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Outdoor financials: Phoenix Footwear reports Q4 loss, plus Jarden, Eddie Bauer, Quiksilver

Phoenix Footwear reports Q4 loss, Jarden reaches 52-week high after analyst upgrade, Eddie Bauer completes refinancing, Analyst upgrade bumps up Quiksilver shares,

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Phoenix Footwear reports Q4 loss
Phoenix Footwear Group (Amex: PXG) swung to a loss in the fourth quarter as revenue declined. The company said it defaulted on financial covenants.

Quarterly loss totaled $23.4 million, or $2.95 per share, from a profit of $71,000, or a penny per share, in the year-ago quarter. Revenue fell 13 percent to $28.9 million from $33.2 million, hurt by weak sales of several of its brands, it said.

Royal Robbins and H.S. Trask were the only brands to post sales gains in the fourth quarter: Royal Robbins sales increased 26 percent to $4.6 million, while H.S. Trask sales grew 11.5 percent to $3.1 million during the quarter.

Tommy Bahama footwear sales fell 58.5 percent to $1.2 million, Chambers net sales fell 5 percent to $9.8 million, Altama sales fell 31.5 percent to $4.5 million, SoftWalk sales fell 26.6 percent to $2 million, and Trotters sales fell 11.5 percent to $3.7 million.

For the year, net loss was $20.4 million, or $2.58 per share, compared with a year-ago profit of $1.2 million, or $0.15 per share. Revenue grew 29 percent, to $140.6 million, from $109.2 million.

For the full year, Royal Robbins posted a 27.8 percent increase in sales: $31.8 million versus $24.9 million in 2005. Phoenix said the double-digit growth of the brand was primarily attributable to moving to direct sales in Canada earlier in 2006 and improved sell-through in all of its retail accounts, including REI.

During the year, Phoenix said it worked to reduce inventory levels, which fell by 40 percent, repositioned the Tommy Bahama spring footwear line.

Phoenix said it defaulted on financial covenants with its bank as of Dec. 30. The bank waived the defaults, but Phoenix said it expects it will not meet its financial covenants for the fiscal quarter ended March 31. Phoenix is in discussions with its bank about waving the first-quarter default and is working on amending its covenants.

Jarden reaches 52-week high after analyst upgrade

Shares of Jarden Corp. (NYSE: JAH), which makes Coleman and Campingaz branded items, among others, hit a 52-week high on April 5, after an analyst said the company has strong cash flows and upgraded the stock.

Goldman Sachs analyst Amy Low Chasen said after a meeting with Jarden management, she believes the company’s strong cash flows in the fourth quarter could extend into the first quarter. She added that Jarden has successfully refinanced debt, and may be looking for an acquisition that would be helpful to earnings.

She raised her price target by $4 to $45 and upped her rating to “Buy” from “Neutral.”

Jarden shares gained $2.41 to $40.84 during April 5 trading on the New York Stock Exchange, ending the day at $40.64. The stock has traded between $27.58 and $39.27 during the past 12 months.

Eddie Bauer completes refinancing
Eddie Bauer Holdings (Nasdaq: EBHI) said it completed refinancing a $275 million secured term loan. The new financing includes a $225 million secured term loan, with a final maturity date of April 1, 2014, and $75 million in 5.25 percent convertible senior notes due 2014.

Howard Gross, Eddie Bauer’s interim CFO, said the new package lowers interest expense and reduces risk in the company’s capital structure.

Separately, the company said that the Report of Independent Registered Public Accounting Firm on its financial statements for the 2006 fiscal year filed with the SEC included an explanatory paragraph about the company’s ability to continue as a going concern. A going-concern statement is a note from independent accountants expressing serious doubt about whether the company can continue to meet its obligations over the next year. Eddie Bauer added that it expected this paragraph.

Eddie Bauer emerged from bankruptcy in June 2005 and is attempting a turnaround. Last month, Eddie Bauer shareholders turned down the company’s proposed $286 million sale to a holding company owned by affiliates of Sun Capital Partners Inc. and Golden Gate Capital.

Analyst upgrade bumps up Quiksilver shares
Shares of Quiksilver (NYSE: ZQK) rose on April 3 after an analyst upgraded the company, saying the company is underestimated by the market and has strong assets.

Morgan Stanley analyst Brian McGough said Quiksilver investors might be undervaluing the company because its 2005 acquisition of French ski maker Rossignol has had a “disappointing start.”

“With all the talk about Rossignol, people forget that Quiksilver owns some of the most coveted assets in the surf/skate business,” McGough wrote in a research note. Those brands, which make up 73 percent of the company’s sales, include Quiksilver, Roxy and DC shoes.

McGough added that the company might be open to considering strategic options if earnings don’t improve. “To the extent the earnings rebound does not play out, we think that the potential for value-creating strategic actions is very likely — by either the existing management team or by a strategic/financial buyer,” he said in his note.

He upgraded the stock to “Overweight” from “Equal-weight” and lifted its price target to $17 from $13.50.

Shares rose as high as $1.19 to $12.68 during midday trading on the New York Stock Exchange, closing the day at $12.24. The stock has traded between $10.90 and $16.08 over the past 52 weeks.

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