Outdoor financials: Eddie Bauer's Q1 loss more than doubles, plus Outdoor Channel, Forzani

Eddie Bauer's Q1 loss more than doubled, Outdoor Channel posted a 45-percent increase in its Q1 revenue, and Forzani rejected a hedge fund's proxy demands.
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Eddie Bauer's Q1 loss more than doubles

Eddie Bauer Holdings (Nasdaq: EBHI) said its first-quarter loss more than doubled, hurt by a hefty charge to amend loan terms and slow consumer spending.

For the three months ended April 4, the company lost $44.5 million, or $1.44 per share, versus losses of $19.3 million, or $0.63 per share, last year. The company said it was hit by one-time charges: a $10.3 million charge for amending its senior term loan and a lower income tax benefit of $11 million.

Quarterly revenue fell to $179.8 million from $213.2 million in the first quarter of 2008.

Combined comparable store sales fell 11.3 percent when excluding the effect of Canadian exchange rates. The company said comparable store sales continue to be impacted by the general economic conditions and reduced consumer retail spending.

Direct revenue was down 10.7 percent. Catalog circulation pages were down 22.6 percent for the quarter, while catalog productivity was up approximately 11.2 percent on a more targeted mailing strategy, the company said.

"The first quarter was a difficult one, as the sharp downturn in the economy took its toll on our sales. We continued to focus on cost cutting and cash flow management, which helped mitigate the impact of lower sales," said Neil Fiske, president and CEO, in a statement.

Its gross margin percentage declined to 24.5 percent in the first quarter from 27.6 percent in the year-ago quarter. Gross margin dollars were down to $41.4 million compared to $54.7 million in the prior year quarter.

SG&A decreased by15.4 percent to $14.7 million and included $1.2 million in severance costs associated with the January 2009 193-person reduction in workforce and a reduction in previously recorded severance amounts.

Operating loss was $28.2 million compared to $25.4 million in the year-ago period.

Outdoor Channel posts 45 percent increase in Q1 revenue

First-quarter revenues for Outdoor Channel Holdings (Nasdaq: OUTD) jumped 45.3 percent due largely to the acquisition of Winnercomm.

Total revenues were $17.0 million compared with $11.7 million in the corresponding period a year ago.

Advertising revenue rose 2.1 percent to $7.8 million from $7.6 million in the prior-year period. Subscriber fees totaled $4.7 million -- an increase of 15.2 percent compared to subscriber fees of $4.0 million in the prior-year period reflecting annual rate increases and an increase in paying subscribers.

The company posted a net loss of $1.3 million, or $0.05 per diluted share, versus a net loss of $0.8 million, or $0.03 per diluted share, last year.

Earnings before interest, taxes, depreciation and amortization amounted to $0.1 million, compared with a loss of $0.1 million in the prior-year period.

In January 2009, Outdoor Channel Holdings acquired certain assets of Winnercomm, and going forward the company will be reporting a third revenue category entitled "production services." Production services revenue during the 2009 first quarter totaled $4.5 million and was comprised primarily of production services for customer-owned telecasts and marketing, it said.

Forzani rejects hedge fund's proxy demands

Forzani Group (FGL.TO) recommended that shareholders oppose plans by Crescendo Partners, a New York-based hedge fund, to nominate its own slate of two directors for election to Forzani's board of directors.

The Canadian sporting-goods retailer said Crescendo Partners, which owns about 5 percent of the outstanding shares, "failed to provide a compelling rationale to support its demands and failed to identify any particular business initiatives."

The fund was requesting that it be allowed to appoint two of its own members to the 10-member board.

"Last month Crescendo informed us that it owned 5.1 percent of FGL's shares, demanded three seats on our board of directors and threatened a proxy fight if we declined," said John Forzani, chairman of Forzani, in a statement. "Based on a number of factors, the board unanimously determined that the company and its shareholders would be best served by denying Crescendo's extraordinary demands."

Forzani also said the plan did not appear to be supported by a large percentage of its shareholders.

Forzani has mailed a Management Proxy Circular with its slate of eight nominees for the company's board. The election of directors will take place at the company's Annual General Meeting on June 10.

The company said its understands that Crescendo has issued its own proxy circular and the company will respond to it in due course, after having taken the opportunity to review it.

Forzani and its board are advised by Greenhill & Co., as independent financial advisors, Blake, Cassels & Graydon LLP, as legal counsel and Georgeson Shareholder Communications Inc., as proxy solicitation agent.

The Forzani Group is Canada's largest national retailer of sporting goods, operating stores such as Sport Chek, Coast Mountain Sports, Sport Mart and Fitness Source, among others.

--Compiled by Wendy Geister

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