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Outdoor financials: Loss of military contract revenue dings Johnson Outdoors in Q4, FY2005, plus Dick's, Gander, GSI, Wellman

Loss of military contract revenue dings Johnson Outdoors in Q4, FY2005; Dick's Q3 profit is up 56 percent; Gander posts larger Q3 sales loss; GSI reports Q3 earnings after accounting delays; and Wellman names a new board member and declares dividend.

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Loss of military contract revenue dings Johnson Outdoors in Q4, FY2005
Reflecting a seasonal slowdown, Johnson Outdoors (Nasdaq: JOUT) posted a 35 percent drop in outdoor equipment revenue as a result of a 46 percent drop in military tent sales. It also posted a fourth-quarter net loss and reported 2005 fiscal year results.

The company reported a net loss for the quarter of $3.4 million, or $0.39 per share, compared with $3.8 million, or $0.44 per share, during the same period a year ago. It pointed to a number of factors that contributed to the loss: a drop in military sales that resulted in a $2.9 million decline in outdoor equipment profits; increased commodity costs for the marine electronics and watercraft divisions; restructuring costs of $1.6 million to improve efficiency and profitability long-term in the watercraft and diving divisions; and Sarbanes-Oxley Section 404 compliance costs of $900,000.

Overall, sales edged up 2 percent to $77.1 million from last year’s $75.6 million.

Its outdoor equipment revenue fell 35 percent to $14.9 million, due to a 46 percent drop in military tent sales. Watercraft continued on the upswing with sales 25 percent ahead of last year’s fourth quarter due to favorable reception of new products, the company said. The marine electronics segment also saw a 34 percent jump, to $22.5 million.

For the 2005 fiscal year, Johnson Outdoors said it achieved net sales of $380.7 million compared to $355.3 million for the full year 2004, an increase of 7 percent. Sales growth in its core brands more than offset the decrease in military revenues for the year, it said.

It said the successful integration of the Humminbird brand into its marine electronics division resulted in a sales increase of 32 percent year-over-year. The watercraft division grew 6 percent year-over-year as a result of a several new product introductions, which drove double-digit growth in international markets and among the division’s top 30 domestic customers. It added that the Old Town Dirigo kayak introduced this year was a major contributor to new product sales for the year. On the down side, the outdoor equipment division reported a year-over-year 16 percent decline in division sales driven primarily by the 21 percent decline in military sales.

Operating profit for the year was $15.5 million compared to $19.1 million in 2004. For the fiscal year, the company’s net income was $7.1 million, or $0.81 per share, down 18 percent from $8.7 million, or $0.99 per share, a year ago. It noted that its profitability would have improved had it not been for unusual one-time items in this and the previous fiscal year.

In other news, Johnson Outdoors also appointed David Johnson as vice president – chief financial officer of the company. Johnson has served as interim CFO since August 2005 during which time the company conducted an executive search process.

Before joining Johnson Outdoors in December 2001, Johnson held a number of financial positions, first with The Northern Trust Company and later with The Procter & Gamble Company. Johnson was director of treasury services and financial analysis at Johnson Outdoors before becoming interim CFO in August. Since assuming that role, he has led all aspects of the company’s finance department, including financial and tax planning, financial reporting, investor relations and financing efforts.

No longer weighed down by merger costs, Dick’s Sporting Goods’ (NYSE: DKS) net income skyrocketed 56 percent to $4.2 million, reversing the $2 million loss from the year before.

Earnings per share for 2005 are $0.08 compared to a reported loss of $0.04 last year. Dick’s said that without the merger and store closing costs, the retailer would have reported a net income of $2.7 million, or $0.05 earnings per share, in the 2004 quarter.

Net sales for the quarter increased 8 percent to $582.7 million from $541 million. Analysts had expected a profit of $0.07 per share on $582.7 million. Same-store sales increased 2.9 percent. The former Galyan’s stores will be included in the same-store base beginning in the second quarter of fiscal 2006.

