Outdoor financials: Kellwood rejects buyout offer from Sun Capital Securities, plus VF, Cabela's, Columbia Sportswear, Oakley, Winmark

Kellwood rejects buyout offer from Sun Capital Securities

About a month after receiving an unsolicited buyout offer, Kellwood (NYSE: KWD) said it has rejected a $543.9 million bid from Sun Capital Securities Group, noting that it’s not in the best long-term interests of Kellwood and its shareholders.

“Our board is committed to enhancing shareholder value, and the Sun Capital proposal is not consistent with this objective,” Robert Skinner Jr., Kellwood’s chairman, president and CEO, said in a statement.

Instead, Skinner said, the company wants to reinvigorate its core brands, expand its marketshare, connect better with consumers and operate more efficiently.

The offer from Sun Capital was based on a purchase price of $21 per share and the 25.9 million shares the company had outstanding as of Aug. 4. Kellwood said the board’s review of the proposal included consultation with its independent financial adviser, Banc of America Securities.

“The board of directors concluded that the unsolicited Sun Capital proposal significantly undervalues the strength of Kellwood’s expanded portfolio of brands and the company’s opportunities for sales and earnings growth,” the statement said. Kellwood has annual sales of about $2 billion.

The unsolicited bid spurred a huge jump in Kellwood stock. Kellwood shares rose 26 percent to $19.14 on Sept. 19, the day the offer was announced, before leveling off. On Oct. 17, shares fell $0.34, or 1.9 percent, to close at $17.33.

Kellwood owns several outdoor brands, including Sierra Designs, Kelty, Royal Robbins, Slumberjack, Ultimate Direction and Wenzel.

VF’s Q3 net income increases on higher outdoor segment sales

Third-quarter profit for VF Corp. (NYSE: VFC), parent of The North Face, JanSport, Eastpak and Eagle Creek, rose 5 percent, helped by sales from its outdoor and jeanswear segment as well as revenue from new acquisitions.

Quarterly earnings rose to $207.2 million, or $1.84 per share, from $197.7 million, or $1.75 per share, during the same period last year. Revenue rose nearly 15 percent to $2.07 billion from $1.81 billion last year.

The company said its outdoor coalition continues to experience tremendous growth. Revenues increased 22 percent to $806 million, with domestic and international businesses each growing more than 20 percent during the quarter.

The North Face, Vans, JanSport, Kipling and Napapijri brands each had double-digit revenue gains in the quarter. The early 2007 acquisition of the Eagle Creek brand of adventure travel gear added $10 million to revenues in the quarter. Outdoor operating income grew 16 percent in the quarter, with operating margins remaining at the 20 percent level.

VF’s gross margins moved to 43.9 percent from 43.8 percent, while operating income rose 15 percent in the quarter, with operating margins reaching 16.0 percent.

International growth continues to be a key driver, it said. International revenues grew 19 percent in the third quarter and comprised 30 percent of total revenues in the period. Excluding the impact of foreign currency translation, international revenues were up 12 percent.

For the fourth quarter, VF expects an increase in revenues and earnings per share of 18 percent and 13 percent, respectively. It now sees full year revenues rising 15 percent, up from its previous guidance of 14 percent. Earnings per share should increase slightly more than 13 percent, versus its previous guidance of 12 percent.

VF’s board of directors also declared a quarterly cash dividend of $0.58 per share, an increase of $0.03. The dividend is payable on Dec. 20, 2007, to shareholders of record as of the close of business on Dec. 10, 2007.



Cabela’s expects Q3 profit to miss analyst estimates, shares hit 52-week low

Cabela’s (NYSE: CAB) reported that it expects its third-quarter profit to fall below analysts’ estimates due to two underperforming stores and promotional costs.

Cabela’s said it expects to earn between $0.18 and $0.20 per share in the quarter. Analysts expect earnings of $0.26 per share.

Cabela’s said two of its newer stores that opened last year did not meet its sales expectations. The company added its margins were pressured during the quarter due to additional promotions.

The outfitter said it expects revenue of about $547 million, with same-store sales rising 4.6 percent. Analysts predict revenue of $557.5 million.

Shares of Cabela’s to a new 52-week low on Oct. 19. The stock lost $2.01, or 9.2 percent, to $19.91, bottoming earlier at $19.50. Previously, shares ranged between $20.05 and $28.80 over the past year.

Robert W. Baird analyst J. David Cumberland downgraded the stock to “Neutral” from “Outperform” and cut his price target by $4 to $24, saying promotional activity likely hurt margins in the quarter.

Although Cumberland wrote in a client note that the company has great opportunities for long-term growth, Cabela’s is having trouble executing on major store expansion plans and has to withstand greater competition. Higher gas prices and potential weakness in consumer spending may hurt Cabela’s as well, he added.

The company is scheduled to release its full third-quarter financial results Nov. 1.

Columbia Sportswear partners with new Brazilian distributor

Columbia Sportswear (Nasdaq: COLM) said it is making a major push into the South American market by signing an exclusive agreement with local-based distributor Drastosa SA.

Drastosa SA will begin distributing Columbia apparel, footwear and other accessories to outdoor specialty, sporting goods and lifestyle retailers throughout Brazil. Also, it will further help the company launch Columbia Sportswear concept shops, or branded sections and fixtures within larger retail stores.

Columbia said Brazil is a significant market for its business. Drastosa SA added that the Columbia brand is already gaining momentum across key retail accounts through Brazil.



Oakley net income up in Q3

Third-quarter net income for Oakley (NYSE: OO) increased 37 percent on strong sales as demand for its products increased.

Quarterly profit rose to $23.7 million, or $0.34 per share, from $17.3 million, or $0.25 per share, in the year-ago quarter. Results include 2 cents per share in transaction costs related to Oakley’s takeover agreement with Luxottica.

Revenue rose 26 percent to $263.8 million from $210.2 million last year.

The company said improved sales of Oakley’s sport performance, Square O lifestyle and women’s collections drove earnings, the company said.

Winmark Q3 profit up 42 percent

Winmark (Nasdaq: WINA), retail franchiser of Play It Again Sports, posted a sharp rise in third-quarter profit due to growth in the number of stores operating under its brands.

Net income rose 42 percent to $1.2 million, or $0.21 per share, from $838,200, or $0.14 per share, a year earlier. Revenue grew 10 percent to $7.95 million from $7.2 million a year earlier.

The company’s number of retail stores rose by 3 percent to 855 franchises from 829 a year earlier.

“Our franchise brands continue to grow both in number of stores and royalties,” CEO John Morgan said in a statement.

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