Outdoor financials: Forzani posts Q1 loss, plus Under Armour, Jarden, Garmin - SNEWS

Outdoor financials: Forzani posts Q1 loss, plus Under Armour, Jarden, Garmin

Forzani posts Q1 loss, Under Armour shares drop on analyst coverage, Jarden CEO buys shares, and Garmin adopts rule plan in conjunction with share repurchase program.
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Forzani posts Q1 loss

Forzani Group (TSX: FGL), Canada's largest sporting goods retailer, posted a first-quarter loss, saying inventory was depleted by a strong fourth quarter, when cold weather spurred demand. Its retail banners include Sport Chek, Sports Experts and Coast Mountain Sports.

Forzani reported a net loss of CDN $2.9 million (USD $2.8 million), or CDN $0.09 (USD $0.08) a share, for the quarter ended May 4. That compares with earnings of CDN $739,000 (USD $721,306), or CDN $0.02 (USD $0.01), in the same quarter a year earlier.

The results included a CDN $1.3 million (USD $1.2 million) loss at the Athletes World chain it bought last November. Forzani said that spring inventory was hit by order cancellations while the chain operated under bankruptcy protection. Athletes World is expected to exit creditor protection at month's end.

Adjusted to exclude the impact of Athletes World, the company said it lost CDN $0.05 (USD $0.04) a share.

Revenue rose 4.4 percent to CDN $307.5 million (USD $300.1 million). Consolidated revenue includes equipment rentals, service income, franchise fees and royalties, along with store and wholesale sales. Forzani said sales and margins improved late in the quarter, but could not offset weak demand in the first eight weeks of the period.

Sales at corporate stores open more than one year fell 5.2 percent in the quarter, but rose 3.1 percent at franchise locations. On a consolidated basis, same-store sales fell 2.1 percent.

Gross margin increased to 34.3 percent of revenue, or CDN $105.4 million (USD $102.8 million), from 33.3 percent in the same period last year.

Forzani said the first-quarter traditionally represents about 2 percent of earnings.

(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 June 11.)

Under Armour shares drop on analyst coverage

Shares of Under Armour (NYSE: UA) dropped as a Stifel Nicolaus & Co. analyst started coverage of the company with a "Hold" rating, citing "consumer belt tightening" that may hurt the brand's growth.

Analyst Thomas Shaw wrote in a client note, "UA products will continue to sell and take share in the space, in our opinion. However, the consumer continues to feel worse across most measures and we do not see temporary relief from tax rebates doing much more than filling gas tanks and paying bills." He added that it is "easy to pull back on high ticket athletic purchases."

The environment could "create more cautious inventory commitments," from sporting goods retailers in the second half of the year and possibly in 2009 as well, he wrote.

While the company is expanding into new markets and developing new products like footwear, the costs associated with such efforts are likely to be outweighed by near-term economic conditions, he added.

Under Armour shares dropped $1.76, or 5.1 percent, to close at $32.56 on June 11. Shares, which have traded between $25.32 and $73.40 in the past year, are down 21.4 percent since the start of the year.

Jarden CEO buys shares

The chairman and CEO of Jarden Corp. (NYSE: JAH), parent of Coleman, K2 and Marmot, bought 100,000 shares of common stock, according to a Securities and Exchange Commission filing Friday.

In a Form 4 filed with the SEC, Martin E. Franklin reported he bought the shares for an average of $18.14 apiece.

Insiders file Form 4s with the SEC to report transactions in their companies' shares. Open market purchases and sales must be reported within two business days of the transaction.

Garmin adopts rule plan in conjunction with share repurchase program

Garmin Ltd. (Nasdaq: GRMN) has adopted a Rule 10b5-1 plan covering 5 million shares of the 10 million shares repurchase authorization that was approved by the company's board of directors.

A plan under Rule 10b5-1 allows a company to repurchase its shares at times when it otherwise might be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods. A broker selected by Garmin will have the authority under the terms and limitations specified in the plan to repurchase shares on the company's behalf in accordance with the terms of the plan. The company may terminate the plan at any time.

Purchases of the remaining 5 million shares under the 10 million shares repurchase authorization may be made from time to time at the discretion of management as market and business conditions warrant.

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