Outdoor financials: Wellman files for Ch. 11 bankruptcy reorganization, plus Cabela's, Crocs, Deckers, Columbia Sportswear, Timberland, Kellwood

Wellman files for Ch. 11 bankruptcy reorganization

Wellman (OTCBB:WMAN) has filed for Chapter 11 bankruptcy reorganization due to deteriorating business conditions and substantial debt obligations.

Along with the filing, it has received a commitment from its revolving credit-facility lenders for up to $225 million in debtor-in-possession financing. The funds, combined with cash from operations, will be used to fund future operating expenses, including employee and supplier obligations.

The bankruptcy filing allows Wellman to operate “while continuing to pursue our previously announced strategic-alternative process,” CEO Thomas Duff said in a statement.

“Although the company has taken numerous steps to reduce its debt and strengthen its balance sheet through the disposition of certain businesses, headcount reductions and other cost reductions, these actions were not sufficient to offset the deterioration in business conditions and the cost of our substantial debt obligations,” he added.

In October, Wellman hired Lazard Freres & Co., an investment bank with extensive experience in mergers and acquisitions for chemical companies, to explore its options.

The company said it intends to still pay its employees full wages and benefits, even if it means petitioning the bankruptcy court in New York to authorize these expenditures.

The company employs 550 people at its Palmetto Plant off McIver Road in Darlington County, in addition to 170 people at its Johnsonville plant.

Wellman said in September 2006 it would end its fiber operations in Johnsonville, putting 360 people out of work. The move came as the company restructures its U.S. fiber operations to improve its operating results, according to a press release issued by the company.

The company consolidated all its U.S. fiber production in its Palmetto plant in Darlington, and closed the fiber production capacity at its Johnsonville plant.

In June, Wellman Inc. sold the manufacturing line of Wellstrand fiber and the rights to the trademark to David C. Poole Co. of Greenville. David C. Poole Co. is a distributor and manufacturer of synthetic fibers for textile and industrial end uses and a distributor of PET resin for packaging applications. David C. Poole Co. purchased the core equipment for its new facility from Wellman, and uses 390,000 square feet of distribution and manufacturing facilities in Johnsonville.

Cabela’s reports bump in Q4 profit, to slow store growth in ’08

Cabela’s (NYSE: CAB) fourth-quarter earnings rose, helped by merchandise sales at newer stores.

Profit for the quarter ended Dec. 29 rose 5 percent to $56.2 million, or $0.84 per share, from $53.4 million, or $0.80 per share, last year.

Revenue rose 14 percent to $889.5 million from $781 million last year. Sales in stores open at least one year fell 5.9 percent.

For the year, earnings rose 2 percent to $87.9 million from $85.9 million a year ago. Revenue rose 14 percent to $2.35 billion from $2.06 billion last year.

The company said it would open two stores in 2008, slowing retail-store expansion to focus on existing stores. It expects earnings in 2008 to grow in the mid-single-digit percentage range.

Stephens Inc. analyst Rick Nelson said in a note to investors that Cabela’s was challenged by a difficult retail climate and poor productivity of new stores. He rated Cabela’s “Buy.”

“We believe the slowdown in store expansion is prudent, with focus shifting to improving profitability of the retail operation,” he wrote in a note. “We continue to view Cabela’s as the long-term winner in the outdoor sector given its brand strength, customer loyalty, and multichannel marketing advantages, including the core catalog/Internet operation.”

Jim Duffy, a Thomas Weisel Partners LLC analyst, said in a note to investors that Cabela’s decision to focus on new stores is “encouraging” but kept his “Market Weight” rating on the stock.

“While we agree with the decision to focus on cash flow, we believe share appreciation will be limited until there is evidence Cabela’s has found an engine for earnings growth that can be accretive to ROIC,” he wrote.

Shares rose $1.24, or 9.2 percent, to close at $14.78 on Feb. 22. The stock has traded between $11.08 and $28.80 during the past year.

Crocs’ Q4 profit jumps 84 percent

Crocs (Nasdaq: CROX) said its fourth-quarter profit jumped 84 percent as revenue nearly doubled on a surge in international demand.

