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Outdoor financials: Restructuring charge rattles Kellwood's Q2, plus Forzani, Big 5, Quiksilver, Wellman, Amer, Fiskars

Restructuring charge rattles Kellwood's Q2, Canada's Forzani Group posts Q2 net loss, Big 5 misses deadline…again, Quiksilver gets a boost from brokerage, Wellman declares force majeure on U.S. products, Amer increases program, Fiskars acquires all assets of Superknife

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Restructuring charge rattles Kellwood’s Q2
Kellwood Co. (NYSE: KWD), parent of Sierra Designs and Kelty, was hit with a second-quarter net loss stemming from charges of $93.4 million related to a restructuring plan aimed at boosting growth. The company is gearing up to sell or exit several businesses in a bid to better focus on the remaining parts of the company.

Sales for the second quarter increased $2 million to $562 million, as compared to $560 million last year. The quarter’s net loss was $79.4 million, or $2.86 per diluted share, as compared to net earnings of $10.2 million, or $0.36 per diluted share last year. The current net loss included impairment, restructuring and related nonrecurring charges of $93.4 million, or $3.36 per share. Partially offsetting this charge was a one-time tax benefit for the repatriation of foreign earnings of $13 million, or $0.47 per diluted share.

For the second quarter, on an ongoing basis, net sales totaled $488 million, rising $5 million from $483 million in 2004. Also, net earnings were $5.6 million, or $0.20 per diluted share, compared to $10.9 million, or $0.39 per diluted share from ongoing operations last year.

Sales growth in its other softgoods category was due partly to sales growth in American Recreation Products, the company said.

Looking ahead to the third quarter, the company forecast sales of $630 million to $640 million. It said it expected earning before charges of $16 million, or $0.55 to $0.58 per share. For the full-year, the company expects sales in the range of $2.4 billion, including sales from divisions and brands that will be exited or restructured. It said it expects earnings before items of about $37 million and $38 million, or about $1.35 per share.

Canada’s Forzani Group posts Q2 net loss
The Forzani Group (TSX: FGL), Canada’s largest retailer of sporting goods, reported a second-quarter net loss of CDN $2.3 million (USD $1.9 million) for the second quarter, or CDN $0.07 per share (USD $0.05), compared to a profit of CDN $2.0 million (USD $1.7 million), or CDN $0.06 per share (USD $0.04), in the prior year.

Retail system sales for the quarter were CDN $305.1 million (USD $257 million), an increase of CDN $48.7 million (USD $41.1 million), or 19.0 percent from 2004’s CDN $256.4 million (USD $217 million). The company said the increase was partly due to the addition of the Nevada Bob’s franchise retail sales and the National Sports corporate retail volume, a result of their acquisition by Forzani. Without these volumes, the existing retail business generated system retail sales of CDN $270.1 million (USD $228.2 million), a 5.3 percent increase over last year.

Revenue was CDN $243.6 million (USD $206 million), up CDN $27.2 million (USD $23 million), or 12.6 percent over the comparable period last year — also partly driven by the Nevada Bob’s and National Sports revenues. Excluding these two, the revenues were CDN $221.3 million (USD $187 million), a 2.3 percent increase over the prior year. Same-store sales from corporate stores were up 0.2 percent, while franchise comparable store sales increased by 4.6 percent. The corporate store performance was driven by a decline of 4.3 percent in the Sport Mart banner. The Sport Chek/Coast Mountain Sports stores generated positive comparable store sales of 1.3 percent for the quarter. The consolidated corporate store increase was the first quarterly comparable store sales increase in 10 quarters.

Forzani said the back-to-school shopping season, a key period for retailer’s third-quarter results, is off to its best start in years and that it expects improvement in its financial results for the last two quarters of 2005.

Combined gross margin for the 13 weeks ended July 31, 2005 was 34.2 percent of revenue, or CDN $83.2 million (USD $70.3 million), down 2.1 percent from the previous year. On an absolute dollar basis, margin increased by CDN $4.6 million (USD $3.8 million). Store operating expenses of CDN $55.2 million (USD $47 million) were up CDN $10.1 million (USD $8.5 million), or 28.8 percent of retail revenues versus CDN $45.1 million (USD $38.1 million), or 27.7 percent in the prior year.

