Amer Sports' fitness division posts 16 percent drop in Q1 sales
Amer Sports posted a 2 percent decrease in quarterly net sales for the entire company, but its fitness segment, which includes Precor, didn't fare well, reporting a 16 percent drop in first-quarter sales.
"The sharp sales decline we saw last year in our fitness business continued during the first quarter, with weakness in both the consumer as well as the commercial business. The weakness reflects both tight credit markets and a 'wait and see' attitude by customers that are concerned by the general economic outlook," Roger Talermo, president and CEO of Amer Sports, said in a statement.
Net sales for the company were EUR 355.3 million (USD $469.5 million) compared to EUR 363 million (USD $479.2 million) in the same period last year. In local currencies, net sales decreased by 7 percent.
The group's EBIT was a loss of EUR 6.9 million (USD $9.1 million) -- a result of challenging market conditions particularly in the United States, the company said.
Earnings before taxes were a loss of EUR 14.4 million (USD $19.0 million) compared to a loss of EUR 6.9 million (USD $9.1 million) in 2008. Earnings per share were a loss of EUR 0.15 (USD $0.19) versus a narrower EUR 0.07 (USD $0.09) loss last year. Net financial expenses amounted to a 9 percent loss of EUR 7.5 million (USD $9.9 million) compared to last year's loss of EUR 6.9 million (USD $9.1 million).
"The sporting goods business entered 2009 under the same cloud of uncertainty that is oppressing almost all consumer businesses. As a result, retailers have become extremely cautious about ordering new products and they have been destocking," Talermo said in a statement. "Furthermore, besides slower consumer demand in general, consumers have also been moving to lower price points in their attempt to cut spending. The current headwinds in the trading conditions are clearly more obvious in the United States than in Europe."
The company's fitness segment reported a 16 percent drop in sales -- 25 percent in local currency -- to EUR 48 million (USD $63.4 million) compared to EUR 57 million (USD $75.3 million) in the same period the year before.
The Americas accounted for 77 percent, EMEA for 16 percent, and Asia Pacific for 7 percent of net sales. In local currency terms, sales were down 12 percent in EMEA, 27 percent in Asia Pacific and 27 percent in the Americas.
EBIT decreased to a loss of EUR 3.4 million (USD $4.4 million) versus EUR 3.7 million (USD $4.8 million) last year on the significant fall in sales and lower gross margins resulting from a lower capacity utilization rate and pricing pressure. Amer said Precor will continue to focus on cost savings to return to profitability.
The company said consumer fitness products sales were impacted by significantly lower consumer spending due to the uncertain economic environment. Consumer sales were affected by both the overall withdrawal from discretionary spending by many families and by a significant reduction in the number of specialty dealers compared to the prior year, it added.
Demand for commercial equipment for both North America and EMEA were impacted as customers are deferring purchase decisions in the light of the financial uncertainty, Amer noted. Availability of credit and financing are also having an impact particularly in Europe. Numbers were also impacted by the distribution lost due to the bankruptcy of two major dealers, which, it said, has not been replaced yet.
Personnel for the fitness segment was down 10 percent year-over-year with 751 employed compared to 2008's 838 employees.
(Conversion of Euros into U.S. dollars is for information only, is not necessarily relative to earnings, and is based on the currency rate as of April 28.)
Forzani plans to scale back number of retail chains
Forzani Group (TSX: FGL) said it plans to boost sales by 10 percent a year and earnings per share by 20 percent a year over the next five years. It also said it will reduce the number of retail chains it operates but increase the size of individual stores.
During an investors' day conference, Forzani said it is forecasting its earnings per share will be between CDN $2.25 (USD $1.84) and CDN $2.35 (USD $1.92) by 2014, up from CDN $0.93 (USD $0.76) in 2008, and its sales will be about CDN $2.6 billion (USD $2.1 billion), up from CDN $1.6 billion (USD $1.3 billion) last year.
The Canadian sporting goods retailer, which has more than 560 stores, currently operates 16 chains under such banners as Sport Chek and Coast Mountain Sports. It said it will gradually cut this to as few as nine chains, focusing on more profitable operations such as Sport Chek and Sport Mart. The end goal of reducing its banner count is to improve efficiency and reduce overlap and competition between its own outlets, it added.
Forzani said the major initiatives underway include:
- Increasing by 5,000 square feet the average size of its Sport Chek outlets, Forzani's largest banner with 128 stores, because, it said, bigger stores deliver a better return on investment.
