Outdoor financials: Sale of division dings VF's Q4 profit, plus Eddie Bauer, Sport Chalet, K2, Timberland, Quiksilver, Oakley, LaCrosse, Wolverine, Jarden

Sale of division dings VF's Q4 profit, Eddie Bauer shareholders reject bid and CEO resigns, Sport Chalet reports record Q3 results, K2 Raises FY '06 financial guidance, Timberland announces Q4 results plus future guidance and licensing deal, Quiksilver revises guidance, Oakley posts drops in Q4 and FY '06 profit, LaCrosse's Q4 and FY '06 post sales increases, Wolverine raises quarterly dividend, and Jarden proposes bond offering.
Author:
Publish date:

Sale of division dings VF's Q4 profit
VF Corp. (NYSE: VFC), parent of various outdoor brands including The North Face, posted a 15-percent drop in fourth-quarter profit due to costs related to the January sale of its intimate apparel business.

Net income declined to $108.6 million, or $0.95 per share, from $127.5 million, or $1.13 per share, during the year-ago period. Excluding a 32-cent charge to sell its intimates business, the company posted income from continuing operations of $1.24 per share.

Revenue grew 9 percent to $1.6 billion from $1.46 billion a year ago, driven by higher sales in the company's jeanswear, outdoor and sportswear business.

Operating income increased 36 percent in the quarter, and operating margins rose while the company continued investing to support the future growth it expects from its outdoor brands.

For the year, earnings grew 5 percent to $533.5 million, or $4.72 per share, from $506.7 million, or $4.44 per share, last year. Revenue grew 10 percent to $6.22 billion from $5.65 billion in the prior year.

VF said its outdoor coalition, which includes JanSport, Eastpak, The North Face, Vans and Kipling, had another outstanding quarter, with total revenues up 32 percent to $453 million and strong gains across nearly every brand. Domestic revenues grew 34 percent in the quarter while international revenues rose 28 percent. The North Face, Vans, Kipling and JanSport brands each posted double-digit revenue gains in the quarter.

Recently, VF announced the acquisition of the Eagle Creek brand of adventure travel gear, which is expected to add approximately $30 million to revenues in 2007.

The company said it expects earnings from continuing operations to grow 10 percent in 2007, implying a per-share earnings figure that falls short of analyst expectations.

For the year, VF sees earnings from continuing operations growing 10 percent, helped by revenue growth and margin expansion. That implies earnings of $5.20 per share, while analysts say they expect higher earnings of $5.24 per share.

Total annual revenue is expected to grow 8 percent, representing revenue of $6.72 billion. Analysts are looking for revenue of $6.7 billion.

VF expects a 15 percent to 20 percent rise in outdoor revenue, and mid-single digit revenue growth in sportswear. Jeanswear revenue is expected to be slightly better than 3 percent and Imagewear is expected to increase in the low-single digits.

Additionally, VF forecast earnings from continuing operations would rise 4 percent to 6 percent in the first quarter, due to a slightly higher tax rate and higher average shares outstanding. That implies earnings from continuing operations of $1.09 per share to $1.11 per share.

VF sees first-quarter revenue growth of 10 percent, implying revenue of $1.84 billion. Analysts expect revenue of $1.57 billion.

The company also affirmed it would use $350 million in proceeds from its intimate apparel business to buyback shares in 2007.

Also, the board of directors declared a cash dividend of $0.55 per share, payable on March 19, 2007, to shareholders of record as of the close of business on March 9, 2007.

Eddie Bauer shareholders reject bid, CEO resigns

A day after shareholders of Eddie Bauer (Nasdaq: EBHI) rejected a $286 million buyout offer from a pair of private equity firms on Feb. 8, the company's CEO resigned.

Fabian Mansson served as president and CEO for more than four years, the company said. The financial terms of his departure were not immediately disclosed.

Eddie Bauer said board member Howard Gross would serve as interim CEO. The company said Gross, a veteran apparel retailer, has worked as CEO of Limited Stores and Victoria's Secret Stores.

A holding company owned by affiliates of Sun Capital Partners, of Boca Raton, Fla., and San Francisco-based Golden Gate Capital planned to pay $9.25 per share and assume $328 million in debt to take over the company.

The Eddie Bauer board and three advisory firms had recommended shareholders approve the deal, but the company said the proposal did not get the required majority in a meeting, with 44 percent of its outstanding shares favoring the buyout and 37 percent opposed.

The company's board said it is considering its next step and will continue to operate as a standalone, publicly traded company.

Sport Chalet reports record Q3 results
Third-quarter sales for Sport Chalet (Nasdaq: SPCHA and SPCHB) were up 15.1 percent. The sales growth reflected nine new stores resulting in a $12.1 million, or 12.4 percent, increase in sales on a same-day basis, it said.

Sales for the three months ended Dec. 31, 2006, were $114.7 million compared to $99.7 million for the same period last year. Same-store sales on a same-day basis increased $3.5 million, or 3.8 percent.

