Outdoor financials: Analyst lowers estimates on Deckers, plus Quiksilver, West Marine, Forzani

An analyst lowered estimates on Deckers, Quiksilver was downgraded by the Moody's ratings agency, West Marine's Q4 same-store sales fell, and Forzani Group took a hit on holiday season sales.
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Analyst lowers estimates on Deckers

Susquehanna analyst Christopher Svezia lowered his share price target and 2009 earnings estimates on Deckers Outdoor Corp. (Nasdaq: DECK), parent of Teva, Ugg and Simple, amidst the current weak retail environment. In a client note, he wrote that he expects fourth-quarter results will be strong, but he expects sales to slow in the second half of 2009 as management "becomes more cautious with distribution in order to maintain brand integrity."

"Over the next month, management will be working with key retailers regarding fall 2009 orders, and while we believe Ugg's retail partners will continue to gravitate toward the brand given its success, we believe pre-books could be more subdued relative to 2008," Svezia wrote.

But he said Deckers will likely be one of the few shoe makers to grow in 2009. He raised his fourth-quarter earnings-per-share estimate to $3.93 from $3.85 based on expected strong sales during the quarter, but lowered his 2009 estimate and cut his share price target to $92 from $134.

Quiksilver downgraded by Moody's ratings agency

Moody's has downgraded Quiksilver (NYSE: ZQK) on concerns that the company's weak fourth-quarter performance and reliance on short-term debt makes it vulnerable as consumers cut spending.

Moody's downgraded the company's $400 million in unsecured senior notes due 2013, taking their ratings down one notch to "Caa1" from "B3."

It also cut Quiksilver's corporate family and probability of default ratings to "B3" from "B2." The rating is an opinion on the company's ability to honor all its financial obligations and is assigned to a corporate family as if it had a single class of debt and a single consolidated entity structure.

One quarter of Quiksilver's debt is due in its current fiscal year. The rating agency's outlook on the company is negative. The company's speculative liquidity grade rating is SGL-4, the lowest possible rating.

West Marine's Q4 same-store sales fall

Hit by slower consumer spending, West Marine (Nasdaq: WMAR) said its fourth-quarter revenue fell 6.1 percent on declining same-store sales.



For the period ended Jan. 3, revenue slipped to $111.1 million from $118.3 million a year earlier. Same-store sales dropped 5.1 percent during the quarter.

Quarterly revenue for the stores segment slid 6 percent to $95.3 million, while port supply unit sales through distribution centers dipped 1.2 percent to $7.7 million. For the direct sales division, revenue was down 10.6 percent to $8.1 million.

Full-year revenue slipped 7.1 percent to $631.3 million on lower same-store sales and store closings. Same-store sales slipped 6.8 percent.

West Marine said its 2008 adjusted loss will be smaller than it previously expected thanks to lower-than-projected restructuring charges and operating costs.

It now forecasts a full-year loss between $0.44 and $0.50 per share, instead of its prior estimated loss of $0.55 to $0.65 per share. It added that the forecast excludes about $0.31 per share in restructuring charges, a deferred tax valuation and lower tax rate and costs related to an ongoing SEC investigation.

Forzani Group takes holiday season sales hit

Canada's Forzani Group (TSX: FGL) reported lower-than-expected sales for the holiday season, saying that was "satisfactory" in light of the challenging North American retail environment.

For the 10 weeks ended Jan. 11, total retail sales were flat compared to the prior year. On a same-store basis, total retail system sales were down 1.8 percent, although sales were stronger in the week before and the week after Christmas, it said. Corporate same-store sales decreased 4.3 percent, while franchise retail same-store sales were up 3.0 percent. The company added that this same-store sales performance was on top of increases of 7.4 percent and 18.5 percent respectively, in the prior year.

Corporate store margin rates improved 55 basis points versus the prior year as a result of more current inventory and less aggressive discounting, it said. Corporate store inventory levels were as planned, and below last year, on a same-store basis, it added.

The Forzani Group is Canada's largest national retailer of sporting goods, operating under the banners of Sport Chek, Coast Mountain Sports, Sport Mart and The Fitness Source.

--Compiled by Wendy Geister

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