Outdoor financials: VF says '05 guidance on track, releases '06 expectations, plus Wolverine, Quiksilver, Kellwood, Wellman, Reebok, Outdoor Channel, LaCrosse, GSI

VF says ’05 guidance on track, releases ’06 expectations
VF Corp. (NYSE: VFC), parent of The North Face, JanSport and Eastpak, reaffirmed its guidance for 2005, saying sales will rise 5 percent to 6 percent, and that it anticipates sales growth of about 4 percent to 5 percent in 2006. Its estimates, which exclude stock-option costs, are shy of analyst predictions.

For 2005, VF said it’s maintaining expectation for an increase in earnings of about 10 percent to $4.65 per share. Sales for 2005 should rise 5 percent to 6 percent, it added. It also expects sales in the fourth quarter to rise about 2 percent, while earnings per share should be flat to up slightly over the $1.10 reported in the same period a year ago. Analysts reported they are looking for a profit of $1.16 per share.

The company anticipates sales growth of about 4 percent to 5 percent, excluding any additional acquisitions, in 2006. Net earnings on a fully diluted basis are expected to increase about 6 percent to $4.95 per share, also excluding any additional acquisitions. Analysts are anticipating a profit of $5.09 per share on sales of $6.76 billion.

VF said it will provide additional details about its 2006 outlook when it releases full year 2005 financial results on Feb. 8, 2006.

Wolverine board OKs stock repurchase, declares dividend
Wolverine World Wide’s (NYSE: WWW) board of directors was busy recently, authorizing the repurchase of 3 million stock shares, declaring a quarterly cash dividend and accelerating the vesting of employee stock options, among other things.

The board authorized the repurchase of an additional 3 million shares of common stock, saying the buyback reflects its confidence in the company’s growth prospects. Wolverine said the money will allow it to invest in new business initiatives, including Patagonia Footwear and Merrell Apparel.

Share repurchases will be made over a two-year period at times and in amounts considered appropriate by the company based on market factors. Since 2000, Wolverine has repurchased approximately 12 million shares (split adjusted) in four previously approved repurchase programs.

In addition, the board declared a quarterly cash dividend of $.065 per share of common stock. The dividend is payable on Feb. 1, 2006, to stockholders of record on Jan. 2, 2006. The company said the dividend is equal to the last quarterly dividend and represents a $0.26 per share annual dividend.

The board also accelerated the vesting of employee stock options awarded under the company’s stock incentive plans, making options to buy 1 million shares available immediately. The move will reduce next year’s earnings from $0.04 to $0.05 per share in 2006.

Lastly, the company also intends to repatriate foreign earnings to take advantage of tax relief under the American Jobs Creation Act of 2004. The board approved a one-time repatriation of approximately $41.5 million in 2005. The impact of this transaction will increase income taxes by approximately $1.4 million ($.025 per share) in the fourth quarter of 2005.

Quiksilver’s Q4 gets boost from Rossignol purchase
Thanks to the acquisition of Rossignol, Quiksilver (NYSE:ZQK) posted an 82 percent increase in fourth-quarter net revenues — $637.4 million from $350.3 million in the fourth quarter of fiscal 2004. Net income for the quarter increased 35 percent to $33.6 million, or $0.27 per share, from $24.9 million, or $0.20 per share, the year before. Analysts’ average forecast was $0.27 per share on sales of $589.8 million.

Consolidated net revenues for fiscal year 2005 increased 41 percent to $1.78 billion from $1.27 billion in fiscal year 2004. Net income was up 32 percent to $107.1 million from $81.4 million in 2004, and diluted net income per share for fiscal 2005 increased 26 percent to $0.86 from $0.68 in 2004.

“The integration of Rossignol is proceeding purposefully and smoothly, and we expect to drive profitability and enhance the market position of the Rossignol, Dynastar, Look, Lange and Cleveland Golf brands,” said Bernard Mariette, president of Quiksilver. “We are also moving toward leveraging our brands into new categories, as the new capabilities of our platform allow. We have many opportunities to organically grow our business and increase our efficiencies and look forward to further demonstrating that our ability to identify and execute strategic prospects is a major part of what sets us apart as a leader in our industry.”

One analyst cautions, though, that things may not be as rosy as the numbers indicate. Net revenues from the company’s newly acquired Rossignol and Cleveland Golf businesses totaled $214.5 million during the fourth quarter of fiscal 2005. Without Rossignol’s contribution, though, Quiksilver’s net sales from continuing operations were $422.9 million, higher by 20.7 percent. Also, looking only at continuing operations, inventories increased slightly by 5 percent. With the inclusion of Rossignol, however, this same metric ballooned by 115 percent.

