Outdoor financials: Kellwood posts Q3 loss, plus Wellman, Gander Mountain, Forzani Group, Collective Brands
Kellwood posts Q3 loss, Wellman to be de-listed from NYSE, Gander Mountain posts fiscal Q3 loss and buys Overton's Internet/catalog company, Forzani Group's profit up 6 percent, and Collective Brands profit falls 12 percent.
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Kellwood posts Q3 loss
Kellwood (NYSE: KWD) reported a third-quarter loss due to hefty impairment and restructuring charges, more markdowns and declining women’s sportswear sales. Kellwood is the parent of various outdoor brands, including Sierra Designs, Kelty, Royal Robbins, Slumberjack, Ultimate Direction and Wenzel.
For the quarter ended Nov. 3, the company reported a loss of $1.1 million, or $0.04 per share, versus profit of $8.1 million, or $0.31 per share in the prior year quarter.
The company said the results included impairment and restructuring charges related to the reorganization of its women’s sportswear business and changing one its businesses to a licensing model. Excluding those charges and earnings from discontinued operations, the company earned 15 cents per share.
The company said profit was hurt by more markdowns and a drop in sales of mainstream women’s sportswear.
Revenue rose 2 percent to $404.1 million from $397 million in the third quarter of 2006.
Kellwood partly attributed improved sales in the quarter to the acquisition of Royal Robbins.
For its full year guidance, the company said its earnings from continuing operations will fall between $0.66 and $0.76 per share, and sales from ongoing operations will range between $1.5 billion to $1.55 billion.
For the 2008 fiscal year, the company said it would earn about $1.50 per share.
Also in the next five years, Kellwood said its sales would grow between 4 percent and 5 percent. To achieve that sales growth, the apparel maker said it would develop more Hanna Andersson retail stores, expand its Vince brand internationally, open more Hollywould retail stores and increase penetration of its XOXO, Democracy, Calvin Klein, Gerber and Royal Robbins brands.
Wellman to be de-listed from NYSE
The New York Stock Exchange has determined that it will suspend trading of Wellman’s (NYSE: WLM) common stock prior to the market opening on Dec. 10, 2007, and that it will de-list the company’s common stock. Wellman said it has decided not to appeal the decision and expects to be traded on the over-the-counter markets.
The decision was reached after the average closing price of Wellman’s common stock for a consecutive 30-day trading period was lower than $1, which is the NYSE’s minimum share price listing standard and because the market capitalization of the company’s common stock was below $25 million. The company’s share price closed at $0.38 on Dec. 3.
Wellman will remain a reporting company for SEC purposes and will continue to comply with all reporting requirements. This decision should not impact the financial status of the company or affect the way it conducts its business, it said.
Gander Mountain posts fiscal Q3 loss, buys Overton’s Internet/catalog company
Gander Mountain (Nasdaq: GMTN) swung to a third-quarter loss, blaming soft consumer demand.
For the quarter ended Nov. 3, Gander Mountain posted a loss of $5.1 million, or $0.25 per share, compared with a profit of $2 million, or $0.14 per share, for the same quarter in 2006. The prior-year quarter’s results included a gain of $1.4 million, or $0.10 per share, related to the recovery of an insurance settlement.
Revenue rose 5.3 percent to $259.5 million from $246.5 million in the year-ago period. Same-store sales fell 8.4 percent.
Gander Mountain said the disappointing sales reflect warm weather across the Northern states, affecting fall hunting seasons, along with soft consumer demand across its store base.
The company did not release fourth-quarter guidance, but said its sales performance has remained “challenging.”
Separately, Gander Mountain bought Internet and catalog company Overton’s Inc. for $70 million in cash. Gander Mountain bought the company from private equity firm Linsalata Capital Partners. The buyout price included the repayment of Overton’s existing debt, Gander Mountain said. It did not specify the amount.
Overton’s had revenue of more than $90 million in 2006 and distributes more than 15 million catalogs annually. It sells water skis, wakeboards and related water sports equipment.
Gander funded the buyout with a $24 million stock offering, a $40 million loan from Bank of America and borrowings under the company’s revolving credit facility.
Friedman, Billings, Ramsey analyst Jeff Sonnek, in a client note, said the new acquisition will help smooth out some seasonality in Gander Mountain’s outdoor business, because Overton’s generates most of its revenue in the first half of the year. But he reiterated a “Market Perform” rating on shares.
“Unfortunately, this has turned into a ‘show me’ story, with the onus clearly on management to execute in fiscal year 2008,” he wrote. He trimmed his target price to $6.50 from $10.
Forzani Group’s profit up 6 percent
The Forzani Group (TSX: FGL), Canada’s largest retailer of sporting goods, reported third-quarter net earnings of CDN $12.6 million (USD $12.5 million), or CDN $0.36 (USD $0.35) per share — up 6 percent over the prior year’s third quarter of CDN $11.9 million (USD $11.8 million), or $0.35 (USD $0.34) per share. Cash flow from operations was $0.63 (USD $0.62) per share versus $0.70 (USD $0.69) in the prior year.
Retail system sales for the quarter were CDN $344.6 million (USD $342.9 million), an increase of 1.5 percent from the comparable 13-week sales of $339.5 million (USD $337.8 million). The increase came despite aggressive pricing actions taken in response to the stronger Canadian dollar, it said.
Same-store sales in corporate locations were down 2.4 percent and increased 3.0 percent in franchise locations, for an overall same-store sales decrease of 0.7 percent. The same-store sales decrease is compared to a very robust 7.7 percent increase in the third quarter of fiscal 2007.
Revenue, consisting of corporate store sales, wholesale sales, service income, equipment rentals, franchise fees and franchise royalties, was $333.5 million (USD $331.9 million), down $12.8 million (USD $12.7 million), or 3.7 percent from the comparable period last year.
Combined gross margin for the quarter was 34.2 percent of revenue, or $113.9 million (USD $113.3 million), compared to 34.5 percent, or $119.4 million (USD $118.8 million) in the previous year. Forzani said the decrease is a result of an aggressive pricing strategy in light of the deterioration in the U.S. dollar throughout the quarter and the impact of a slower start to the winter selling season where the company typically realizes the benefit of higher margins on winter apparel.
Earnings before interest, taxes and amortization were $32.9 million (USD $32.7 million), or 9.9 percent of revenues, compared to $31.4 million (USD $31.2 million), or 9.1 percent of revenues for the 13-week period last year.
(Conversion of Canadian dollars into U.S. dollars is for information only, is not necessarily relative to earnings, and is based on the currency rate as of Dec. 7.)
Collective Brands profit falls 12 percent
Collective Brands (NYSE: PSS), parent of Saucony and Hind, said its third-quarter profit dropped almost 12 percent on costs tied to its acquisition of the Stride Rite chain in June.
The company, which changed its name earlier this year from Payless ShoeSource, reported earning $25.5 million, or $0.39 per share, for the three months ended Nov. 3, compared with $28.9 million, or $0.43 per share, during the same period a year ago.
Not including the effect of $28.6 million in purchase accounting, the company said it earned $33.3 million, or $0.51 per share.
Revenue for the quarter rose 18 percent from $703.4 million last year to $830.7 million.
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