. It opened or acquired 54 stores under the various brands it controls this year.

The company has said it hopes to have 800 stores nationwide in the next seven years, but next year, the company plans to open just 18 Dick’s stores and one Golf Galaxy location.

Moody’s lowers Quiksilver ratings on debt levels

Moody’s Investors Service lowered its ratings on Quiksilver (NYSE: ZQK), due to weakening liquidity and reliance on short-term debt following the sale of its Rossignol ski equipment business.

Quiksilver recently finalized the sale of its Rossignol to Chartreuse & Mont Blanc for $37.5 million. It had been trying to sell the unit — which had been incurring operating losses — for much of the year.

Moody’s said the company has weakened liquidity following the sale, and also received smaller-than-expected leverage from the sale. “Quiksilver funded the seasonal build in Rossignol’s inventory through the date of sale, and the net cash sale proceeds (which were reduced in the revised final purchase price) were insufficient to retire the associated working capital debt,” Moody’s said in a statement.

As a result, the company continues to have a “significant” level of short-term debt in its capital structure, Moody’s said.

Moody’s downgraded the company’s corporate family rating and probability of default rating two notches to “B2” — a speculative or “junk bond” rating five notches below investment-grade status — from “Ba3,” which is three notches below investment-grade status. It also lowered the company’s speculative grade liquidity rating to SGL-4, the lowest rating, from SGL-3.

All ratings — except for the speculative-grade liquidity rating — are on review for a further possible downgrade.

Q3 profit slips for Hibbett Sports

As overhead and other costs increased, Hibbett Sports (Nasdaq: HIBB) said its third-quarter profit dropped 2 percent despite a pickup in sales.

For the quarter ended Nov. 1, earnings were $7.7 million, or $0.26 per share, compared with $7.8 million, or $0.25 per share, a year earlier.

Sales increased 8 percent to $140.1 million. Same-store sales were up 0.4 percent.

But store operating, selling and administrative expensive climbed, to $31.1 million from $26.9 million, and depreciation and amortization costs also increased.

Hibbett opened 22 new stores and closed 8 stores in the quarter, leaving it with 726 stores in 24 states on Nov. 1. For the next fiscal year, the company plans to open 75 to 79 new stores and close 12.

Also, Hibbett said it expects to earn $0.97 to $1.04 per share in the fiscal year that ends Jan. 31. Hibbett earlier had forecast full-year earnings of $0.93 to $1.03 per share. It said the new forecast was based on same-store being flat to up 2 percent in the November-January quarter.

–Compiled by Wendy Geister

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