Outdoor financials: Q3 profit for VF drops 7 percent, plus Columbia Sportswear, Deckers, Rocky Brands, LaCrosse, Under Armour, Amer Sports
VF's Q3 profit dropped 7 percent, Columbia's Q3 profit fell 24 percent, Q3 profit rose 30 percent for Deckers, Rocky posted a 17-percent rise in Q3 profit, LaCrosse reported a slight Q3 sales rise, Under Armour shares rose on an analyst upgrade, and new Amer Sports shares were registered with the Trade Register.
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Q3 profit for VF drops 7 percent
VF Corp. (NYSE: VFC) said its third-quarter profit fell 7 percent on lower revenue despite gains in its outdoor and action sports segment. VF is parent of The North Face, JanSport, Eastpak, Eagle Creek and Vans, among others.
The company reported net income fell to $217.9 million, or $1.94 per share, down from $233.9 million, or $2.10 per share in the prior-year period.
The latest results were hit by a combined $0.17 per share impact from higher pension expense and foreign currency translation. The quarter also didn’t include a $0.07 per share benefit seen in the same period last year.
Revenue fell 5 percent to $2.1 billion from $2.2 billion a year earlier, with foreign currency translation accounting for two percentage points of the decline.
The company said third-quarter revenues in its outdoor and action sports coalition were about even with the prior year, with operating income and margins each reaching record levels in the period. On a constant currency basis, revenues rose 3 percent.
Global revenues of The North Face and Vans brands grew 10 percent and 4 percent, respectively, in the quarter on a constant currency basis. Total coalition revenues in its Americas businesses rose 1 percent, while international revenues were up 4 percent in constant dollars, led by exceptionally strong growth in Asia.
Total direct-to-consumer revenues for its outdoor and action sports coalition rose 17 percent in the quarter, with double-digit growth for The North Face, Vans and Napapijri brands. Operating income rose with margins reaching a record 23.1 percent in the quarter, with continued expansion in gross margins.
For the outdoor and action sports segment, revenue growth should accelerate in the fourth quarter primarily due to an increase in its owned retail store business, as well as more favorable foreign currency translation rates. In addition, operating margins should continue to expand in the quarter compared with the prior year period.
“Our four largest brands — Wrangler, Lee, The North Face and Vans, representing approximately 60 percent of our total revenues — are strong and healthy, and continue to gain share in most markets,” said Eric Wiseman, chairman, president and CEO of VF, in a statement.
Based on the quarter’s results, the company said it is moving its earnings guidance toward the higher end of its prior range of $4.70 to $5 per share.
Also, the company raised its quarterly dividend by 2 percent to $0.60 per share.
Columbia’s Q3 profit falls 24 percent
Columbia Sportswear (Nasdaq: COLM) said its third-quarter profit fell 24 percent as sales dropped.
For the three months ended Sept. 30, earnings were $46.9 million, or $1.38 per share, compared to $58.3 million, or $1.69 million, during the same period last year.
Sales were down 4 percent to $434.5 million versus $452.4 million last year.
Columbia brand net sales totaled $370.3 million, down 6 percent. Mountain Hardwear brand net sales were equal to the third quarter of 2008 at $35.2 million. Net sales of Sorel footwear increased 42 percent to $27.0 million. Net sales of Montrail and Pacific Trail brand products were insignificant during the third quarter of both years, it said.
“Third-quarter results were significantly better than our July outlook, primarily due to greater than expected demand and resulting shipments of fall 2009 products in the U.S., as well as a greater benefit from stronger international currencies,” said Tim Boyle, Columbia’s president and CEO, in a statement. “The gross profit from those incremental shipments dropped to the bottom line as we held spending within our original plan for the quarter.”
The company raised its full-year revenue, saying it expects sales to fall 8 percent to 9 percent for the full year. It previously estimated sales would fall in the low double digits.
Mitch Kummetz of Baird told clients in a research note that while the guidance is better than Columbia’s initial take, it hasn’t improved all that much. The analyst wrote that the company’s outerwear and sportswear businesses are fairly mature, and plans to grow its footwear segment have yet to be realized.
Kummetz reaffirmed a “neutral” rating and increased and increased its price target to $47 from $40.
Also, Columbia’s board of directors boosted its quarterly dividend nearly 13 percent to $0.18 per share to be paid on Nov. 25 to shareholders of record as of Nov. 12. The previous quarterly dividend was $0.16 per share.
Q3 profit up 30 percent for Deckers boosted by Ugg sales
Deckers Outdoor (Nasdaq: DECK), parent of Teva, Ugg and Simple, said its third-quarter profit climbed 30 percent on strong international and Ugg boot sales.
For the period ended Sept. 20, it earned $33.8 million, or $2.59 per share, up from $26 million, or $1.97 per share, during the same period a year ago.
Sales were up 16 percent to $228.4 million from $197.3 million. Deckers said international sales jumped 41 percent to $49.4 million, while domestic sales increased 10.3 percent.
Ugg brand net sales were up 19.1 percent to $212.8 million compared to $178.7 million for the same period last year. The company said the sales gain was from an increase in domestic and international shipments of fall product versus the same period a year ago.