The dilemma? Quiksilver might see its profitability flatline next year buried beneath the pile of inventory that the company inherited from its Rossignol purchase. The ski company brought with it enough unsold merchandise — $197.9 million worth — to grow Quiksilver’s inventories by 144 percent last quarter. With Quiksilver’s inventory growing at half again the rate of sales (19 percent versus 11 percent) even without the Rossignol batch of unsold goods, it seems likely the combined company will need to do some heavy-duty discounting to move the merchandise out of its warehouses, convert it to cash and put it in the corporate till. Ultimately, eating into profits.

Kellwood’s Q3 filing to SEC delayed, Skinner named chairman
Kellwood (NYSE: KWD) told the SEC it is delaying the filing of its third-quarter report because it is restating previous financial statements. The company has filed preliminary financial information, but it has not been reviewed by its accounting firm yet.

Earlier this month, Kellwood said it would restate its financial statements for the first two quarters of fiscal year 2005 and for fiscal years 2002, 2003 and 2004. An accounting error caused the company to understate its cost of goods sold in prior periods, which led to a cumulative overstatement of profit of about $5 million as of July 30, 2005, it reported. Also, Kellwood expects to take a $2.5 million after-tax charge for death benefit program.

Both actions are expected to reduce profit in the first two quarters by less than $0.01 per share, it said.

In other news, Robert C. Skinner Jr. was elected chairman of Kellwood, starting on Feb. 1, 2006, succeeding Hal J. Upbin, who is retiring as chairman on Jan. 31, 2006. Skinner will continue in his roles of president and CEO.

Skinner was named CEO in June 2005. He was elected to the Kellwood board in June 2004, and president and COO in December 2003. From March 2002 until December 2003, he served as Kellwood corporate vice president with overall responsibility for menswear, intimate apparel and childrenswear. Skinner joined Kellwood in 2000 as president of the the menswear division. Prior to Kellwood, he was president of Oxford Shirt Group for 13 years, and corporate vice president of Oxford Industries for his last two years there.

Wellman to reduce Fortrel pricing
Wellman (NYSE: WLM) said it will revise the pricing structure of Fortrel polyester staple fiber, starting with the Jan. 1 shipments, to reflect the renewed stability in the supply and cost of its chemical raw materials. The monthly adjustments in price that have been in effect since September 2005 will be eliminated with this change. The price for Fortrel polyester staple will be adjusted back to August levels, plus an additional $0.03 per pound, to cover the continued elevated levels of raw material, energy and transportation costs.

Reebok shareholders to vote on adidas-Salomon merger
Reebok International (NYSE:RBK) plans to hold a special meeting of shareholders on Jan. 25, 2006, to vote on its merger with adidas-Salomon. Shareholders of record as of Dec. 19 will be entitled to vote at the special meeting in its Canton, Mass., headquarters. The definitive proxy statement will be mailed to Reebok’s shareholders on or about Dec. 21. If passed, Reebok expects to complete the merger during the first half of 2006.

Outdoor Channel director enters stock trading plan
Jerry Berglund, director of Outdoor Channel Holdings (Nasdaq: OUTD), said he has entered into a pre-arranged stock trading plan to sell a portion of his company stock over time as part of his individual long-term strategies for asset diversification and liquidity. Under SEC’s Rule 10b5-1, Berglund is able to sell up to 76,366 of his shares between Jan. 3, 2006, through Jan. 3, 2007. A pre-determined number of shares will be available for sale each month under the arrangement and is subject to an escalating pricing guideline as specifically outlined in the plan. The shares to be sold will be acquired through the exercise of stock options, which expire Dec. 7, 2007.

LaCrosse sells old PVC boot plant
LaCrosse Footwear (Nasdaq: BOOT) has completed the sale of its facility in Claremont, N.H., for $685,000 in cash. The net proceeds from the sale are expected to approximate the net book value of the property. The facility was the former manufacturing and distribution center for its discontinued PVC boot line. With the sale of the facility, the company said it has eliminated all properties and assets once associated with its PVC line. CEO Joseph Schneider said, “We will use the proceeds from the sale to continue to invest in developing and marketing high-margin, high-performance and innovative products for both the work and outdoor markets.”

GSI elects new board member
John Hunter has been elected to serve on the board of directors for GSI Commerce (Nasdaq: GSIC). Hunter, the senior vice president of customer services for QVC Inc., fills the seat recently vacated by Randy Ronning. Hunter joined QVC in 1991 as a vice president of customer service. Hunter’s current role is that of chief customer officer and advocate and he directs all aspects of QVC’s customer focus strategies. Prior to QVC, Hunter was a senior vice president in the credit division of Citibank.

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