During the quarter, the company opened three Sport Chek and one Coast Mountain Sports stores and closed one Sport Chek store.

(Conversion of Canadian dollars into U.S. dollars is for information only, is not necessarily relative to earnings, and is based on the currency rate as of Sept. 1.)

Big 5 misses deadline…again
Big 5 Sporting Goods (Nasdaq: BGFVE) may be in big trouble, alerting the Nasdaq that its accounting firm has not completed its final review and audit of the company’s 2004 annual report. KPMG LLP, Big 5’s accounting firm, is completing its final review and audit of the forms and needs an additional “few days” for the work to be completed. Big 5 said its previous announcements regarding the expected impact of all known restatement items remain unchanged.

So far, Big 5 is asking Nasdaq for an additional extension request, but hasn’t heard from it yet. If the request is not granted, its shares may be de-listed from the Nasdaq National Market. If so, Big 5 said it expects that its shares would trade in the over-the-counter market and it would apply for relisting of its shares on Nasdaq as soon as its SEC filings were current.

Quiksilver gets a boost from brokerage
Quiksilver (NYSE: ZQK), now the dominant player in Rossignol Group’s business, is getting kudos for its skateboard and surf-inspired clothing from Wachovia Securities, boosting its shares in recent trading.

Wachovia Securities forecasted strong sales for Quiksilver, upgrading it from “outperform” to market perform.” Quiksilver sales went up $0.30, about 2 percent, to $15.18 on the New York Stock Exchange.

“The surf and skate community is putting out some of the freshest product in the industry, and the lifestyle continues to gain momentum with a broad range of consumers,” Wachovia said in a client note.

Wachovia also forecast that Quiksilver’s stock price could trade as high as $19 to $21, aided by strong back-to-school sales and 1980s-influenced clothes that are currently back in style. The brokerage also projected that Rossignol Group, the French skiing gear-maker Quiksilver acquired in March for $320 million, would be “materially positive” to earnings this year.

Wellman declares force majeure on U.S. products
Wellman (NYSE: WLM) declared force majeure (act of God) on domestically produced products at its Pearl River plant in Mississippi, which suffered no major structural damage from Hurricane Katrina. As a result of the hurricane, Wellman said PET resin sales will decrease — at least — in the third quarter of 2005. The company, which expects losses from the hurricane to be covered by insurance with a $20 million deductible, said it is difficult to estimate when production at the facility will resume.

Amer increases program
Amer Sports said it increased the size of its Commercial Paper Program to Euro 500 million (USD $624.5 million) from Euro 200 million (USD $250 million). The program arrangers, OKO Bank, Nordea Bank and Sampo Bank, remain unchanged. Under the terms of the program, Amer Sports is in a position to issue commercial papers of up to one year of maturity, it said. The funds raised will be used for general corporate purposes.
(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 Sept. 1.)

Fiskars acquires all assets of Superknife
Fiskars Brands Inc. has acquired the brand names, patents and products of Superknife. Superknife, the “World’s First Folding Utility Knife”, was launched in 2001. The initial design has since expanded into a line of replaceable blade folding utility knives. As a result of the acquisition, the Superknife product line will be integrated into Fiskars Brands’ Outdoor Recreation division, Gerber Legendary Blades, and the company’s operations will be relocated from Phoenix, Arizona to Portland, Oregon.

Gerber Legendary Blades is a division of Fiskars Brands, Inc., a wholly owned subsidiary of Fiskars Corporation, a Finnish corporation traded on the Helsinki Stock Exchange . Founded in 1649, Fiskars is one of the oldest companies in the world. Fiskars Brands, Inc. is a leading manufacturer of scissors, gardening tools and cutlery, as well as other consumer products sold under the brand names including Fiskars, Gerber Legendary Blades, Royal Floor Mats, Home Leisure, Planterra, Cool in the Shade, Power Sentry, Montana, Raadvad, Sankey and Ebert. For more information, go to

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