Royal Robbins sales flat in Phoenix Footwear's Q2
Phoenix Footwear Group, Inc. (Amex: PXG) reported second-quarter net sales were up 10.6 percent to $15.4 million compared to $13.9 million in 2004. But it had a net loss of $1.0 million, or $0.14 per diluted share, compared to net income of $643,000 or $0.12 per diluted share for the second quarter of 2004.
Phoenix said its second-quarter results were in line with its revised expectations, reflecting softness at our Altama and Trotters units and, to a lesser extent, the impact of a poor spring sandal selling season at retail which affected our SoftWalk brand.
Gross margin in the second quarter of 2005 was 38 percent of net sales, compared to 45 percent in the second quarter of 2004. Phoenix said the decrease was due to the addition of the Altama brand gross margins, which generate lower gross margins than the company's other branded products and a higher level of footwear close-out sales as compared to the prior year quarter. Operating expenses were $7.1 million or 46 percent of net sales, versus $5.0 million, or 36 percent of net sales in 2004. This increase is related to increased legal, acquisition, marketing and employee compensation costs along with operating costs associated with the recently acquired Altama brand.
Second quarter 2005 net sales for Royal Robbins were $5.2 million, flat compared to second quarter 2004 levels. For the entire spring season (Jan. 1 through June 30), Royal Robbins' sales grew by 17 percent. Phoenix said the first and third quarters are typically Royal Robbins' strongest periods, and early third quarter results are encouraging, as key retailers have requested early delivery of fall goods. Royal Robbins' travel related business also continues to grow and it continues to open new accounts, such as Academy Sports, it added. Strong growth for the full year 2005 is expected.
In Phoenix's other divisions: SoftWalk posted net sales for the second quarter of 2005 of $2.1 million, compared to net sales of $2.8 million in 2004, representing a decline of 23.8 percent. Net sales for H.S. Trask were $1.6 million, a 133 percent increase over the comparable prior year period. Altama's net sales decreased 71.5 percent to $3.5 million, compared to 2004 net sales of $12.2 million, prior to its acquisition of the brand. Lastly, net sales for Trotters were $2.9 million, compared to $5.2 million in 2004, representing a decline of 44 percent. For the total spring season (Jan. 1 through June 30), Trotters' sales decreased by 34 percent. Phoenix said it will take the full year to work through the brand's product issues.
In other company news, Phoenix said it has acquired the assets of the Paradise Shoe Company and signed an exclusive license agreement with the Tommy Bahama Division of Oxford Industries. Terms were not disclosed on either deal. Paradise Shoe Company, based in Phoenix, Ariz., is the exclusive licensee of the Tommy Bahama line of men's and women's footwear, hosiery and belts. Phoenix will design, manufacture and distribute the Tommy Bahama line of men's and women's footwear, hosiery, belts and men's small leather goods and accessories as part of he licensing agreement.
LaCrosse outdoor sales up 36 percent
Net sales for LaCrosse Footwear's (Nasdaq: BOOT) second quarter were up 6 percent to $19.8 million compared to $18.6 million last year. Its net income was $400,000, or $0.07 income per common share, in the second quarter of 2005, an increase from 2004's net loss of $200,000, or $0.04 loss per common share. The results in the second quarter include an income tax expense of $200,000, as compared to zero income tax expense in the same periods of 2004 due to the use of federal net operating loss carry-forwards, which were fully utilized during 2004.
Sales to the outdoor market were $8.9 million for the second quarter of 2005, up 36 percent from $6.5 million last year. While outdoor sales are typically stronger in the second half of the year, the company said that year-over- year growth in the second quarter of 2005 reflects stronger penetration into various hunting markets, combined with an additional $1.0 million of sales relating to the early delivery of preseason fall orders. Sales to the work market were $10.8 million for the second quarter of 2005, compared to $12.1 million in 2004.
In the second quarter of 2005, the company's gross margin was 35.8 percent of consolidated net sales, an increase from 32.1 percent in the same period of 2004. The margin improvement of 370 basis points reflects increased sales of new higher-margin products as well as its discontinuation of lower margin products, including PVC.
Sales of Amer's sports instruments division down 2 percent
From January to June 2005, Amer Sports' comparable net sales in local currencies rose by 6 percent and its net sales were up 3 percent to Euro 511 million (USD $631 million) compared to Euro 496.5 million (USD $613 million) last year -- in line with the company's objectives, it said. Gross profit was Euro 206.9 million (USD $255 million) versus Euro 204 million (USD $252 million) last year. Earnings before interest and taxes amounted to Euro 33.6 million (USD $41.5 million), including Euro 5.9 million (USD $7.2 million) in capital gains from the sale of properties. Earnings per share were Euro 0.29 (USD $0.35).
Net sales for the winter sports division decreased by 6 percent to Euro 34.3 million (USD $42.3 million) from January to June compared to 36.5 million (USD $45 million) in 2004. In local currency terms, net sales decreased 5 percent. Operating losses were Euro 20.5 million (USD $25.3 million) as the division focuses on producing next season's lines during the second quarter. Amer said judging from the level of pre-orders, it expects an upward trend in alpine ski boots, cross-country skis and snowboard in 2005.
In the sports instruments division, which includes Suunto, net sales from January to June were down 2 percent in local currency terms to Euro 38.6 million (USD $47.6 million) compared to 2004's Euro 39.5 million (USD $49 million). Wrist-top computers and diving instruments accounted for 62 percent of Suunto's sales and were around the same level as last year, Amer said.
In 2005, comparable net sales in local currencies from Amer Sports' current operations are expected to grow by 5 percent compared with the previous year. Earnings per share from current operations for 2005 are forecast to be Euro 0.90-1.00 (USD $1.11-$1.23).
In May, Amer Sports agreed to acquire Salomon, which includes the brands Salomon, Mavic, Bonfire, Arc'Teryx and ClichÃ©, from adidas-Salomon AG. The acquisition is subject to customary conditions including regulatory approvals. When consummated, Amer said the transaction will have a significant impact on its net sales in the last quarter of 2005, but is estimated to have no significant impact on earnings per share in the current fiscal year.
(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 Aug. 5.)
Lands' End CEO exits
After less then two years, Lands' End CEO Mindy Meads has left the apparel brand, which has posted inconsistent sales since being bought three years ago by Sears, Roebuck & Co. Before her promotion to CEO, Meads was one of several Lands' End executives given major roles in reviving Sears's apparel department. The company said it will look at both internal and external candidates. Her temporary successor will be David McCreight, formerly executive vice president of merchandising at Lands' End, a Sears spokesman said.
The Wall Street Journal said that Sears has had better success with Lands' End in some markets than others. Customers in more affluent and more suburban areas tend to like the brand, but shoppers in urban markets have been less interested, it reported. The retailer has also struggled with Lands' End shipping delays and shortages as the historically specialized catalog and Internet brand adapts to working in the challenging network of 870 Sears stores. Since the acquisition by Kmart closed, Sears has provided little information about how Lands' End or its other clothing brands are doing, sources say.
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