Outdoor financials: Q3 sales for Amer Sports' winter sports/outdoor segment fall 5 percent, plus Rocky, Under Armour, Luxottica /Oakley, Garmin, Hanesbrands, Liberty Media

Q3 sales for Amer Sports’ winter sports/outdoor segment fall 5 percent

Hit by weak North American sales, Amer Sports reported an expected decline in company-wide net sales, as well as a 5-percent drop in its winter sports and outdoor segment.

For the third quarter, Amer Sports’ net sales decreased 6 percent to EUR 433.2 million (USD $541.0 million) versus EUR 462.8 million (USD $578.0 million) in the same period last year. Net sales in local currency terms decreased 2 percent.



The group’s earnings before interest and taxes amounted to EUR 51.5 million (USD $64.3 million) compared to EUR 59.1 million (USD $73.8 million).



Earnings before taxes were EUR 43.8 million (USD $54.7 million) down 15 percent from EUR 51.3 million (USD $64.0 million) in 2007. Earnings per share were EUR 0.45 (USD $0.56) versus EUR 0.53 (USD $0.66). Net financial expenses amounted to EUR 7.7 million (USD $9.6 million) compared to EUR 7.8 million (USD $9.7 million).

“Amer Sports’ business developed in the third quarter according to our expectations,” said Roger Talermo, CEO and president of Amer Sports, in a statement. “The high-season for winter sports equipment shipments to retailers started somewhat later than last year and consequently our sales in local currencies were 13 percent lower in the quarter compared with last year.”

The company noted that third-quarter net sales and EBIT were below last year’s level mainly due to the timing of winter sports equipment deliveries to retailers. Subsequently, the order book for the remaining year is higher than it was at the same time last year, it added.

For the third quarter, net sales for Amer Sports’ winter and outdoor segment, which included Salomon, Arc’Teryx, Mavic and Suunto, dropped 5 percent to EUR 267.6 million (USD $334.2 million) versus EUR 280.6 million (USD $350.4 million) in the same period the year before. In local currencies, the decline was 2 percent.

The segment’s EBIT dropped 7 percent from EUR 48.9 million (USD $61.0 million) last year to EUR 45.7 million (USD $57.0 million) this quarter. In local currencies, the change was a 3-percent drop.

The breakdown of net sales was as follows: apparel and footwear, 37 percent; winter sports equipment, 35 percent; cycling, 16 percent; and sports instruments, 12 percent. EMEA accounted for 64 percent, the Americas for 26 percent, and Asia Pacific for 10 percent of net sales.

“Thanks to clearly more pre-order deliveries booked for Q4 and as a result of already completed profitability-improving measures, the winter sports equipment business is set to improve its profitability substantially already this year,” Talermo said in a statement.

The company said the winter sports equipment pre-order season was completed in June. Pre-orders were up 3 percent compared to last year. The order book for the remaining year is 14 percent higher than at the same time last year. The fastest-growing product group is ski boots, whereas the cross-country skiing market continues to decline, it added.

The sell-out of Salomon and Arc’Teryx products continues to be strong, and pre-orders for spring/summer 2009 are growing at a double-digit pace, Amer Sports reported.

Suunto’s sales were driven by good performance of the new outdoor products and continued double-digit growth in training, Amer Sports said, adding that weaker global macro-environment is having a negative impact on diving product sales.

For the group, Amer Sports revised its full-year guidance.

“Given the weak worldwide consumer confidence, Amer Sports’ outlook is more uncertain than normally at this time of the year. With this in mind and as the last quarter is seasonally the strongest for Amer Sports, we currently anticipate full-year operating results to be between EUR 80 million to EUR 90 million (USD $99.9 million to USD $112.4 million),” Talermo said in a statement.

Previous guidance was EUR 90 million to EUR 105 million (USD $112.4 million to USD $131.1 million).

(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 Oct. 28.)



Q3 sales drop for Rocky

Rocky Brands (Nasdaq: RCKY), parent of the Rocky Outdoor Gear, Georgia Boot and Durango brands, said tough economic conditions pushed it to a third-quarter revenue decline, but cost-cutting measures helped it double earnings.

For the quarter ended Sept. 30, net sales were $72.5 million versus net sales of $82.3 million in the third quarter of 2007. Net income was $2.4 million, or $0.43 per diluted share, compared to $1.1 million, or $0.21 per diluted share, a year ago.

Sales in the third quarter fell 12 percent to $72.5 million from $82.3 million as the company’s wholesale and retail divisions posted declines. It said companies that are retail customers opted to close plants, cut employees and defer shoe purchases amid a shaky economy while some supply-chain disruptions hurt wholesale revenue.

Wholesale sales for the third quarter were $55.6 million compared to $64.1 million for the same period in 2007. Retail sales for the third quarter were $15.3 million compared to $18.2 million for the same period in 2007.

Military segment sales for the third quarter were $1.6 million, versus no comparable sales in the same period in 2007.

Last year’s third quarter had been slammed by pricing pressure and higher product costs, which brought Rocky’s gross margin to 35 percent of sales. The company’s gross margin in this quarter increased to 37 percent of sales.

Selling, general and administrative (SG&A) expenses decreased 12.5 percent to $22.0 million, or 30.3 percent of sales, compared to $25.1 million, or 30.5 percent of sales, a year ago.

Income from operations increased 200 basis points to $5.1 million, or 7.1 percent of net sales compared, to $4.2 million, or 5.1 percent of net sales, in the prior year.

Under Armour Q3 profit up 28 percent

Under Armour (NYSE: UA) said its third-quarter profit rose 28 percent, but the company lowered its full-year profit outlook in anticipation of a tough holiday shopping season that will affect the fourth quarter.

