Outdoor financials: Lacrosse sales dip, plus Johnson, Rocky, Coleman/Jarden, Phoenix, Big 5, Sportsman's Guide, Kellwood

LaCrosse Footwear 1Q sales dip, but gross margins up, as are sales in outdoor segment
For the first quarter of 2005, LaCrosse (NasdaqNM: BOOT) reported consolidated net sales of $18.9 million, compared to $23.7 million in the first quarter of 2004. Sales for the first quarter of 2004 included $4.3 million from General Services Administration (GSA) delivery orders to the U.S. military and $1.7 million from the discontinued PVC boot line.

Consolidated net income was $0.3 million, or $0.05 per common share, in the first quarter, compared to 2004’s $1.1 million, or $0.18 per common share. Results for the first quarter of 2004 included an expense reduction due to a one-time cash payment of $0.9 million from a former vendor. The results in the first quarter of 2005 include an income tax expense of $0.2 million, compared to zero income tax expense in the first quarter of 2004 due to previously unrecognized federal net operating loss carryforwards, which were fully utilized during fiscal 2004. The reduction in net income also reflects the margins related to the GSA delivery orders in the first quarter of 2004. Lacrosse said it expects its effective income tax rate to be approximately 36 percent in 2005 and approximately 37 percent in 2006 and beyond.

Sales to the outdoor market were $6.9 million for the first quarter of 2005, up 4 percent from $6.6 million for the same period in 2004. While outdoor sales are typically stronger in the second half of the year, the year-over-year growth in the first quarter of 2005 included stronger penetration into various hunting markets.

The company continued to improve its overall gross margin, which was 37.1 percent of net sales for the first quarter of 2005, up from 30.5 percent in the same period of 2004, an increase of 660 basis points. The continued margin improvement reflects the increased sales of the company’s new higher-margin products and the strategic discontinuation of the low margin PVC boot line.

LaCrosse’s selling and administrative expenses were $6.5 million in the first quarter of 2005, compared to $6.0 million in the same period of 2004. The selling and administrative expenses for the first quarter of 2004 were reduced due to the one-time cash payment of $0.9 million from a former vendor.

The company reports that it expects outdoor sales to increase with increased focus on innovative products for the hunting market. In addition, the integration of the company’s nationwide sales, marketing and customer services teams are expected to aid the company in getting closer to their customers, enhance targeted marketing efforts and extend distribution into specific work and uniform market opportunities.

Johnson Outdoors continues with “just say no” stance with Dolphin
Johnson Outdoors (NasdaqNM: JOUT) has rejected the latest, and increased, offer from Dolphin Limited Partnership I, L.P., a Stamford, Conn.-based, private investment partnership, to acquire approximately 1.5 million shares of the Johnson’s authorized but unissued Class B common stock at $21.75 per share. Johnson also rejected an earlier $21 per share proposal. Dolphin’s $32.7 million increased offer for a minority of JOUT’s shares was 8 percent above the unsuccessful $20.10 Johnson family buyout for the entire company and 15 percent above the market price.

Dolphin, along with an affiliate, holds approximately 310,000 shares of Johnson Outdoors.

In separate, but related news, on April 18, Dolphin delivered a proposal for inclusion in the company’s proxy statement for the 2005 annual shareholders meeting to be held on June 2. Dolphin’s proposal calls upon the board to take steps to implement cumulative voting for the Class A common stock. Cumulative voting would provide an opportunity for the unaffiliated 54 percent of the Class A common stock to elect one representative to the company’s board of directors. A release from Dolphin alleges that although the Class A shareholders have been entitled to elect 25 percent of the board since Johnson became a public company, as a practical matter, public shareholders have not been in a position to elect even a single director.

Dolphin has also delivered a request for certain minute books and accounting records of Johnson Outdoors Inc. under rights afforded under Wisconsin law. Dolphin said the company requested the records for the purpose of:

• determining whether the directors and/or executive officers of the company have fairly, disinterestedly and consistent with their fiduciary duties actively pursued all opportunities to enhance value for all shareholders
• assessing whether the directors of the company purporting to be independent and, as such, to be free of conflicts that may interfere with their disinterested representation of all shareholders, in fact qualify as such
• obtaining additional insights into the company’s published financial statements for the purpose of identifying opportunities available to the board for value enhancement

Dolphin stated in a press release that, “With the unsuccessful $20.10 per share going private transaction representing a 1.5 percent IRR for the 1987 IPO shares and, in today’s environment of heightened director scrutiny, it appears cavalier to us to see value enhancing proposals rejected without explanation or the offer of any alternative economic proposals. We look forward to carefully reviewing the documents requested under Wisconsin law and reporting to all shareholders.”

