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Outdoor financials: Johnson Outdoors quarterly income down 1 percent, plus Lafuma, VF Corp., Outdoor Channel, Sportsman's Guide, April retail sales update

Outdoor financials: Johnson Outdoors quarterly income down 1 percent. Lafuma acquires Oxbow and launches new surf and snowboard division. VF reorganizes its upper management. Outdoor Channel reviews '04 filings. Retail sales for April on the upside. Sportsman's Guide proposes public offering.

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Johnson Outdoors quarterly income down 1 percent
Johnson Outdoors’ (Nasdaq: JOUT) second-quarter profit was down 1 percent, hit by gross margin declines on diving products and a $1 million charge related to its unsuccessful bid to go private. Also, the company said it benefited from strong performance in the marine electronics business unit and reduced operating losses in the watercraft division. It added that second-quarter results reflected the anticipated slow-down of military tent sales in outdoor equipment and the impact of soft markets and sluggish profits in diving.

The company said its quarterly income declined to $4.7 million, or 54 cents per share, from $4.8 million, or 55 cents per share, a year ago. Gross margins fell to 43.1 percent from 44.2 percent due to lower sales and margins in the company’s diving products line, which the company has been working to restructure.

Revenue rose 11 percent to $106.2 million from $95.6 million, driven by sales Humminbird brand — which accounted for $15.8 million in sales for the quarter. The planned discontinuance of low-margin specialty boats resulted in the unfavorable comparison year-on-year in watercraft revenues. Diving sales benefited from favorable currency translation ($0.6 million), however not enough to reduce the impact of soft markets worldwide. The projected decline of military tent sales accounted for the majority of the reduction in sales during the quarter in outdoor equipment.

Operating profit declined $0.3 million in the second quarter versus the same period last year. Humminbird added $2.0 million to operating profit for the quarter, and increased efficiency in manufacturing drove the $1.1 million improvement in watercraft operating losses.

Johnson cautioned investors not to rely on financial projections for 2005 and 2006 included in its Feb. 15 shareholder proxy due to current developments in the military and diving markets.

“With the arrival of warmer weather, we shift focus from customer sell-in to consumer sell-thru. This is the time when weather and economy can have the biggest impacts – positive or negative – on our businesses,” said Helen Johnson-Leipold, chairman and CEO of Johnson. “We have stepped up investment in innovation over the past two years to better provide a strong pipeline of new products that are designed to represent the best price/value option in the marketplace. Those investments are paying off as new product sales reflect about a third of total revenue.”

Lafuma acquires Oxbow and launches new surf and snowboard division
The Lafuma group, headquartered in France, has agreed to acquire a 63.55 percent share of another French company, Oxbow, a manufacturer of surf and snowboard wear. The Lafuma group indicated that Oxbow will become a fourth division within the company focused on the surf and snowboard markets.  

Lafuma group also owns the Lafuma brand, which sells packs, sleeping bags, footwear and outerwear to the outdoor mass market channel, Millet which sells outdoor products to the specialty outdoor and mountaineering channel, and Le Chameau (The Camel), an outdoor lifestyle brand.

The combined brands represent a respectably-sized European company with sales of Euro 250 million (USD $318 million).

It is expected that Lafuma will work to establish Oxbow as a growth opportunity in Asia, and possibly also North America where the Lafuma brand has been enjoying resurgent growth in the last several years.

The sale is expected to close in the next month pending the outcome of a financial audit of the most recent financial statements and other approvals.

VF reorganizes its upper management
VF Corp. (NYSE: VFC) announced broad-based organizational changes with a more streamlined leadership structure that it said is designed to support its long-term growth plans and centralize its supply chain functions.
Eric Wiseman has been promoted to executive vice president, global brands, and will be responsible for driving growth across all our key brands. Reporting to Wiseman will be the presidents of VF’s Outdoor, Sportswear, Jeanswear and Intimates Coalitions. Since February 2004, Wiseman has been serving as vice president and chairman of VF’s Outdoor and Sportswear Coalitions.

VF is also consolidating all supply chain functions within a new Global Supply organization, under the leadership of George Derhofer, who is promoted to senior vice president, global operations. In his new role, Derhofer will be responsible for leveraging VF’s global supply chain capabilities, and handling manufacturing, sourcing, operations and information services/information technology functions in the United States and Europe. Since February 2004, Derhofer has been serving as vice president and chairman of VF’s Intimate Apparel and Imagewear Coalitions.

Also, Bob Shearer, currently vice president, finance and global processes and chief financial officer, has been named senior vice president and chief financial officer. John Schamberger will continue in his role as vice president, cross coalition, directing cross coalition efforts relating to retail strategy and direct-to-consumer opportunities. Stephen Dull, who was named vice president, strategy in January 2005, will continue to have responsibility for the identification of long-term-strategic growth initiatives and brand development.

Outdoor Channel reviews ’04 filings
An accounting snafu forced Outdoor Channel Holdings (Nasdaq: OUTD) to review its consolidated financial statements included in its quarterly report on Form 10-Q for the 2004 third quarter and in its annual report on Form 10-K for FY 2004. The company said it filed the restatements with the SEC and there are no adverse impacts on results. The company said the restatements reflect the effects of a decrease in the non-cash, non-recurring compensation expense resulting from a correction of its accounting in connection with the acquisition of the remaining minority interest in The Outdoor Channel that it did not previously own and to correct other information contained in the notes to the financials. As a result of the corrections, compensation expense decreased, and goodwill increased, by $4.2 million, the company said. And, net deferred tax assets decreased by $1.7 million, and net loss decreased, and stockholders’ equity increased, by $2.5 million. Upon completion of the review of certain other accounting matters, the company concluded that no additional changes to Q3 and FY 2004 are required.

Retail sales for April on the upside
Retail industry sales for April (which exclude automobiles, gas stations, and restaurants) rose 4.4 percent over last year and rose 1.0 percent seasonally adjusted from March, according to the National Retail Federation (NRF). The gains were stronger than NRF had been anticipating.

April retail sales 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 1.4 percent seasonally adjusted from March and increased 7.2 percent unadjusted year-over-year. Sales at gasoline stations rose 20.1 percent over a year ago as gasoline prices increased, which inflated total retail sales.

NRF said it expects sales to increase 5.0 percent in the second quarter and 4.8 percent this year over 2004.

Sportsman’s Guide proposes public offering
The Sportsman’s Guide (Nasdaq: SGDE) has filed a registration statement with the SEC for a proposed public offering of 2,500,000 shares of its common stock. The company plans to grant the underwriters of the offering an option to purchase up to 375,000 additional shares to cover over-allotments. RBC Capital Markets and Roth Capital Partners are acting as managing underwriters of the proposed offering, with RBC Capital Markets acting as the sole bookrunner.

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