Wolverine’s Q1 profit drops 56 percent
Wolverine World Wide (NYSE: WWW) saw its first-quarter profit plunge 56 percent on restructuring charges and a stronger dollar. The company is the parent of Merrell and Chaco, among others, and is the licensee for Patagonia Footwear.
For the quarter ended March 28, net income dropped to $10.5 million, or $0.21 per share, compared with $23.7 million, or $0.46 per share, a year earlier. Excluding restructuring charges and $0.03 per share for an increased pension expense, profit was $0.44 per share.
Wolverine announced in January that it would cut 450 jobs — about 10 percent of its staff — in a move to save $17 million to $19 million annually. The restructuring effort was expected to cost $31 million to $36 million before taxes to implement, with the charges recorded throughout 2009.
Sales slipped 11 percent to $255.3 million from $288.2 million.
Operating expenses in the quarter were $87.5 million. Adjusting for $12.1 million of non-recurring restructuring and related charges, $2.2 million of increased pension expense, and a $4.4 million benefit from the stronger U.S. dollar, operating expenses decreased 9.1 percent versus the prior year.
Accounts receivable at quarter end were 11.1 percent lower than the prior year’s first quarter.
Inventory at the end of the first quarter was up 15.6 percent compared to the prior year, but up only 11.8 percent on a unit volume basis. Wolverine said the increase was driven primarily by year-over-year product cost increases on most brands in the portfolio, a strategic pre-buy of core product prior to anticipated cost increases, inventory from its recently acquired Chaco brand, and a build of buffer inventory in our leather business prior to the recent closure of the company’s tannery operations.
Adjusting for $2.3 million of non-recurring restructuring and related charges that are included in cost of sales, gross margin was 41.2 percent, compared to prior-year gross margin of 42.2 percent. The primary driver of the lower gross margin in the quarter was the impact of expected product cost increases, it said. Reported gross margin in the quarter was 40.3 percent.
The company reaffirmed its full-year adjusted profit and sales forecasts saying it still expects 2009 net income of $1.74 to $1.97 per share. This excludes $0.12 per share for an increased pension expense, $0.12 to $0.15 per share for the stronger dollar and $31 million to $36 million in restructuring costs. It also kept its revenue outlook in a range of $1.07 billion to $1.15 billion.
Also, Wolverine repurchased 406,200 shares of stock during the quarter at an average cost of $13.77 per share. It said its liquidity position remains strong, with borrowings of $94.4 million offset by $56.8 million of cash.
Jarden’s Q1 profit up, sales down; prices share offering
Even as sales declined on a stronger dollar, Jarden Corp. (NYSE: JAH) said it first-quarter profit jumped 89 percent. The company’s outdoor brand portfolio includes Coleman, K2 and Marmot.
Excluding reorganization and acquisition-related costs and other items, net income was $18.4 million, or $0.24 per share. The amount was higher than Jarden’s forecast of $0.21 to $0.23 per share.
Sales for the period ended March 31 dropped 7 percent to $1.14 billion from $1.22 billion.
Interest expense fell to $36.2 million from $46.2 million a year earlier.
Also, Jarden said it has agreed to sell 12 million shares of common stock in a registered public offering underwritten by Barclays Capital. The offering increases fully diluted shares outstanding by approximately 16 percent.
It has priced the 12 million shares at $17.50 per share, and the offering is expected to close April 27. The company intends to use the proceeds from the sale for general corporate purposes, including paying off debt.
Gander reports record billion-dollar sales for FY ’08
Gander Mountain (Nasdaq: GMTN) posted a 5.2-percent increase in fourth-quarter sales and a 9.8-percent increase in FY ’08 sales to hit a record $1.1 billion — the first time the company’s annual revenue has ever exceeded $1 billion.
For the quarter ended Jan. 31, consolidated sales were a record $334.1 million compared to consolidated sales of $317.6 million for the fourth quarter of fiscal 2007.
Retail segment sales for the fourth quarter were $322.0 million, a 3.2-percent increase over 2007. Direct segment sales were $12.1 million for the quarter, compared to $5.5 million for the same quarter last year.
Retail segment net income in the fourth quarter was $16.6 million, which includes a $6.5 million non-cash charge for impairment of goodwill in light of current market conditions, versus $7.0 million last year. Excluding the non-cash impairment charge, retail segment net income was $23.1 million.
The company said the improvement resulted primarily from increased product margins and decreased SG&A costs.
Consolidated net income improved to $13.0 million for the fiscal 2008 fourth quarter, including the goodwill charge, compared to net income of $5.8 million for the same quarter last year. Excluding the non-cash impairment charge, consolidated net income for the fiscal 2008 fourth quarter was $19.6 million.
As reported, comparable store sales during the fourth quarter of fiscal 2008 were down 0.2 percent, an improvement over last year’s 6.5-percent drop. Comparable store sales were a positive 2.7 percent during the quarter, excluding the 2.9 percent downward impact of boats, ATV sales and power sport services, which are categories the company is in the process of exiting.
For the fiscal year, Gander reported record sales of $1.1 billion, an increase of 9.8 percent over the prior year. The company reported a net loss for the year of $15.5 million, or $0.64 per share, compared with a net loss of $31.8 million, or $1.52 per share for the 2007 fiscal year.
Retail segment results for the year were a net loss of $9.4 million, compared with a net loss of $30.6 million in fiscal 2007. Comparable store sales declined 5.6 percent. Direct segment results were a net loss of $6.1 million compared with a net loss of $1.2 million in fiscal 2007 reflecting additional investment in the launch of Gander Direct in fiscal 2008.
The company added that record cash flows from operating activities for the year were $59.2 million, an improvement of approximately $90 million over fiscal year 2007. During the year, Gander reduced its total debt by approximately $38 million.
Sport Chalet appoints new board member
Sport Chalet (Nasdaq: SPCHA and SPCHB) said Kevin Ventrudo has been appointed to the company’s board of directors.
Ventrudo, 50, has more than 25 years of strategic management, finance and consulting experience. The majority of his career has been spent in the investment banking industry, most recently with SG Cowen Securities Corp. and also with Salomon Smith Barney, Sutro & Co. and Merrill Lynch. He previously served as CEO of L.A. Gear. Since leaving the banking industry, he has served as an independent consultant and has been involved in a number of entrepreneurial ventures.
–Compiled by Wendy Geister
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