- Adding concept shops within many of the Sport Chek outlets, including 21 Nevada Bob's Golf boutiques in the current fiscal year. Forzani said the strategy is capital efficient and less risky than adding free-standing Nevada Bob's stores.
- Focusing Sport Mart, with 82 stores, more sharply on opening price-point customers to capture a much greater share of this $3.5 billion market.
- Adding vendor managed performance nutrition departments in Sport Chek and Fitness Source stores. The business has sound margins, faster inventory turns than sporting goods, and the potential to add to store visits as customers replenish supplies, Forzani added.
- Striving for average franchise retail margins in its corporate stores, which would be a 150 basis point increase in corporate store margins.
Also, the company said it would gradually buy back shares and return the capital to investors through dividends at a payout rate of about 20 percent to 25 percent of EPS.
(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 April 28.)
New shoe line boosts Under Armour's Q1 profit
Under Armour (NYSE: UA) said first-quarter profit rose 38 percent, boosted by strong sales of its new running shoe.
For the quarter ended March 31, profit rose to nearly $4 million, or $0.08 per share, in the three months ended March 31 from $2.9 million, or $0.06 per share, a year ago.
Revenue rose 27 percent to $200 million from $157.3 million a year ago.
Apparel revenue rose 2 percent to $132.2 million, while footwear revenue more than doubled to $40.3 million, from $16.6 million a year ago. Results were helped by the introduction of Under Armour's running shoe during the quarter, as well as shipments of its Performance Training cross training shoes.
"The athletic footwear market represents an enormous growth opportunity for the Under Armour Brand," said Kevin Plank, chairman and CEO, in a statement.
Standard & Poor's upgraded its recommendation on Under Armour's shares to "strong buy" from "buy." S&P Equity Research analyst Marie Driscoll said in a client note that the upgrade reflects expectation of continued strength of its product, higher sales and earnings projects. S&P also increased its 2009 and 2010 earnings estimates, as well as its target price.
GSI Commerce's Q1 net loss widens
With net revenue up slightly, GSI Commerce (Nasdaq: GSIC) reported a wider net loss for the first quarter.
Net loss for the quarter ended April 4 was $11.1 million, or $0.23 per share, compared to a net loss $10.8 million, or $0.23 per share, last year.
The company's net revenues increased slightly to $196.5 million from $195.5 million. Non-GAAP net revenues increased 14 percent to $106.3 million from $93.3 million.
Loss from operations was $13.0 million compared to a loss from operations of $17.8 million. Non-GAAP income from operations was $9.3 million compared to $0.7 million.
Trailing 12-month free cash flow was $16.7 million compared to a negative $0.4 million.
For the second quarter, the company expects net revenues to be in a range of $177.0 million to $182.0 million. Loss from operations is expected to be in a range of $17.0 million to $19.0 million. Non-GAAP income from operations is expected to be in a range of $3.0 million to $5.0 million.
Town Sports' Q1 income takes a header
While its revenue was essentially flat, Town Sports International Holdings (Nasdaq: CLUB) reported a steep dive in its first-quarter profit.
Net income was $639,000 compared to a net income of $4.8 million for the first quarter of 2008. Earnings per diluted share were $0.03 for Q1 2009.
For the quarter ended March 31, revenue increased 0.3 percent to $126.7 million versus $126.3 million last year. Comparable club revenue decreased 2.1 percent.
Total member count was 518,000, increasing 6,000, or 1.2 percent, compared to 2008. Membership attrition averaged 3.6 percent per month in compared to 3.0 percent last year.
Total operating expenses increased 7.9 percent for the quarter. Operating margin was 4.4 percent for Q1 2009 and 11.2 percent in Q1 2008.
The company said it is limiting its second-quarter guidance, saying its expects revenue between $123.0 million and $125.0 million versus $129.4 million for Q2 2008.
Town Sports repurchased 2.1 million shares at a total cost of $5.4 million, resulting in a decrease of total common shares outstanding from 24.6 million to approximately 22.6 million.
Costco increases quarterly cash dividend
Costco Wholesale (Nasdaq: COST) said its board of directors has approved a $0.02-per-share increase in the company's quarterly cash dividend. The company said its dividend is now $0.18 per share, up from $0.16 per share. The new dividend is equivalent to $0.72 per share on an annualized basis. The dividend is payable May 29 to shareholders of record on May 15.
--Compiled by Wendy Geister
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