Outdoor financials: Phoenix Footwear reports 127.1 percent increase in sales, plus Amer Sports, Sara Lee, Outdoor Channel, West Marine, GSI Commerce, Cabela’s, adidas

Phoenix Footwear reports 127.1 percent increase in sales, lower net loss
With double-digit performances from its Royal Robbins and Altama brands, Phoenix Footwear Group (Amex: PXG) posted a 127.1 percent increase in net sales for the second quarter — $34.9 million compared to $15.4 million for the second quarter of 2005. Solid contributions from SoftWalk and Trotters also boosted the bottom line.

Phoenix reported strong organic growth of 27.4 percent, which excludes the Tommy Bahama and Chambers brands as these were acquired in the last 12 months. This revenue reflects an 87.8 percent increase in Altama, a 25.8 percent increase in Royal Robbins, a 5.1 percent increase in SoftWalk and a 2.5 percent increase in Trotters, offset by a 21.5 percent decline in H.S. Trask. On a trailing 12-month basis, net sales through the second quarter increased 66.6 percent to $142.6 million, compared to $85.6 million a year ago.

The company’s net loss for the second quarter was $342,000, or $0.04 per share, on 7.9 million of weighted-average shares outstanding, compared to net loss of $1.0 million, or $0.14 per share, on 7.6 million weighted-average shares outstanding, for the comparable quarter a year ago. The company said included in the net loss was a severance charge of approximately $800,000, or $0.06 per diluted share. Excluding this charge, earnings per share were $0.02. On a trailing 12-month basis, net income increased 200.6 percent to $3.7 million, compared to $1.2 million, a year ago.

Gross margins in the second quarter of 2006 were 37.8 percent, compared to 38.2 percent in the second quarter of 2005. Operating costs increased to $12.2 million, compared to $7.1 million in the second quarter of 2005, primarily associated with the Chambers and Tommy Bahama footwear brands acquired during late 2005. Operating income for the second quarter was $935,000, compared to an operating loss of $1.2 million in the second quarter of 2005.

Second quarter 2006 net sales for Royal Robbins were strong at $6.5 million, an increase of 25.8 percent, compared to $5.2 million a year ago. The division continued to solidify its position in Canada and maintained strong growth momentum in the domestic market, as well. During the quarter, Royal Robbins added Sport Chalet as a new customer and plans to open 15 more doors for its spring 2007 line of merchandise. Finally, Phoenix said the current backlog suggests continued growth in the second half of the year.

In the company’s other units, most reported upswings in sales, while H.S. Trask sales dropped 21.5 percent. Sales from the Tommy Bahama Footwear brand totaled $4.3 million, or 12.3 percent of total sales; sales from the Chambers Belt Co. was $11.0 million, representing 31.6 percent of total sales; Altama’s net sales increased 87.8 percent to $6.5 million, compared to net sales of $3.5 million in 2005; SoftWalk net sales increased 5.1 percent to $2.2 million, compared to 2005’s $2.1 million; and sales for Trotters increased 2.5 percent to $3.0 million, compared to $2.9 million a year ago. Net sales for H.S. Trask decreased 21.5 percent to $1.3 million in the second quarter, compared to $1.7 million a year ago.

Amer hits with sales, loses with earnings
Amer Sports, parent of Salomon, Suunto and Atomic, reported that net sales for January to June 2006 grew by 7 percent to Euro 739.2 million (USD $946.7 million), compared to Euro 689.9 million in 2005. In local currencies, net sales grew by 4 percent.

Gross profit was Euro 285 million (USD $365 million), compared to Euro 264.8 million in the same period of 2005. Earnings before interest and taxes (EBIT) amounted to a loss of Euro 7.4 million (USD $9.4 million) compared to a loss of Euro 14.2 million the year before and a loss of earnings per share of Euro 0.19 (USD $0.24) compared to a loss of Euro 0.23 for the same 2005 period.

“The seasonality of business areas was evident in the second quarter, which is the quietest season of the year for the winter sports business,” said CEO Roger Talermo in a statement. “On the whole, the amount of orders placed for both Salomon’s and Atomic’s winter sports equipment for the 2006/07 season is higher than in the previous year.”

He added: “The earnings trends of Salomon and Precor were particularly positive in the review period. The factors underlying the improvement in Salomon’s earnings were sales growth and better cost control. Precor’s EBIT also rose substantially thanks to growth in sales and improved sales margins. The Golf Division fell short of its objectives, burdening Wilson’s result.”

The company said that 2006 is a transitional year for Salomon, and it is proceeding as planned, including the cutting of 370 positions on June 23. Additionally, it said great progress has been made in finding synergies for industrial cooperation between Atomic and Salomon, and these changes will be carried through next year.

The company is estimating that its net sales in 2006 will amount to Euro 1.8 billion (USD $2.3 billion). Earnings per share in 2006 are expected to come in at Euro 0.95-1.05.

In other company news: Amer Sports reported that it is consolidating Amer Sports Winter & Outdoor America business under one management team to strengthen the company’s presence and develop its business in the United States. Its goal is to find new ways to grow the business with Amer Sports brands Salomon, Atomic and Suunto, as well as provide a more efficient infrastructure for sales and operations for the U.S.-based winter and outdoor businesses. Mike Dowse has been appointed to the newly created position of general manager of Amer Sports Winter & Outdoor Americas, effective Sept. 1.

(Conversion of Euros into U.S. dollars is for information only, is not necessarily relative to earnings, and is based on the currency rate as of Aug. 9.)

Duofold parent posts Q4 profit
Sara Lee (NYSE: SLE), parent of numerous brands, including Duofold, reported a fourth-quarter profit but said it does not believe it will hit long-term targets in sales and operating margins by 2010 as previously expected.

