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Outdoor financials: VF nabs Vans, plus Columbia, Johnson, Rocky, Gander, Wellman, Russell, Sportsman's Guide, GSI

Outdoor financials: VF acquires Vans and reports record sales in Q1. First-quarter reports on Columbia Sportswear,Rocky, Wellman, GSI, Sportsman's Guide, Russell. Q2 report for Johnson Outdoors. Gander expands board.

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VF acquires Vans and reports record sales in Q1

VF (NYSE: VFC) entered into an agreement on April 28 to acquire Vans, a Southern California-based manufacturer of skate and snowboard footwear, for $396 million in cash. VF, which reported sales of $5.2 billion in 2003, has been on a torrid acquisition pace of late, picking up Napapijri just a few weeks ago. Both companies will become part of the VF Outdoor Coalition, which currently includes The North Face, Eastpak and JanSport. Vans will report directly to Eric Wiseman, vice president and chairman of the outdoor and sportswear divisions. In both the conference call to announce the sale, and the following earnings call, VF made it very clear it expects to be able to grow Vans’ sales to $500 million annually in three to five years. In the nine months ending Feb. 28, Vans reported sales up 7.3 percent and sales of $282.4 million and the company is projecting sales in excess of $346 million for the year. Vans currently operates 156 stores (a few of which are located in Europe) that account for approximately 35 percent of Vans’ revenue. Approximately 30 percent of the revenue is generated from international business through Vans-owned subsidiaries in Europe and licensing arrangements in Asia. The remaining 35 percent of revenue comes from wholesale business.

In related news, VF reported Q1 a 15 percent boost in sales from $1.25 billion to $1.43 billion and a 13 percent increase in net income to $103.9 million. Once again, the Outdoor Coalition was the darling of the financial report, with sales up 24 percent to $125 million. The North Face garnered the most praise with sales up 27 percent and fall bookings up 30 percent.

SNEWS® View: Say hello to the skateboard market and, in a small way, the snowboard market, too. That VF is playing for market share and brand strength in the outdoor and action sports markets is becoming abundantly clear in the last two weeks. According to TNF President Mike Egeck, who contacted the SNEWS® offices shortly after the Vans announcement was made public, Napapijri gives VF’s Outdoor Coalition (Egeck will oversee Napapijri biz here in the United States) a solid fashion ski line to take to the resort markets, better men’s and women’s specialty stores, and also presents the opportunity to open up a few company-owned stores where appropriate. Now add Vans to the mix and VF suddenly has a red-carpet entrée to a market segment that includes 12- to 24-year-olds and, according to recent reports, accounted for over $12.5 billion in sales in the surf and skate shoe and apparel market. While Egeck made it clear that because VF’s style is to keep its brands separate, it is unlikely we’ll see TNF clothing or gear in Vans stores, or Vans’ footwear or clothing in TNF stores, but there will certainly be cross-pollination of talents that will benefit all brands. TNF’s footwear line is a modest success currently, and we’d imagine the company will derive benefits from the ex-Reebok and ex-Nike footwear expertise currently on the Vans payroll. We’d also imagine that the entire Outdoor Coalition will benefit from Vans’ expertise at marketing to the youth and skate culture as well as leverage benefits from associating, where appropriate, with several of Vans’ currently successful events, such as the Vans Warped Tour and the Vans Triple Crown series. We’d also think it likely to see Vans garner benefits from associating with VF’s apparel and sourcing expertise, and will go out on a limb to predict that you’ll soon see a strong snowboard apparel line carrying the Vans name. Vans is one company that could compete very well with the likes of successful action sports names such as Quiksilver or Billabong.

Columbia Q1 sales strong in all segments

Columbia Sportswear Company (Nasdaq: COLM) reported a first-quarter record of $206.7 million, an increase of 22.4 percent over net sales of $168.9 million in 2003. The company also reported record net income for the first quarter ended March 31, 2004, of $20.0 million, a 34.2 percent increase over net income of $14.9 million for the same period of 2003. Earnings per share for the first quarter of 2004 were $0.49 (diluted) on 41.0 million weighted average shares, compared to earnings per share of $0.37 (diluted) for the first quarter of 2003 on 40.4 million weighted average shares.

