Outdoor financials: VF expands international ventures, plus Kellwood, Forzani Group, Sport Chalet, Sportsman's Guide, Wellman

VF expands international ventures
VF Corp. (NYSE: VFC) said it has formed a joint venture with a local partner, Arvind Mills Ltd., to design, market and distribute VF branded products in India. VF will own 60 percent of VF Arvind Brands Private Ltd. and Arvind Mills will own the remaining 40 percent.

“The strength of Arvind’s distribution gives us a clear entry into one of the world’s most dynamic and fastest growing markets,” Mackey McDonald, VF’s chairman and CEO, said in a statement. “With its rapidly expanding economy, growing retail base and favorable demographic characteristics, India presents a source of enormous future growth for our brands.”

The joint venture will start off with VF brands including JanSport, Lee, Wrangler, Nautica and Kipling, which were previously marketed under licensing and distribution agreements with an Arvind Mills subsidiary. The business will be based in Bangalore, India, and will have about 180 employees.

Darshan Mehta has been named CEO of VF Arvind Brands Private Limited, reporting to Eric Wiseman, chairman of the joint venture company and president and COO of VF Corp.

VF expects its wholesale business in India to grow more than 25 percent a year from its current level of about $40 million, the company said. The Indian market for name-brand clothing is about $4.4 billion a year and growing with the population of 1.1 billion, almost four times larger than the United States. The U.S. Census Bureau forecasts India will add 400 million people in the next 20 years.

In other company news: VF is forming a new international leadership team as part of an ongoing growth initiative to enter new markets and accelerate revenue growth throughout Europe, the Middle East, Africa and Asia. Additionally, VF raised its international revenue target to 30 percent from 25 percent of total revenue. International revenue now comprises $1.6 billion or one-quarter of total revenue, it said. VF forecasts that international revenue could account for 30 percent of total sales in three to five years.

Karl Heinz Salzburger will lead VF’s international team in the newly created position of president of Europe, Middle East, Africa (EMEA) and Asia. In this new role, Salzburger will have responsibility for VF’s Outdoor and Jeanswear businesses in Europe, the Middle East, Africa and Asia.

Salzburger said VF will continue to extend its brands across Europe, Asia, the Middle East and Africa, with particular focus on growth markets such as India (which is apparent from the Arvind partnership), China and Russia.

“These markets have growing middle classes with an accelerating demand for lifestyle brands. VF has some of the most highly desired brands in the world and a world-class supply chain that can deliver them to these consumers,” Salzburger said.

Kellwood reports Q2 profit after loss last year
Kellwood Co. (NYSE: KWD), whose brands include Kelty and Sierra Designs, said it swung to a second-quarter profit as the company cinched costs and logged higher interest income.

The company posted earnings of $7.2 million, or $0.28 per share, compared with a loss of $78.9 million, or $2.84 per share, in the prior-year period. The year-ago quarter was weighed down with losses of $72 million, or $2.59 per share, from now-discontinued operations. Quarterly sales totaled $474.5 million versus $488.2 million a year ago, down 3 percent year over year.

Analysts expected the company to earn $0.28 per share on $480.2 million in sales.

Kellwood also reported that sales costs fell to $374.9 million from $388.8 million, and selling, general and administrative expenses dropped to $79.2 million from $82.2 million.

The company maintained its guidance for per-share earnings from ongoing operations of $1.75 for the year. For the third quarter, Kellwood is forecasting sales of $520 million and earnings from ongoing operations of $0.69 per share.

Separately, Kellwood’s board declared a regular quarterly dividend of $0.16 per common share, payable Sept. 22 to shareholders of record on Sept. 11.

Canada’s Forzani Group reports Q2 sales results
After suffering a profit loss in the same quarter in 2005, Forzani Group (FGL.TO) is in the black for the 2006 second quarter, as Canada’s largest sporting goods retailer overhauled some of its storefronts.

The company, whose outlets include Sport Chek, Sports Experts and Coast Mountain Sports, said it earned CDN $1.9 million (USD $1.7 million), or 6 Canadian cents a share, for the quarter. That compares with a loss of CDN $2.3 million, or 7 Canadian cents a share, for the same quarter a year earlier. Its results included a non-recurring, non-cash charge of 1 Canadian cent a share related to income tax rate changes, it added.

Retail sales rose 11 percent to CDN $337.9 million (USD $304.9 million) compared to CDN $305.1 million last year, boosted in part by the recent acquisition of The Fitness Source chain. Same-store sales were up 5.4 percent in corporate outlets and 6.9 percent in franchise locations — for an overall increase of 6 percent.

Forzani said the revitalization of its Sport Chek and Sport Mart stores, as well as changes made to merchandising and inventory management processes, helped lift results.

(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.)

Sport Chalet ranked No. 1 by consumers in retail survey
Sport Chalet (Nasdaq: SPCHA and SPCHB) was ranked by consumers as the No. 1 most desired retailer in the 2006 Retail Demand Today Report published by Kanbay Research Institute (KRI), an independent research company. It topped the list ahead of Kohl’s, Amazon.com, Macy’s eBay, Nordstrom, Staples, Barnes & Noble and Tiffany, among others.

KRI said the study identifies the top performing retailers in 16 major retail categories including sporting goods. Sport Chalet gained the top spot among all retailers across the 16 categories, which spanned the specialty, luxury, discount and online categories. As impressive as the survey showing is, what Sport Chalet fails to point out in the company press release highlighting the number one ranking however, is that in the report, Dick’s, Sports Authority, and Sport Chalet were the only sporting goods stores included in the study.

In the 2006 study, KRI conducted 6,674 web-based interviews with U.S. consumers, rating 104 of the leading retail companies to discern how well their desires are being met and identify emerging trends in the industry. The report, which was released last week, is entitled “Retail Demand Today: How Well Retailers Deliver on America’s Shopping Desires.” To download a copy, click here or contact info@kanbayresearch.com.

Acquisition of Sportsman’s Guide completed
Redcats USA has completed the acquisition of The Sportsman’s Guide (Nasdaq: SGDE), a catalog and online marketer of outdoor and sports gear, for a price of $31 per share — for an approximate value of $265 million.

Following the approval of the transaction by the board of directors of The Sportsman’s Guide earlier in May and by the U.S. antitrust authorities, the company’s shareholders approved the proposed merger at a special meeting on Aug. 25 by nearly 99 percent.

Redcats said in a statement that the acquisition of the fast-growing Sportsman’s Guide in the United States enhances the international operations of Redcats.

Wellman to raise price of polyester staple fiber
Effective Oct. 1, Wellman (NYSE: WLM) is increasing the price of all polyester staple fiber products by $0.05 per pound. Joe Tucker, vice president of the Fibers and Recycled Products Group, attributed the increase to the continued rise in petrochemical raw material costs. “There is continuing upward pressure on the cost of our raw materials, which have already surpassed levels recorded last year following the Gulf Coast hurricanes. We cannot absorb or offset these increases and need to work to maintain margins that allow us to continue to meet future customer needs,” he said in a statement.

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