The company earned $8 million, or a penny per share, in the three months ended July 1 compared to a loss of $148 million, or $0.19 per share, a year ago.

Results include $0.08 per share in net charges, as costs relating to the recognition of trademark impairments, severance and other business transformation were offset in part by gains on the sale of businesses. Additionally, an increase in the provision for income taxes reduced earnings by $0.22 per share.

The company’s revenue was up nearly 2 percent to $4.1 billion, from $4.03 billion last year. Analysts, on average, expected higher revenue of $4.23 billion.

Sara Lee is in the process of selling some businesses to focus on large branded divisions it believes can contribute to strategic growth, including core food, beverage, and household and body care businesses. It plans to spin off its Hanesbrands apparel business, which includes Duofold, in September.

Because fiscal 2005 and 2006 came in weaker than Sara Lee’s initial expectations, the company announced it is altering its long-term guidance. It warned it does not believe it will hit its previously expected 12 percent operating margin and $14 billion in sales in fiscal year 2010.

For the year, profit declined to $555 million, or $0.72 per share, from $719 million, or $0.90 per share, a year ago. Annual revenue edged down nearly 1 percent to $15.94 billion from $16.03 billion last year.

Expenses take toll on Outdoor Channel’s Q2 profit
Outdoor Channel Holdings (Nasdaq: OUTD) saw its second-quarter profit slip 26 percent on higher programming expenses.

Quarterly net income fell to $377 million, or a penny per share, from $512 million, or $0.02 per share, in the year-ago period. During the quarter, subscriber fees grew 11 percent to $4.3 million from $3.9 million, while advertising revenue from televised commercials rose 8 percent to $5.7 million from $5.3 million. Total revenue increased to $10.9 million from $10 million.

Programming expenses jumped to $2.2 million from $531,000, as the Outdoor Channel worked to boost its in-house programming efforts. Total expenses for the company increased 27 percent to $11.7 million from $9.2 million, a year earlier.

West Marine Q2 income tanks
West Marine (Nasdaq:WMAR) released unaudited operating results for the second quarter of 2006, which included a slight bump in sales and a significant drop in net income.

Second-quarter net sales were $264.5 million, an increase of 4.3 percent from net sales of $253.5 million for the same period a year ago. Comparable store sales increased 2.3 percent.

Net income for the quarter was $14.0 million, or $0.65 per share, including a $3.5 million pre-tax, non-cash asset impairment charge, or $0.09 per share after-tax, compared to net income of $22.8 million, or $1.07 per share, for the same period a year ago.

During the second quarter, the company incurred the $3.5 million charge based on management’s ongoing analysis of underperforming stores. The company said it expects to incur additional pre-tax costs relating to closing certain locations in 2006 ranging from $8 million to $10 million.

Excluding costs related to store closures, the company now expects that earnings for the full year 2006 will range from approximately $0.05 to $0.10 per share, based on projected comparable store sales increases ranging from 1.5 percent to 2.5 percent for the year.

“This is a transition period for West Marine,” said CEO Peter Harries in a statement. “We are taking aggressive action to solidify the store foundation and reduce expenses in order to position the company for long-term profitability and growth.”

GSI Commerce president plans retirement
Effective October, GSI Commerce (Nasdaq: GSIC) said that Robert Blyskal, the company’s president and chief operating officer, plans to retire. Blyskal came out of retirement to join GSI Commerce as co-president and chief operating officer in May 2004 and was later named president and chief operating officer in August 2005. Michael Rubin, chairman and CEO of GSI Commerce, will assume the role of president following the departure of Blyskal. The company added that it doesn’t plan to fill the position of chief operating officer at this time.

Cabela’s verifies accounting policies, plans to re-file statements
After reviewing accounting policies related to select short-term investments, Cabela’s (NYSE: CAB) said the results did not impact the company’s revenue, net income, total assets, stockholders’ equity, or earnings per share for any prior periods. As a result, the company said it will file as soon as possible a Form 10-Q/A for the first quarter of fiscal 2006 to restate its statements of cash flows, a Form 10-K/A for the fiscal year ended Dec. 31, 2005, to restate its balance sheet, as well as its statements of cash flows for the fiscal years ended Dec. 31, 2005, Jan. 1, 2005, and Jan. 3, 2004.

adidas reports second-quarter results
For the second quarter of 2006, the adidas Group (ADSG.DE) reported that sales increased 59 percent on a currency-neutral basis, driven by the consolidation of the Reebok business segment, as well as higher than anticipated double-digit growth of both adidas and TaylorMade-adidas Golf.

Sales for the adidas Group excluding Reebok increased 20 percent on a currency-neutral basis, with double-digit sales increases coming from all regions. In euro terms, group revenues grew 60 percent to Euro 2.428 billion (USD $3.109 billion) in the second quarter of 2006 from Euro 1.516 billion in 2005. Sales for the adidas Group excluding Reebok grew 20 percent in euro terms to Euro 1.812 billion (USD $2.320 billion) from Euro 1.516 billion in the prior year.

Its new Reebok business saw orders decline by 16 percent, which adidas mainly blamed on a weak footwear business and a transfer of the license sales rights for the U.S. basketball league NBA to adidas. The company bought Reebok for $3.8 billion to take on Nike but has launched a revamp to tackle falling orders.

While adidas said Reebok would help improve 2006 group earnings, analysts are split over whether the U.S. acquisition will pay off.

“You cannot turn around Reebok in one quarter or two,” CEO Herbert Hainer said in a conference call.

In April, Adidas said it expected the takeover to generate annual cost synergies of Euro 175 million (USD $224 million), up from Euro 125 million (USD $160 million) originally targeted.

(Conversion of Euros into U.S. dollars is for information only, is not necessarily relative to earnings, and is based on the currency rate as of Aug. 9.)

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