After payment of preferred dividends, Crocs earned $38.3 million, or $0.45 per share, compared with $20.8 million, or $0.26 per share, for the same quarter in 2006. Revenue jumped to $224.8 million from $112.9 million in the year-ago period.

Domestic sales rose about 47 percent to $115.8 million, while international sales more than tripled to $109 million.

Crocs said its gross margin for the recent quarter was hurt by shipping costs, which resulted from higher-than-expected orders over the holiday season.

For the full year 2007, Crocs earned $168.2 million, or $2 per share, compared with $64.4 million, or $0.81 per share, for 2006. Revenue rose to $847.4 million from $354.7 million the year before.

For FY 2008, Crocs reiterated its previously issued growth targets and expects revenues of approximately $1.16 billion and net income per diluted share of approximately $2.70.

For the six months ending June 30, 2008, the company expects revenues to increase approximately 50 percent over the six-month period ended June 30, 2007.

Crocs shares dropped $3.64, or 11.4 percent, to $28.44 in aftermarket trading. They fell $1.35, or 4 percent, to $32.08 in the regular session on Feb. 19.

Deckers shares jump on analyst upgrade

Shares of Deckers Outdoor (Nasdaq: DECK) rose Feb. 19 after an analyst said he expects the parent of Teva, Uggs and Simple to report strong quarterly earning, prompting him to raise his ratings.

“Our channel checks this holiday season indicate that Uggs sold strongly at full price despite the promotional retail environment, and we saw stock-outs in multiple channels, including (department store) Nordstrom,” Jeff Mintz of Wedbush Morgan wrote in a note. “Given the strong sell-through, we expect the company to report (fourth-quarter earnings per share) in line with our $2.69 estimate, well above the $2.29 consensus.”

Brisk sales of the sheepskin boots should continue into spring, Mintz wrote, and restocking of the line could boost results in the first quarter as well. Mintz also wrote that the company is better prepared to meet strong demand than in past years.

Mintz added the stock’s sell-off is overdone and lifted his rating to “Buy” from “Hold.” The stock has plunged 31 percent since peaking at $166.50 at the end of December.

He maintained his estimates for earnings per share in 2007 and 2008 — which both exceed consensus estimates — and $144 price target.

Deckers Outdoor shares added $4.77, or 4.2 percent, to close at $119.15 on Feb. 19.

Columbia Sportswear CEO buys shares

Tim Boyle, president and CEO of Columbia Sportswear (Nasdaq: COLM), bought 11,775 shares of stock, according to a Securities and Exchange Commission filing.

In a Form 4 filed with the SEC, Boyle reported he bought the shares for $42.26 to $42.50 apiece Feb. 20-21.

Insiders file Form 4s with the SEC to report transactions in their companies’ shares. Open market purchases and sales must be reported within two business days of the transaction.

Sun Capital completes Kellwood buyout

Sun Capital Partners said it has completed its $540 million buyout of Kellwood (NYSE: KWD), parent of Sierra Designs, Kelty and Royal Robbins. After launching a tender offer, Sun Capital bought enough shares to take control of Kellwood.

Sun Capital manages more than 180 companies worth $35 billion. Now in the hands of a private investor, Kellwood’s stock will no longer trade on a public exchange.



Timberland executive exercises options

A vice president at Timberland (NYSE: TBL) exercised options for 8,000 shares of common stock, according to Securities and Exchange Commission filings.

In Form 4s filed with the SEC, Danette Wineberg reported she exercised options for the shares Feb. 19-20 for $9.02 apiece and then sold the same number of them the same day for $15 to $15.11 apiece.

Insiders file Form 4s with the SEC to report transactions in their companies’ shares. Open market purchases and sales must be reported within two business days of the transaction.



For more information about any public company on this page or its financial reports, as well as to view stock prices updated every 15 minutes, visit the SNEWS® Stock Market Updates. Click on: www.outsidebusinessjournal.com/cgi-bin/snews/stock_report.html.