Gross profit as a percent of sales increased to 32.5 percent from 31.9 percent primarily as a result, the company said, of the leverage created by increased same-store sales against relatively fixed occupancy costs.

Net income for the third quarter increased 31.4 percent to $4.0 million, or $0.28 per diluted share, compared to net income of $3.0 million, or $0.22 per diluted share, for the third quarter last year.

Selling, general and administrative expenses as a percent of net sales remained relatively flat at 26.4 percent compared to 26.5 percent for the same period last year as leverage created by increased same store sales was partially offset by expenses associated with new stores which take time to reach operating efficiency. Overall, SG&A expenses increased $3.9 million over the year ago quarter primarily due to the additional stores.

Sport Chalet also reported that it plans to open six to eight new stores during the year as well as completing two store remodels. The majority of the new stores will be focused on adding density to current markets, namely Southern California and Arizona. The company also anticipates entering a new market in 2007 with a store opening planned in Utah.

In addition to the store opening initiatives for 2007, the company also plans to relocate four buildings, which currently serve the La Canada Flintridge, Calif., market into a single 45,000-square-foot store in the proposed La Canada Flintridge Town Center in calendar 2008.

K2 Raises FY '06 financial guidance
K2 Inc. (NYSE: KTO) boosted its fiscal 2006 profit outlook, saying it anticipates higher earnings in 2007 on its global sporting goods business and brand strength.

The company now expects full year 2006 adjusted earnings in a range of 87 cents to 88 cents per share, up from its prior guidance of between 83 cents and 86 cents per share.

K2 said it expects 2007 adjusted earnings to surpass its revised prior-year guidance. The company said it sees softness in its wintersports business this year due to warm weather and poor snow conditions.

Timberland announces Q4 results, future guidance and licensing deal
Timberland (NYSE: TBL) reported fourth-quarter and full year earnings results, guidance for 2007, and also announced an apparel licensing deal with Phillips-Van Heusen and the exit of two executives.

Timberland reported that fourth-quarter earnings fell 18 percent as the company expanded internationally, but it still stayed ahead of analyst expectations.

Quarterly income totaled $38.3 million, or $0.61 per share, from $46.9 million, or $0.71 per share during the year-ago period. Excluding restructuring costs, earnings were $0.65 per share.

Timberland said profit declines were related to investments in growth strategies, including global business expansion.

Revenue grew 5 percent to $488.2 million, from $465.3 million. Lower sales of boots and kids sales were offset by higher sales in new brands such as SmartWool, along with higher sales in Timberland PRO series and Timberland apparel and accessories.

For the year, net income fell 35 percent to $106.4 million, or $1.67 per share, from $164.6 million, or $2.43 per share in 2005. Revenue rose fractionally to $1.57 billion.

Additionally, Timberland said it expects 2007 revenue growth to be flat with 2006 sales of $1.57 billion due to sales declines in boots and kids products.

The company said it expects "solid" growth in its casual, outdoor and industrial categories, but could see a $100 million sales decline in boots and kids sales while the company streamlines its product supply and distribution processes for those segments.

Lower boots and kids' sales combined with higher product costs will continue to pressure operating margins, particularly in the first half of the year given warm winter weather conditions and the implementation of European Union anti-dumping duties.

The company estimates these factors will drive down operating profits, excluding restructuring costs, in the range of $40 million in the first half of 2007, with most of this decline in the first quarter.

Timberland also will record a $4 million pre-tax restructuring charge for its recent decision to license Timberland's North America wholesale apparel business. It said the licensing will ultimately save $4 million to $5 million in 2007, mainly toward the back-end of the year.

On other fronts, Timberland said clothing maker Phillips-Van Heusen will design, source and market Timberland-brand apparel in North America beginning in the fall of 2008 under a new licensing deal. Financial terms were undisclosed.

Phillips-Van Heusen will take over the men's apparel line in fall of 2008 and launch a women's line in the fall of 2009.

Timberland will continue to design and market Timberland apparel in Europe and Asia. Timberland also will continue to make and market Timberland Outdoor Performance apparel worldwide, and Block Corp. will make and market Timberland PRO apparel in the United States and Canada.

Timberland will take a pre-tax restructuring charge of about $4 million in 2007 to cover severance, outplacement services and asset disposal costs. It expects to save $4 million to $5 million on the deal in 2007, weighted toward the back half of the year.

Lastly, Timberland said its finance chief and chief operating officer are leaving the company. After seven years with Timberland, CFO Brian McKeon will depart to become finance chief of information management company Iron Mountain. He will stay until the end of the quarter help with transition planning. A search for his successor is underway. COO Ken Pucker will also leave, effective March 31, after 15 years with the company.

Quiksilver revises guidance
Quiksilver (NYSE: ZQK) said it cut its first-quarter and full year 2007 guidance below Wall Street expectations, citing unseasonably warm weather and poor snow conditions in the United States and Europe.