Fourth-quarter earnings are expected to range from $0.95 to $1 per share, excluding one-time items, with same-store sales growing 1 percent to 2 percent. For the year, Dick’s said it’s maintaining its estimate for income of $1.70 to $1.75 per share, or $1.27 to $1.32 per share before items. Same-store sales are forecast to increase by 2 percent.

During the third quarter, Dick’s opened 16 stores, relocated three stores and remodeled one store, which completes the new store openings for the year. It now operates 255 stores in 34 states.

On the New York Stock Exchange, Dick’s shares closed at $33.75 on Nov. 15, up $3 from the previous day.

Gander posts larger Q3 sales loss
Gander Mountain (Nasdaq: GMTN) posted a sharper-than-expected third-quarter loss due to higher expenses and a steep drop in same-store sales — falling short of analyst expectations.

Gander Mountain posted a loss of $7.5 million, or $0.53 per share, for the quarter versus a restated year-earlier profit of $1.7 million, or $0.11 per share. Sales increased 20 percent to $214.4 million from $178.1 million aided by more store openings, it said. But same-store sales fell 8.5 percent.

Analysts were looking for a loss of $0.05 cents per share, excluding one-time items, on $206.1 million in sales.

“We are disappointed in our sales performance and loss for the quarter,” said Mark Baker, Gander’s president and CEO. “We continue to believe that outdoor lifestyle retailing is a great industry and that Gander Mountain, with our value positioning and large-format stores, has the right concept to succeed in this business. However, we recognize that we need to prove the strength of this concept by delivering profits.”

The company also said it has amended a credit facility with Fleet Retail Group LLC to adjust the requirements for earnings before interest, taxes, depreciation and amortization and operating cash flow. Gander said that the latter requirement will be tested quarterly, adding that it is “confident that it will have the liquidity it needs to execute its plans in 2006.” The company posted a loss of $35.5 million for the first nine months of the fiscal year.

In the third quarter of fiscal 2005, Gander Mountain opened nine new stores and relocated and consolidated two stores, bringing the total store count to 98 at the end of the quarter. The company entered three new states in the quarter — Maryland, Kansas and North Carolina — bringing the total number of states to 18. The company anticipates opening six to eight new stores in 2006, including two relocations.

GSI reports Q3 earnings after accounting delays
After delaying its third-quarter filing to resolve past accounting issues, GSI Commerce (Nasdaq: GSIC) reported results for the third fiscal quarter ended Oct. 1 on Nov. 15 posting a net loss of $4.5 million, or $0.10 per share, for the third quarter of 2005. That compares to a net loss of $3.0 million, or $0.07 per share, in the same period last year.

Net revenues were $84.9 million, a 24 percent increase compared to $68.6 million in the same period in 2004. Merchandise sales were $126.6 million, a 26 percent increase over 2004’s $100.2 million.

Net revenues from sporting goods category sales were $38.1 million, a 28 percent increase compared to $29.8 million for the same period last year. Merchandise sales from the sporting goods category were $46.5 million, a 29 percent increase compared to $36.1 million last year.

GSI said it has resolved its accounting issues, but the changes will cause it to report a loss of $337,000 for the 2004 fiscal year, instead of the profit of $340,000 it previously posted. For fiscal 2003, the company said its loss was narrower than previously reported — $11.9 million instead of $12.1 million. The company also said it restated previous results for the first two quarters and first half of the 2005 fiscal year, and for the corresponding periods last year.

Wellman names new board member, declares dividend
Wellman’s (NYSE: WLM) board of directors has appointed Kevin Kruse, vice president of Warburg Pincus, to the board, effective immediately. Kruse will be replacing Oliver Goldstein, who has resigned from the Wellman board. Goldstein, a former Warburg Pincus managing director, had been a member of the Wellman board since February 2003, when Warburg Pincus made its initial investment in Wellman.

Wellman’s board declared a quarterly dividend of $0.05 per share on the outstanding shares of its common stock. It’s payable on Dec.15, 2005, to stockholders of record on Dec. 1, 2005.

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