Rocky rides EJ Footwear acquisition to record first-quarter earnings
Rocky Shoes & Boots, Inc. (Nasdaq: RCKY) reported that for the three months ending March 31, 2005, net sales increased 181 percent to a record $61.5 million compared to $21.9 million for the corresponding period a year ago. Net income rose to a record $1.1 million versus net income of $0.1 million and diluted earnings per share increased to $0.20 versus $0.01 last year.

On Jan. 6, 2005, Rocky completed the acquisition of EJ Footwear Group. The results for the three months ended March 31, 2005, represent the performance of the consolidated company, while the year ago results reflect Rocky Shoe & Boots on a stand-alone basis.

Net sales for the first quarter increased 181 percent to $61.5 million compared to $21.9 million a year ago. EJ Footwear contributed $39.9 million in revenue during the quarter.

Gross margin in the first quarter of 2005 increased to $24.2 million, or 39.4 percent of sales, from 2004’s $5.6 million, or 25.7 percent of sales. The 1370 basis point increase was primarily due to sales of EJ Footwear product, which carry a higher gross margin than Rocky products, as well as a decrease in shipments to the U.S. military in the first quarter of fiscal 2005 compared to the first quarter of fiscal 2004. Military boots are sold at lower gross margins than branded products.

Selling, general and administrative (SG&A) expenses were $20.7 million, or 33.6 percent of sales for the first quarter of 2005 compared to $5.3 million, or 24.3 percent of sales, a year ago. The increase is primarily a result of higher SG&A associated with the EJ Footwear business. Income from operations increased to $3.5 million or 5.8 percent of net sales for the period from $0.3 million or 1.3 percent of net sales in the prior year.

Inventory increased to $69.3 million for the quarter compared with $35.1 million last year due to the acquisition of EJ Footwear.

Coleman organic sales up 4 percent making parent Jarden happy
Jarden Corp. (NYSE:JAH), parent of Coleman, said its net sales increased 229 percent to $521.3 million compared to $158.3 million for the same quarter last year. On an as adjusted, non-GAAP basis, first-quarter net income increased 110 percent to $15.8 million, compared to net income of $7.5 million for the same quarter last year.

On a GAAP basis, the first-quarter net income was breakeven, Jarden said. After the non-cash amounts for the paid-in kind dividends on the Series B and C preferred stock and a beneficial conversion charge related to the Series B preferred stock, the loss to common stockholders was $22.0 million or $0.76 per common share compared to diluted earnings per common share of $0.27 for the same quarter last year. On an as adjusted, non-GAAP basis, diluted earnings per common share was $0.38 for the first quarter.
First-quarter earnings for Coleman were $7,338,000 on sales of $182,916,000. The company’s conference call reported organic sales were up 4 percent, thanks to the sales of new products, as well as sleeping bags, tents and water sports. Two products singled out as strong successes were a collapsible lantern and a wide beam flashlight. Jarden also said it would be spending 25 percent more on R&D and product development this year overall, which included adding 100 new SKUs to the Outdoor Solutions segment — otherwise known as the Coleman business.

Phoenix Footwear reports first-quarter results up thanks to Royal Robbins and Trask
Phoenix Footwear Group (AMEX: PXG), parent of Royal Robbins, H.S. Trask, Trotters and others, reported that first-quarter net sales increased 41.6 percent to $26.4 million compared to $18.6 million for the first quarter of 2004.

Net income was $1.2 million, or $0.15 per diluted share, compared to net income of $1.2 million, or $0.24 per diluted share, for the first quarter of 2004. The per share amounts for the first quarter ended April 2, 2005, include the effect of 2.7 million shares issued during fiscal 2004 in connection with the company’s secondary offering and subsequent purchase of the Altama Delta Corp., as well as a severance charge of $0.05 per diluted share related to a management restructuring in January 2005. Gross margin for the first quarter of 2005 was 40 percent, compared to 44 percent for the first quarter of 2004.