The company earned $25.7 million, or $0.51 per share, in the three months that ended Sept. 30. It earned $20 million, or $0.40 per share, in the same period a year ago.

Revenue rose 24 percent to $231.9 million.

Operating income rose 37.5 percent to $97.5 million in the third quarter.

Apparel net revenues for the third quarter rose 19.0 percent to $201.1 million compared with $169.0 million in the same period of the prior year. The women’s business achieved the strongest percentage rate of growth during the quarter, increasing 27.5 percent to $50.3 million.

Footwear revenues increased to $13.1 million from $2.2 million in the third quarter of 2007, primarily driven by its performance training footwear, which launched during the second quarter of 2008.

The current financial turmoil led the company to be more cautious of how it will perform in the final months of the year. For the full year, the company lowered its revenue estimate to a range of $750 million to $765 million, an increase of 24 percent to 26 percent over 2007. It had previously predicted revenue would be $765 million to $775 million.

The company also lowered its guidance for operating income to a range of $97.5 million to $104.5 million, down from an earlier estimate of $104.5 million to $105.5 million.

Oakley parent posts sales gain in Q3

Luxottica Group (NYSE: LUX), parent of Oakley, said it continued to grow in both market share and sales volume for the third quarter despite a particularly challenging economic environment that deteriorated steadily over the period.

Luxottica Group’s third-quarter net sales were up 12.8 percent at constant exchange rates — 5.3 percent at current rates — to EUR 1.21 billion (USD $1.51 billion) compared to EUR 1.15 billion (USD $1.43 billion) in the same period of the previous year.

Net income was down 7 percent to EUR 104.6 million (USD $130.6 million), or EUR 0.23 (USD $0.28) per share, compared to EUR 112.4 million (USD $140.3 million), or EUR 0.25 (USD $0.31) per share, in 2007. The company said the reduction in net income was almost entirely due to exchange rates and higher financial charges following the Oakley merger.

On the operating front, EBITDA rose 3.1 percent from EUR 250.9 million (USD $313.3 million) in third quarter 2007 to EUR 258.6 million (USD $323.0 million) for the same period in 2008.

Operating income was EUR 195.1 million (USD $243.6 million), comparable to the same period of the previous year.

Looking ahead, the company now expects to achieve earnings per share between EUR 0.96 (USD $1.19) and EUR 0.98 (USD $1.22) for 2008.



(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 Oct. 28.)

Revenue bump doesn’t save Garmin’s falling profits

Garmin (Nasdaq: GRMN) saw its third-quarter profit fall nearly 12 percent, saying strong revenue growth was offset by the dollar’s strength against the euro.

Profit for the quarter ended Sept. 27 fell to $171.2 million, or $0.82 per share, from $193.5 million, or $0.88 per share. Excluding foreign-currency exchange, or the detrimental effect of the stronger dollar, net income would have been $0.87 per share.

Revenue rose 19 percent to $870.4 million from $728.7 million.

Revenue in the company’s automotive and mobile segment grew 21 percent to $626 million, while revenue in its outdoor and fitness segment grew 35 percent to $119 million.

The company said revenue in its outdoor/fitness segment continued to grow rapidly when compared to the year ago quarter due to the strength of its product line-up and an expanding fitness market.

Revenue in Europe grew 9 percent to $247 million, while Asian revenue fell 21 percent to $38 million.

Garmin said it is staking steps to manage its business amid a difficult retail environment, including reducing inventory levels by about $150 million by the end of the year and becoming “more focused” in advertising spending.

It lowered its fiscal year guidance due to the weakening economic climate and the strengthening dollar. The company now expects earnings of $3.78 per share, including a $0.27 per share gain related to selling its shares in Dutch mapmaker Tele Atlas NV. Previously the company expected earnings of $4.13 per share, including the gain.

Hanesbrands’ sales hold steady for Q3

Hanesbrands (NYSE: HBI), parent of Champion, said total net sales in the quarter held steady at $1.15 billion, increasing slightly. In the outerwear segment, Champion activewear sales increased by double-digits.

For the quarter ended Sept. 27, earnings per diluted share in the quarter were $0.17. Excluding actions and the previously announced impact of the Mervyns bankruptcy, non-GAAP earnings per diluted share increased by 17 percent to $0.56. The company said the increase was a result of reduced long-term debt, lower base interest rates, and lower income tax expense as a result of its global supply chain strategy.

“We continued our strategic execution in the third quarter and delivered comparable sales and solid earnings per share in a difficult environment,” Hanesbrands CEO Richard A. Noll said in a statement. “We remain optimistic about our earnings potential for the fourth quarter due to favorability of expenses that may more than offset the challenges of higher commodity costs and an uncertain sales environment.”



Liberty’s cash tender offer raises $781 million

Liberty Media LLC (Nasdaq: LINTA and LCAPA) said the cash tender offer for its outstanding 7-7/8 percent senior notes and 7-3/4 percent senior notes, both due in 2009, has expired

Approximately $565.7 million aggregate principal amount of 7-7/8 percent notes and about $216.2 million of 7-3/4 percent notes were validly tendered. This represents approximately 85 percent and 93 percent of the outstanding principal amount of the 7-7/8 percent notes and the 7-3/4 percent notes, respectively.

Liberty will pay accrued but unpaid interest on all such notes accepted for payment to, but excluding, the final settlement date. All notes purchased in the tender offers will be retired.

Liberty has retained Citi to serve as dealer manager for the tender offers, and Global Bondholder Services Corporation to serve as the depositary and information agent.

Liberty Media LLC is an intermediate holding company of Liberty Media Corp., owning interests in a broad range of electronic retailing, media, communications, and entertainment businesses, including Backcountry.com.

–Compiled by Wendy Geister

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