Columbia had strong sales across all segments this quarter. Compared to the first quarter of 2003, sportswear sales increased 19.6 percent to $117.0 million (vs. $97.8 million), outerwear sales increased 12.2 percent to $40.4 million (vs. $36 million), footwear sales increased 29.3 percent to $38.4 million (vs. $29.7 million), and accessories sales increased 51.9 percent to $8.2 million (vs. $5.4 million).

During the April 29 conference call, it was reported that Mountain Hardwear’s first-quarter sales were $9.7 million, with $2.7 million in equipment sales. Ninety percent of its bookings were in apparel, and it is developing international sales, especially in Europe. Mountain Hardwear added 75 specialty retailers in the quarter, mainly in the snowsports arena.

Sorel generated $3.5 million in first-quarter sales, driven by strong sales in classic cold-weather boots.

Compared to the first quarter of 2003, U.S. sales increased 15.8 percent to $115.3 million, European sales increased 33.2 percent to $42.9 million, other international sales increased 37.4 percent to $26.1 million, and Canadian sales increased 23.8 percent to $22.4 million for the first quarter of 2004.

Shares of the company’s stock fell 6.8 percent on April 30, though, after it maintained a modest outlook on the fiscal year despite better-than-expected first-quarter profits, which prompted analysts to lower their estimates.

Johnson Outdoors outdoor segment posting high, watercraft dragging

Johnson Outdoors Inc. (Nasdaq: JOUT) announced total net sales for the second quarter, ended April 2, 2004, were $95.6 million, a 14.8 percent increase over the same quarter last year due to significant revenue gains in part from the Outdoor Equipment (made up of Eureka and Silva) segment. Military sales grew 54.3 percent versus the same period last year resulting in the reported gains in Outdoor Equipment.

Operating profit for the quarter grew 41.8 percent compared with the prior year ($8.7 million versus $6.1 million respectively) driven by double-digit profit growth in Motors (75.0 percent) and Outdoor Equipment (46.5 percent). Watercraft posted an operating loss for the third consecutive reporting period (-$2.1 million). Net income in the second quarter was $4.8 million (earnings per diluted share of $0.55) compared with $4.3 million (earnings per diluted share of $0.50) in the prior year period.

Watercraft, which includes Old Town, Ocean Kayak and Necky Kayak, is one of two businesses that are having significant challenges, according to the company in its earnings call on April 29. The division is seeing some signs of progress and the company said it is making investments for the division’s long-term health, but is disappointed that its efforts haven’t translated into improved sales and cost controls yet. Watercraft posted a slight decline in sales and a total operating loss of $5.6 million for the quarter, while year-to-date sales are up by one percent.

The company says its does see a glimmer of light at the end of the tunnel. Last year, Old Town lost sales and did inventory write-offs, while this year the company posted a 33 percent increase in sales and in March alone sales almost doubled. The company attributes the positive track to adjustment and strengthening of the operation’s infrastructure.

Rocky’s military contract boosts sales

On April 29, Rocky Shoes & Boots Inc. (Nasdaq: RCKY) reported record net sales for the three months ended March 31, 2004. Net income increased to $0.1 million, or $0.01 per diluted share, for the first quarter compared to a net loss of $0.6 million, or $0.14 per diluted share, the prior year. The improvement in net income per share was achieved despite a 14 percent increase in the weighted average number of diluted shares outstanding for the first quarter 2004 compared to the first quarter 2003. This resulted from the increase in the company’s share price during the past year.

Net sales increased to a first-quarter record of $21.9 million compared to $13.8 million for the same period in 2003. This 59.1 percent increase was led by higher branded sales and shipments of boots to the U.S. military, which rose $3.1 million and $5.0 million, respectively. Substantial growth was achieved in the Rocky work footwear category, as well as the outdoor apparel and footwear categories. Sales of Gates products, a brand that was acquired in the second quarter 2003, also contributed to the first quarter 2004 net sales increase.

Gross profit increased to $5.6 million, or 25.7 percent of net sales for the 2004 first quarter from $3.5 million, or 25.2 percent of net sales, the prior year, influenced by the boots produced for delivery to the U.S. military and an increase in sourced product sales.

