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Outdoor financials: Sport Chalet expects to report Q4 loss, plus Shock Doctor acquired, Exel, Crocs

Sport Chalet said it expects to report a Q4 loss, Shock Doctor was bought by a private-equity firm, Exel said it anticipates a weak Q1,and an analyst said he's optimistic about Crocs' growth potential.

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Sport Chalet expects to report Q4 loss

Sport Chalet (Nasdaq: SPCHA and SPCHB) said it expects to report a loss in its fourth quarter, with sales declining due to the consumer spending slowdown in its key markets.

The company expects to report fourth-quarter net sales of approximately $97.0 million compared to $97.8 million for the same period last year. Same-store sales are expected to drop 9.0 percent from the same period a year ago.

Sport Chalet anticipates a fourth-quarter loss per diluted share in the range of $0.20 to $0.25. In the fourth quarter of 2007, the company reported a profit of $0.06 per share.

The company said housing trends in California, Arizona and Nevada have put additional pressure on the store’s customers and have led to lower spending. It added that its revenue was also hurt by promotions the chain used to sell its winter merchandise to ensure the right inventory position.

For 2008, the company said it expects to report a loss between $0.15 and $0.20 per share, excluding an impairment charge. Revenue will likely be between $403 million and $388.2 million for the year, with same-store sales falling about 5 percent.

Sport Chalet will report its fourth-quarter and full-year results in early June.

Shock Doctor bought by private-equity firm

Private-equity firm Norwest Equity Partners said it acquired Shock Doctor, a branded consumer products company focused on the sports protection category.

Timothy Kuehl, NEP Partner and Shock Doctor board member, said in a statement, “Shock Doctor provides a terrific investment opportunity for NEP. With consistent sales and profitability growth over the years, it has established a technology leadership position within its market. Together with the management team, NEP is in position to leverage an established consumer brand and continue to work on building an entire sports protection products platform.”

Shock Doctor products are offered through sporting goods dealers, catalogs and health care professionals throughout the United States, Canada, Europe, Japan and Australia.

Prior to the NEP acquisition, Shock Doctor was a portfolio company of Minneapolis private equity firm Hillcrest Capital Partners. Wachovia Securities served as financial advisor to Shock Doctor, Lindquist & Vennum, LLP provided legal counsel to NEP, and Faegre & Benson LLP provided legal services to Hillcrest.

Exel anticipates weak Q1

Exel said a preliminary report of its first quarter deviates from the current market consensus’ estimates which, according to Bloomberg, amount to EUR 28.1 million (USD $44.2 million) in sales and EUR 3.4 million (USD $5.3 million) in operating profit.

The preliminary sales report of the group shows EUR 24 million (USD $37 million) in sales for the first quarter compared to EUR 28.8 million (USD $45.3 million) for the corresponding period last year.

The company said weaker sales are primarily a result of a decrease in its wind energy segment, the divestment of the plastics business in Germany for Exel Composites, and weaker market conditions in other segments, especially in building and construction. Exel Sports Brands has had sales in line with company expectations but lower than last year.

Additionally, the company said that operations of Exel Sports Brands continue to suffer from a high cost level and logistical problems, and it will, despite corrective actions, report a significant loss in the first quarter. The operating profit for the group is expected to be slightly positive for the first quarter of 2008. The corresponding period last year was EUR 3.5 million (USD $5.5 million).

Exel’s guidance report for 2008 forecasted that sales would not be higher than in 2007. Based on the outcome for the first quarter and due to the expected general slow-down in the market, it is now expected that sales for the whole year will be lower than in 2007.

Exel will announce the first-quarter results on May 2.

(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 April 7.)

Analyst optimistic about Crocs’ growth potential

After checking on retail outlets that carry Crocs (Nasdaq: CROX), a Wedbush Morgan Securities analyst told investors that Crocs has strong growth potential, despite a difficult economy.

Analyst Jeff Mintz wrote in a client note that it appears sales growth has slowed, but markdowns are below most other brands and consistent with first-quarter guidance. Additionally, new styles are helping the company gain new customers and sell more shoes to existing customers, he said.

He said business is “substantially” better than the share price suggests. Shares have fallen 53 percent since the beginning of 2008.

He reiterated his “Strong Buy” and $44 price target on the company. Mintz acknowledged Crocs has high inventory levels — during the fourth quarter, inventory jumped 27 percent sequentially — but said the risk is factored into the share price.

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