Outdoor financials: Amer Sports' EBIT boosted by winter/outdoor business segment, plus Under Armour, Rocky Brands, Gander Mountain, Garmin, West Marine

Amer Sports' EBIT was boosted by the winter/outdoor business segment, Under Armour's Q1 profit plunged, Rocky Brands settled a federal lawsuit involving trade secrets, Gander Mountain returned to the catalog business, Garmin's Q1 profit increased, and West Marine's Q1 net loss widened.
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Amer Sports' EBIT boosted by winter/outdoor business segment

A weak U.S. dollar knocked Amer Sports Group's first-quarter net sales down by 5 percent, while the winter and outdoor business segment helped improve the company's earnings before interest and taxes. Amer Sports is the parent of Salomon, Arc'Teryx and Suunto, among others.

Amer Sports first-quarter net sales were EUR 363.0 million (USD $566.5 million) versus EUR 381.8 million (USD $595.9 million) in the same period the year before. Net sales in local currency terms increased 2 percent. The group's EBIT amounted to zero compared to a EUR 7.8 million (USD $12.1 million) loss the year before.



Earnings loss before taxes narrowed to EUR 6.9 million (USD $10.7 million) versus a loss of EUR 14.6 million (USD $22.7 million) the year before. Earnings loss per share came in at EUR 0.07 (USD $0.10), lower than a loss of EUR 0.15 (USD $0.23) in 2007. Net financial expenses amounted to a loss of EUR 6.9 million (USD $10.7 million) compared to a loss of EUR 6.8 million (USD $10.6 million) in the same period the year before.

For the winter and outdoor business segment, first-quarter net sales increased 15 percent in local currency terms to EUR 162 million (USD $252.8 million) compared to EUR 144.4 million (USD $225.3 million) in the same period the year before.

The breakdown of net sales was as follows:

>> Winter sports equipment, 23 percent, with sales of EUR 37.3 million (USD $58.2 million) vs. EUR 31.7 million (USD $49.4 million) in 2007

>> Apparel and footwear, 43 percent, with sales of EUR 70.6 million (USD $110.1 million) vs. EUR 60.5 million (USD $94.4 million)

>> Cycling, 21 percent, with sales of EUR 33.5 million (USD $52.2 million) vs. EUR 30.2 million (USD $47.1 million) in 2007

>> Sports instruments, 13 percent, with sales of EUR 20.6 million (USD $32.1 million) vs. EUR 21.4 million (USD $33.4 million) in 2007

EMEA accounted for 69 percent, the Americas for 22 percent, and Asia Pacific for 9 percent of net sales. Sales in local currencies were up 35 percent in Asia Pacific, 13 percent in EMEA, and 10 percent in the Americas.



EBIT loss narrowed to EUR 14.6 million (USD $22.7 million) from EUR 34.4 million (USD $53.6 million) last year. The company said the improvement was due to strong growth in the profitability of apparel and footwear and an increase in winter sports equipment sales on the previous year.



Amer Sports said sales of both Atomic and Salomon were fuelled by increased demand for alpine skiing equipment in Central Europe, while the cross-country skiing equipment market was still extremely challenging. It added that positive sales development of winter sports equipment compared to the previous year is not indicative of the full-year picture; the amount of pre-orders for the upcoming season will be the decisive factor.

The company said sales of apparel and footwear continued to soar, adding that the popularity of trail running continues to grow, and Salomon has strengthened its position as a manufacturer of technical trail running shoes.



Sports instruments net sales were on par with the previous year in local currency terms, and sales are expected to increase during the second quarter, the company said.

(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 29.)



Under Armour's Q1 profit plunges


Under Armour (NYSE: UA) said its first-quarter profit tumbled 71 percent, weighed down by increased marketing expenses.

For the quarter ended March 31, the company reported income of $2.9 million, or $0.06 per share, compared with $9.9 million, or $0.20 per share, in the year-ago period.

Revenue rose 27 percent to $157.3 million from $124.3 million in the first quarter of 2007. The company said sales were boosted by a 25-percent increase in apparel revenue with strong growth across the men's, women's and youth segments. Footwear revenue increased 40 percent to $16.6 million.