First-quarter net sales for Royal Robbins increased 29.2 percent to $8.7 million, compared to $6.7 million last year. The unit has increased its retail distribution points, and its products continue to sell very well. Royal Robbins currently has a strong fall pre-book position, Phoenix said. It expects the brand to continue posting strong growth in 2005.

Net sales for H.S. Trask in the first quarter increased 24.8 percent to $2.0 million, from $1.6 million in the first quarter of 2004. This increase in sales reflects success in rebuilding and repositioning the H.S. Trask line, Phoenix said. SoftWalk posted net sales for the first quarter of 2005 of $4.2 million, a 5.8 percent increase over $4.0 million in the first quarter of 2004. Net sales for Trotters decreased 27.8 percent to $4.5 million, from $6.3 million in the first quarter of 2004. Altama’s net sales for the first quarter decreased 43.2 percent to $6.8 million, compared to net sales of $12.0 million for Altama’s three months ended April 3, 2004, prior to its acquisition.

“Our first quarter results trended as expected, highlighted by strong results at our Royal Robbins, SoftWalk and H.S. Trask brands, offset by softness at our Altama and Trotters units,” James Riedman, Phoenix’s chairman, said in a statement. “Despite these inconsistent sales results, we continue to post solidly profitable financial returns from our portfolio. We are taking steps to address the issues at Altama and Trotters, while our other units are demonstrating continued momentum in the current quarter. In addition, we expect our pending acquisition of the Chambers Belt Company, which is scheduled to close in the second quarter, to increase our growth and profit potential in 2005 and beyond.”

Big 5 reports 1Q same store sales growth for 37th consecutive quarter
Big 5 Sporting Goods Corp. (Nasdaq: BGFVE) has reported that 1Q net sales increased by $8.1 million, or 4.5 percent, to $189.9 million from net sales of $181.8 million in the first quarter of 2004. Same-store sales increased 1.7 percent during the first fiscal quarter versus the comparable 13-week period last year, representing the company’s 37th consecutive quarterly increase in same store sales over comparable prior periods. Net income increased to $7.2 million, or $0.32 per diluted share, for the fiscal 2005 first quarter, compared with net income, as preliminarily restated, of $6.6 million, or $0.29 per diluted share, in the fiscal 2004 first quarter.

The company reported that despite being open for business one less day than in 2004 due to the timing of the Easter holiday, store sales were up in each of the retailer’s three major merchandise categories for the quarter, with footwear being the strongest performing category, followed by apparel and hardgoods.

As Big 5 previously announced the company will be restating its prior reported financial statements for fiscal years 2002 and 2003, and the quarterly periods of fiscal years 2002, 2003 and 2004, in order to correct an accounting error and to make adjustments relating to the previously disclosed establishment of a sales return allowance as well as the company’s accounting treatment for leases. The company’s accounting firm hasn’t been able to finish the restatements, resulting in the change of Big 5’s Nasdaq symbol from BGFV to BGFVE — a probation period by the stock exchange until Big 5 completes the paperwork. Big 5 management said it does not believe that the ongoing review of its prior reported financial statements will identify any other material errors or adjustments than those the company has already reported or result in any material change to the company’s financial information contained in the 1Q report.

Big 5 currently operates 310 stores and anticipates opening between 16 and 20 new stores in fiscal 2005.

The Sportsman’s Guide reports record 1Q 2005 results
The Sportsman’s Guide (NasdaqNM: SGDE) saw a 44.2 percent jump in net sales to $64.3 million, compared with $44.6 million last year, due in large part to net sales increasing 12 percent at the company and the acquisition of The Golf Warehouse in June 2004. The increase at the company was largely the result of increased Internet sales, it said.

Net earnings for the quarter were $2.1 million, or $0.26 per fully diluted share, a 79.6 percent increase over the $1.2 million, or $0.15 per fully diluted share, reported for the same period in 2004. The per share calculations for the most recent period have been adjusted to reflect the Company’s recent 3-for-2 stock split, distributed to shareholders on April 15. Without the split, fully diluted earnings per share for the quarter would have been $0.39 per share, compared to $0.22 per share for the same period in 2004.

Kellwood names new CIO
Michael Saunders has been named chief information officer of Kellwood Company, handling the company’s information services and technology. He will serve as the company’s principal information technology advisor to corporate and division management. Most recently, Saunders was the vice president-business processes and chief information officer for Russ Berrie and Company, and he has also worked for Danskin.

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