Gander Mountain expands board of directors

New-to-Nasdaq Gander Mountain (Nasdaq: GMTN) announced the addition of five new members to its board of directors on April 26. The new directors join continuing directors Gerald Erickson and Ronald Erickson to form Gander Mountain’s seven-member board. The new directors are: Mark Baker, Gander Mountain’s CEO and president; Karen Bohn, president and CEO of the Galeo Group; Marshall Day, CPA, former senior vice president of finance and accounting and CFO of The Home Depot; Richard Dell, CEO of Ames True Temper; and Dale Nitschke, president of for Target Corp.

Wellman reports Q1 earnings

Wellman Inc. (NYSE: WLM) reported a first-quarter loss of $31.2 million, or $0.99 per diluted share, compared to the fourth-quarter 2003 loss of $105.2 million, or $3.33 per diluted share. The overall first-quarter 2004 results were an improvement over fourth-quarter 2003 results. Net sales improved to $293.8 million from $273.9 million, an increase of approximately 7 percent. Gross profit improved to $17.4 million from $10.6 million and the gross profit percentage improved to 5.9 percent from 3.9 percent. Operating Income was $2.9 million in 2004 compared to the previous year’s loss of $5.7 million. “NAFTA PET resin market conditions were extremely competitive in the second half of 2003, and our PET resin margins were at all time lows during the seasonally-weak fourth quarter,” said Tom Duff, Wellman’s chairman and CEO. “The results of our operations in the first quarter of 2004, compared to the fourth quarter of 2003, have improved as a result of improved PET resin margins, increased volumes in our fiber and resin businesses and reduced operating costs. We believe the results of our PET resins business will improve as industry capacity utilization in PET resins improves.”

Sportsman’s Guide reaps earnings from Internet

The Sportsman’s Guide Inc. (Nasdaq: SGDE), provider of value -priced outdoor gear through catalogs and websites, reported sales for the quarter ended March 31, 2004, were $44.6 million compared to the $43.7 million reported for the same period one year ago. The company also reported on April 28 that net earnings of $1.2 million, or $0.22 per fully diluted share for the quarter, a 22 percent increase when compared to the $957,000, or $0.19 per fully diluted share, reported in 2003. The increase in net earnings and earnings per share from last year’s first quarter was due primarily to higher Internet-related sales and lower levels of selling, general and administrative expenses. Internet-related sales for the first quarter of 2004 were just over 40 percent of total catalog and Internet sales, setting an all time record. Internet-related sales as a percentage of total catalog and Internet sales were approximately 34 percent for the first quarter of 2003.

GSI reports gains in sporting goods categories

GSI Commerce Inc. (Nasdaq: GSIC), an e-commerce provider, announced on April 28 that for its first fiscal quarter ended April 3, 2004, the company increased its net revenues 36 percent to $66.3 million (compared to 2003’s $48.9 million) and reported a net loss of $4.0 million, or $0.10 per share, decreasing the company’s net loss by $1.5 million, or $0.04 per share, compared to last year’s first fiscal quarter. Net revenues from product sales generated by the company’s sporting goods category were $33.5 million for the first quarter of fiscal 2004, which was a 37 percent increase compared to $24.4 million for the first quarter of fiscal 2003. Net merchandise sales from the sporting goods category increased 44 percent in the first quarter of fiscal 2004 to $35.1 million compared to $24.4 million in the first quarter of fiscal 2003.

Russell KO’d by earnings drop

Despite a 10 percent increase in net sales for its 2004 first quarter, Russell Corp.’s (NYSE: RML) first-quarter earnings dropped to $500,000 ($.02 per diluted share) versus earnings of $3.4 million ($.11 per diluted share) in first quarter 2003. First-quarter earnings were reduced by $.05 per share from the unfavorable impact of inventory close-out costs, it reported on April 29. Net sales for the 2004 first quarter were $251.8 million, an increase of $23.8 million from 2003’s $228.0 million. Gross profit was $64.6 million, or a 25.7 percent gross margin, for the 2004 first quarter versus a gross profit of $62.8 million, or a 27.6 percent gross margin, in the prior year.

For more information about these companies’ financial reports, as well as to view stock prices updated every 15 minutes, visit the SNEWS® Stock Market Updates at in SNEWS Extras, or click here