Cost of goods sold rose 29 percent to $82.5 million. Selling, general and administrative expenses increased 58 percent to $70.5 million on higher marketing expenses. The company previously said it would shift a substantial portion of its full-year marketing spending to the first half of the year.

Marketing expenses for the first quarter were 18 percent of revenue, compared with 11 percent in the prior-year quarter. Under Armour said it would continue to invest 12 percent to 13 percent of revenue in its marketing budget for the full year.

Also, Under Armour reiterated its full-year sales outlook for $765 million to $775 million, representing a 26-percent to 28-percent gain over the company's 2007 revenue figure.

It lowered its full-year income from operations estimate to be between $103.5 million and $104.5 million, from a previous estimate of $108.5 million to $110.5 million.

The company earlier estimated gross margin improvement of 40 to 50 basis points, but now expects gross margins to fall by 30 basis points in 2008.

Rocky Brands settles federal lawsuit involving trade secrets

Rocky Brands (Nasdaq: RCKY) has reached a settlement with a former employee and two companies that it said was planning to make and sell knock-offs of its most popular shoes. The terms of the settlement are confidential.

The company reached a settlement with former Rocky employee Glen Bratcher, his company and a Chinese manufacturer it alleged were using trade secrets to make boots nearly identical to some Rocky lines. Also named in the suit were Bratcher's Franklin, Tenn.-based company, Westwood Footwear and Accessories LLC and Nantong Hong Yi Wang Shoes Company Ltd., which makes products for Westwood as well as Rocky Brands.

Rocky said terms of the settlement are confidential, but CEO Mike Brooks said the company is "extremely pleased" with the resolution of the case, which included 13 claims against Bratcher and the two companies.

In the suit filed Feb. 5, Rocky was seeking damages of more than $75,000 on a breach of fiduciary duty claim, plus undetermined damages on the other charges. It also wanted injunctions against Bratcher and the two companies to halt the boot production.

In the suit, Rocky claimed Nantong invested millions of dollars in Westwood, where Bratcher serves as CEO, and would make boots for the company at the same plant where it makes Rocky products, using the same molds, dies, stitching, patterns and leather. Rocky also alleged Nantong had delayed filling its orders to prepare for summer shipments of the Road Wolf products, which it says violated Rocky's Wild Wolf trademark.

Gander Mountain returns to catalog business

After a 12-year hiatus, Gander Mountain (Nasdaq: GMTN) has returned to the direct marketing business, mailing a 324-page catalog from its Overton's subsidiary that features products from Overton's, Gander Mountain and other vendors.

The company said the acquisition of Overton's was made to allow Gander Mountain to quickly reenter the direct marketing channel that it left in 1996 when it sold its catalog operation. Returning to direct marketing allows the company to become a multi-channel marketer with the ability to sell products to customers in all 50 states, not just the 23 states in which it currently has retail stores, it said.

The size of the potential market in the outdoor lifestyle industry is estimated to represent more than $32 billion in annual sales, it added.



Garmin's Q1 profit increases


Garmin (Nasdaq: GRMN) said its first-quarter earnings rose as demand for its GPS automotive and mobile products stayed strong beyond the holiday season.

For the quarter ended March 29, Garmin earned $147.8 million, or $0.67 per share, compared with $139.9 million, or $0.64 per share, in the same quarter last year. Excluding the impact of foreign exchange, Garmin earned $0.69 per share.

The company's sales rose year over year to $663.8 million from $492.2 million.

Garmin said that for the 13 weeks that ended on March 29, sales in its automotive and mobile segment rose $135.2 million, or 42.7 percent, to $451.9 million. The company's aviation sales rose $13.4 million, or 18.7 percent, to $85.4 million.

By region, Garmin said its North America revenue rose 27 percent to $411 million, while Europe revenue rose 43 percent to $211 million. Revenue in Asia doubled, totaling $42 million in the first quarter.

West Marine Q1 net loss widens

West Marine (Nasdaq: WMAR) said its first-quarter loss widened on softer consumer spending on discretionary items.

The company reported a loss of $17.7 million, or $0.81 per share, compared with a loss of $11.4 million, or $0.53 per share, in the same quarter a year before.

For the period ended March 29, revenue declined 10 percent to $113.3 million from $125.8 million. Same-store sales fell 9.4 percent during the quarter.



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