Teva brand net sales decreased 19.5 percent to $9.0 million for the third quarter compared to $11.2 million for the same period last year, hurt by lower sell-in.
Simple brand net sales decreased 31.4 percent to $3.5 million versus $5.2 million last year, with a lower than normal rate of reorder business in the quarter.
The company reported that inventory grew 18.9 percent to $187.8 million on higher Ugg brand inventory. It said most of Ugg’s business is pre-booked, so the higher inventory is needed to fulfill orders currently on its books. Part of the inventory increase was also due to more retail store openings, the company added.
Deckers said it now expects 2009 profit to climb about 9 percent from the prior year’s adjusted earnings of $7.27 per share, which implies profit of $7.92 per share. The company previously forecast earnings would be flat to up slightly.
Deckers also lifted its annual revenue guidance. It anticipates sales will rise about 13 percent, up from a prior outlook for a 9 percent to 10 percent sales increase. The new outlook implies 2009 revenue of $779 million.
For the fourth quarter, Deckers expects adjusted earnings to rise about 5 percent from a year ago, with sales up approximately 4 percent. The forecast implies fourth-quarter income of $4.25 per share on revenue of $315.5 million.
Rocky posts 17 percent rise in Q3 profit
Despite a 17-percent increase in profit, Rocky Brands (Nasdaq: RCKY) saw its sales dip 8 percent in the third quarter.
It earned $2.78 million, or $0.50 a share, compared to $2.37 million, or $0.43 a share, in the same period a year ago.
Revenue dropped 8 percent to $66.6 million from last year’s $72.5 million. The company said wholesale revenue was down but retail sales fell 25 percent in part because of the company’s move to close some mobile stores selling its Lehigh-brand footwear.
Closing some of the Lehigh shops also helped Rocky cut costs as overhead expenses dropped 15 percent to $18.6 million. Lower freight, trade-show and payroll costs also played a role in trimming expenses, the company said.
The company said it has been working over the past 18 months to chip away at expenses and boost profitability. Despite a dip in sales, the company said it’s seeing signs of stabilization in its wholesale business, which accounts for about 80 percent of revenue.
Gross margin was $24.7 million, or 37.1 percent of sales, compared to $27.1 million, or 37.4 percent for the same period last year. Selling, general and administrative expenses decreased $3.4 million, or 15.4 percent, to $18.6 million, or 27.9 percent of sales for the third quarter of 2009, compared to $22.0 million, or 30.3 percent of sales, a year ago.
Income from operations increased 19.8 percent to $6.1 million, or 9.2 percent of sales for the period, compared to income from operations of $5.1 million, or 7.1 percent sales in the prior year.
Inventory decreased 18.3 percent to $68.1 million at Sept. 30 compared with $83.3 million on the same date a year ago.
LaCrosse reports slight Q3 sales rise
While retail demand remained soft, LaCrosse Footwear (Nasdaq: BOOT), parent of Danner, said it saw slight rise in third-quarter sales from at-once demand in niche markets and product categories including outdoor footwear.
For the third quarter ended Sept. 26, net sales were $40.8 million, up from $40.3 million in the third quarter of 2008.
Net income was $2.2 million, or $0.35 per diluted share, compared to $2.8 million, or $0.43 per diluted share, in 2008.
Sales to the outdoor market were $18.7 million for the third quarter of 2009, down from $20.8 million for the same period of 2008, reflecting continued softness in the overall global retail environment, it said. Sales to the work market were up 14 percent to $22.1 million from $19.5 million.
Gross margins were 38.6 percent of net sales, compared to 39.2 percent in the same period of 2008. Operating expenses were $11.8 million, up 5 percent from last year.
LaCrosse’s board also approved a quarterly dividend of $0.125 per share of common stock, totaling $0.8 million, to be on Dec. 18 to shareholders of record on Nov. 22.
Under Armour shares rise on analyst upgrade
Shares of Under Armour (NYSE: UA) were up Oct. 26, ahead of its third-quarter earnings report, after an analyst said the company’s sales are strong.
Shares rose $1.58, or 5.01 percent, to $33.09. The stock has traded between $11.94 and $33.31 over the past year.
Susquehanna analyst Christopher Svezia wrote in a note to investors that sales of the company’s ColdGear products in particular, including fleece, outerwear and base layers, have been strong. But, he added, footwear has been weaker.
“We expect to see solid 2010 apparel growth while the company regroups its lower-margin footwear business,” Svezia wrote. He upgraded the company to “neutral” from “negative.”
New Amer Sports shares registered with the Trade Register
Amer Sports, parent of Salomon, Arc’Teryx and Suunto, reported that a total of 48.4 million new shares were subscribed for in its rights offering and have been registered with the Trade Register.
Following the registration, the total number of Amer Sports’ shares is 121.5 million shares. The new shares include the right to dividends and other distributions as well as other shareholder rights from the registration date of Oct. 26.
Trading of new and existing shares will start on Oct. 27.
–Compiled by Wendy Geister
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