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Outdoor financials: Kellwood's 3Q earnings down 8 percent, plus Forzani, Rocky, West Marine, Columbia

Kellwood's 3Q earnings down 8 percent, Canada's Forzani Group reports higher 3Q earnings but lower comps, Rocky board elects eighth member, West Marine same-store sales down 2.9 percent, Columbia's Japan subsidiary names new president.

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Kellwood’s 3Q earnings down 8 percent
Third-quarter earnings for Kellwood (NYSE: KWD), parent of Sierra Designs and Kelty, were down 8 percent to $28.4 million, or $1.01 per diluted share, versus $30.9 million, or $1.13 per share last year. The company blamed the fall on higher seasonal markdowns, costs of new marketing initiatives and the acquisition costs of Phat Fashions and Phat Farm.

Analysts had expected Kellwood to post earnings of $1 per share for the quarter. In late October, the company cut its third-quarter view to $1 per share from an earlier forecast of about $1.15.

Sales for the third quarter increased $73 million, or 11 percent to $717 million, versus $644 million last year due to a combination of organic growth of $44 million, and the acquisition of Phat Fashions and Phat Farm which provided $29 million of revenue.

Sales for the first nine months grew by $138 million, or 8 percent to $1.963 billion, versus $1.825 billion last year. Net earnings for the nine-month period increased $3.8 million, or 6 percent, to $63.6 million, or $2.27 per share on a diluted basis, versus $59.8 million, or $2.22 per share last year.

For the 2004 fiscal year, Kellwood anticipates hitting its guidance sales and earnings numbers provided in late October. Sales in the fourth quarter are expected to increase 13 percent to 15 percent and be in the range of $600 million versus $521 million last year. Approximately 60 percent of the $80 million year-to-year increase in sales will come from its new marketing initiatives, and approximately 30 percent of the increase will come from the acquisition of Phat Fashions and Phat Farm with the balance coming from 1.5 percent to 2.0 percent growth in Kellwood’s base business.

The board of directors declared a regular quarterly dividend of $0.16 per common share, payable Dec. 24, 2004 to shareholders of record Dec. 13, 2004.

Canada’s Forzani Group reports higher 3Q earnings, lower comps
Forzani Group (FGL.TO), Canada’s largest sporting goods retailer, reported third-quarter net earnings of CDN $6.4 million (USD $5.36 million), or CDN $0.20 (USD $0.17) per diluted share, versus CDN $5.9 million (USD $4.94 million), or CDN $0.18 (USD $0.15) per diluted share, a year earlier. Its earnings were higher than expected and CEO Bob Sartor said the gain was from a strong wholesale business and managing costs.

Results from last year were restated due to a new accounting guideline, the company said. Forzani would have earned CDN $ 0.23 (USD $0.19) per share in both the current and previous year’s third quarters in the absence of the accounting change.

Third-quarter revenue — which is made up of corporate store sales, wholesale sales, service income, equipment rentals, franchise fees and franchise royalties — was CDN $265.7 million (USD $223 million), a 6.2 percent increase over 2003’s CDN $250.2 million (USD $210 million). Combined gross margin for the quarter was down 140 basis points to 31.1 percent of revenue, from 32.5 percent in the prior year. Forzani said it has changed how it weighs the retail sales versus wholesale components of total revenue: 66 percent retail and 34 percent wholesale in fiscal 2005 compared to 72 percent and 28 percent, respectively, in fiscal 2004. Retail sales generate a greater gross margin percentage than wholesale sales, and a decrease in the retail component of revenue generally reduces the overall gross margin percentage. In absolute dollars, the combined gross margin increased CDN $1.1 million (USD $921,300), to CDN $82.5 million (USD $69.1 million), from the 13-week period last year.

Same-store sales from corporate locations were down 4.4 percent, driven largely by soft sales in the early weeks of the quarter and the increased competitive environment, specifically in Ontario, according to the company. Franchise same-store sales were flat. On a combined basis, comparable store sales were down 3.0 percent.

Forzani operates under the banners Sport Chek, Coast Mountain Sports and Sport Mart. At the end of the third quarter, it had 226 corporate stores and 173 franchise locations. Franchise brands are Sports Experts, Intersport, Atmosphere, and RnR. On Dec. 3, Forzani opened a 75,000-square-foot Sport Chek Supercentre in Place d’Orleans in Ottawa, Canada. Sport Chek is the largest retailer of its kind in Canada, and carries more than 46,000 brand name and private-brand products. In addition to its regular product assortment and web-enabled interactive computer kiosks, the new store also includes a new outdoor department with product categories like kayaks, camping, climbing and outdoor lifestyle.

(Conversion of Canadian dollars to U.S. dollars is for information only, is not necessarily relative to earnings, and is based on the currency rate as of 12/03/04.)

Rocky board elects eighth member

J. Patrick Campbell has been elected to a newly created position on Rocky Shoes & Boots’ board of directors, increasing the board to eight members. Since January 2004, Campbell has been a consultant and chief of technology and operations for the American Stock Exchange, New York, New York. Prior to that, he held several senior positions at Nasdaq, and has also worked for The Ohio Company, a privately held investment banking firm.

West Marine same-store sales down 2.9 percent
With an earlier Thanksgiving this year, West Marine reported that same-store sales fell 2.9 percent in November, but would have been flat without the calendar shift. The company added that its monthly sales were in line with expectations. Total sales grew slightly to $34.6 million. In the year-to-date period, same-store sales grew 0.7 percent, with total sales surging 5 percent to $636.7 million.

Columbia’s Japan subsidiary names new president
Columbia Sportswear Company Japan Inc., a subsidiary of Columbia Sportswear USA (Nasdaq: COLM), has appointed Toshio Sano as president, replacing Kinichi Sato who has assumed the position of honorary chairman. Sano’s primary responsibility is to develop new sales and marketing strategies to strengthen the brand’s presence and create future business opportunities in Japan. Sano has more than 30 years of sales, marketing and operations experience in the Japanese footwear and apparel market. Prior to joining Columbia, he held senior management positions with Reebok Japan and Rockport Japan.

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