The company, parent of Rossignol, now expects fiscal first-quarter earnings of $0.04 per share on revenue of $540 million. In December, the company forecast higher quarterly earnings of $0.09 per share on sales of $550 million to $555 million. Analysts are expecting earnings of $0.09 on revenue of $549.8 million.

Quiksilver said it anticipates fourth-quarter net income having "carry-over" effects and expects profit to be between $0.54 and $0.55 per share on revenue of $760 million and $770 million. Analysts expect higher earnings of $0.63 per share on revenue of $817.5 million.

For the fiscal year, Quiksilver cut its earnings outlook to between $0.75 and $0.78 per share, from a prior view of $0.88 to $0.92 per share. The company also reduced its revenue projection to between $2.43 billion and $2.46 billion from a previous forecast of $2.5 billion. Analysts are looking for a profit of $0.91 on revenue of $2.51 billion.

Oakley posts drops in Q4 and FY '06 profit

Oakley's (NYSE: OO) fourth-quarter profit slid 20 percent, marking the third quarter in the year in which the branded products maker posted falling earnings.

Quarterly net income fell to $7.7 million, or $0.11 per share, from $9.6 million, or $0.14 per share, in the prior year quarter. Sales climbed 21 percent to $196.4 million from $162.4 million in the year-ago quarter.

Yearly profit dropped 25 percent to $44.8 million, or $0.65 per share, from $59.7 million, or $0.87 per share, in the prior year. Sales rose nearly 18 percent to $761.9 million from $648.1 million in 2005.

The company said in a statement that 2006 was a year of strategic realignment, where the company concentrated on five key strategies -- focusing on optics, enhancing brand development, restructuring footwear, realigning apparel and expanding its retail platforms.

LaCrosse's Q4 and FY '06 post sales increases
LaCrosse Footwear (Nasdaq: BOOT), parent of the Danner and LaCrosse brands, reported a 7 percent increase in fourth-quarter sales and an 8 percent increase for the full year.

For the fourth quarter of 2006, net sales were $31.7 million, up 7 percent from $29.8 million in the fourth quarter of 2005. Net income was $2.2 million or $0.36 per diluted share in the fourth quarter of 2006, up 9 percent from $2.0 million or $0.33 per diluted share in the fourth quarter of 2005.

For the full year 2006, consolidated net sales were $107.8 million compared to $99.4 million in 2005. For the full year 2006, net income was $6.3 million or $1.02 income per diluted share, up 21 percent from $5.2 million or $0.85 per diluted share in 2005. The results in 2006 include stock-based compensation expense of $0.1 million or $0.01 per diluted share for the fourth quarter, and $0.5 million or $0.05 per diluted share for the full year 2006.

Sales to the outdoor market were $15.7 million for the fourth quarter and $53.1 million for the full year of 2005, up 10 percent from $14.2 million and up 9 percent from $48.9 million, respectively, for the same periods of 2005. Growth in the outdoor market primarily reflects the success of innovative products introduced in recent years and continued penetration into the hunting and rugged outdoor boot markets.

Sales to the work market were $16.0 million for the fourth quarter and $54.7 million for the full year of 2006, up 3 percent from $15.5 million and up 8 percent from $50.4 million, respectively, for the same periods of 2005. The growth in work sales reflects continued penetration into uniform markets, including the fire boot segment.

Wolverine raises quarterly dividend
Directors of Wolverine World Wide (NYSE: WWW), parent of Merrell, declared a quarterly cash dividend increase of 20 percent to $0.09 per share of common stock. The dividend is payable on May 1, 2007, to stockholders of record on April 2, 2007, and represents a $0.36 per share annual dividend.

Jarden proposes bond offering

Jarden Corp. (NYSE: JAH), parent of Coleman and Campingaz, said it intends to offer $100 million aggregate principal amount of its 7 1/2 percent Senior Subordinated Notes due 2017. The offering is being made pursuant to Jarden's effective shelf registration statement filed with the Securities and Exchange Commission on Feb. 2, 2007.

Jarden said it intends to use the net proceeds of the offering for general corporate purposes, which may include the repayment of debt, the funding of capital expenditures and potential acquisitions.

For more information about this company or its financial reports, as well as to view stock prices updated every 15 minutes, visit the SNEWS® Stock Market Updates. Click on: www.snewsnet.com/cgi-bin/snews/stock_report.html.

Related

Outdoor financials: VF Q4 profit jumps 51 percent, plus Kellwood accepts Sun Capital's takeover bid, Timberland, Amer Sports, Dorel buys Cannondale and Sugoi, Luxottica/Oakley, LaCrosse, Sport Chalet

VF Q4 profit jumps 51 percent VF Corp. (NYSE: VFC) posted a 51-percent jump in fourth-quarter profit as sales improved, boosted by new brands. The company is the parent of various outdoor brands, including The North Face, JanSport, Eastpak, Eagle Creek, Vans, Kipling, Napapijri ...read more