Outdoor financials: Timberland's Q4 profit plunges 46 percent, plus Amer Sports, Dick's Sporting Goods

Timberland's Q4 profit plunged 46 percent, Amer Sports posted a 5 percent drop in FY '08 sales, and Dick's Sporting Goods' shares rose on an updated Q4 forecast.
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Timberland's Q4 profit plunges 46 percent

Fourth-quarter profit for Timberland (NYSE: TBL) fell 46 percent as sales dropped amid slower consumer spending.

Net income fell to $13.1 million, or $0.23 per share, compared with $24.1 million, or $0.40 per share, a year earlier. Excluding restructuring charges and other items, earnings remained at $0.23 per share.

Revenue dropped 12 percent to $390.6 million from $442.7 million for the period ended Dec. 31.

Global footwear revenue decreased 7.6 percent to $281.2 million, while apparel and accessories revenue declined 22.2 percent to $103.8 million.

Timberland said the lower results were affected by a stronger U.S. dollar, 28 retail store closings, softer results from its global Timberland branded footwear and international apparel operations and a transition to a licensing model for its North American apparel business.

For the year, earnings grew 7 percent to $42.9 million, or $0.73 per share, from $40 million, or $0.65 per share. Adjusted earnings were $0.74 per share.

FY '08 sales dropped 5 percent to $1.36 billion from $1.44 billion.

The company said it would not provide future guidance because of the current economic climate.

Amer Sports posts 5 percent drop in FY '08 sales

Despite an uptick in sales for the winter and outdoor segment, Amer Sports posted drops in both its fourth-quarter and FY '08 net sales. Among the company's outdoor brands are Arc'Teryx, Salomon, Suunto and Atomic.

"The last quarter of the year winter sports progressed due to product innovations and good snow conditions. Looking at the year as a whole, group sales were at last year's level thanks to the continued success of our apparel and footwear business. Despite the several cost-cutting measures we made during the year, these could not offset the drastic and rapid sales decline in our fitness business," said Roger Talermo, Amer Sports' president and CEO, in a statement.

For the fourth quarter, Amer Sports' net sales were EUR 495.3 million (USD $641.1 million) compared to EUR 497.1 million (USD $643.4 million). Net sales in local currency terms decreased 3 percent.



The group's earnings before interest and taxes (EBIT) were EUR 35.2 million (USD $45.5 million) versus EUR 11.0 million (USD $14.2 million) last year. The results were hit by one-time product recall costs of Mavic and Atomic of EUR 6 million (USD $7.7 million). Last year's results include EUR 42.7 million (USD $55.2 million) restructuring costs. Excluding both of these items the results weakened by 23 percent due to weaker profitability in its fitness and ball sports divisions.



Earnings before taxes were EUR 23.9 million (USD $30.9 million), or EUR 0.25 (USD $0.32) per share, compared to EUR 1.7 million (USD $2.2 million), or EUR 0.02 (USD $0.025) per share, in the same period last year. Net financial expenses amounted to EUR 11.3 million (USD $14.6 million) compared to EUR 9.3 million (USD $12.0 million).



For the full year, Amer Sports' net sales decreased 5 percent to EUR 1.57 billion (USD $2.03 billion) versus EUR 1.65 billion (USD $2.13 billion) for the 2007 fiscal year. In local currencies, the company said net sales were at last year's level.



EBIT was EUR 78.9 million (USD $102.1 million), compared with EUR 49.5 million (USD $65.0 million) in 2007. The company noted, excluding the EUR 42.7 million (USD $55.2 million) restructuring costs in 2007 and excluding the capital gain of EUR 13.1 million (USD $16.9 million) in 2008, EBIT was EUR 65.8 million (USD $85.1 million) in 2008 compared with EUR 92.2 million (USD $119.3 million) in 2007. The company said the main reason for the weakened profitability was the substantial sales drop in the fitness business.



Earnings before taxes were EUR 45.6 million (USD $59.0 million), or EUR 0.47 (USD $0.60) per share, compared to EUR 24.6 million (USD $31.8 million), or EUR 0.25 (USD $0.32) per share, last year. Net financial expenses amounted to EUR 33.3 million (USD $43.1 million), while they were EUR 24.9 million (USD $32.2 million) last year. Last year's corresponding figure was reduced by realized interest rate swaps, which resulted in a gain of EUR 6.4 million (USD $8.2 million).



Taxes for the period were EUR 11.6 million (USD $15.0 million) versus EUR 6.1 million (USD $7.8 million) in the same period last year. The group's tax rate was 25 percent comparable to last year.

In the company's winter and outdoor segment, which includes winter sports equipment, apparel, footwear and sports instruments, among other categories, fourth-quarter sales were up 7 percent to EUR 326.6 million (USD $422.7 million) compared to EUR 304.9 million (USD $394.6 million) in the same period last year. In local currencies it was up 6 percent.

In Q4, EBIT increased 4 percent to EUR 36.7 million (USD $47.5 million) versus EUR 35.2 million (USD $45.5 million) last year. Sales growth was 6 percent in local currencies.

For the full year, net sales were EUR 860.8 million (USD $1.114 billion) up 4 percent from EUR 830.1 million (USD $1.074 billion) in 2007. Net sales increased 5 percent in local currency terms. EBIT increased to EUR 41.1 million (USD $53.2 million) up 97 percent from EUR 20.9 million (USD $27.0 million) last year. The company said the improvement reflects the restructuring of the winter sports equipment business and the strong growth in sales of apparel and footwear.



The company said alpine Europe as a region and alpine boots as a product category grew in high single digits, but continued weakness in the U.S. and the Nordic skiing markets depressed global sales. Retailers' attempts to reduce their own inventories decreased the amount of re-orders, it added.



Net sales for winter sports equipment were EUR 391.9 million (USD $507.2 million) similar to last year's level in local currency terms.

Favorable development of Salomon and Arc'Teryx apparel and Salomon footwear sales continued in all key markets. The outdoor trend remained solid, and trail running as a category continued to gain popularity, Amer Sports said. Net sales in apparel and footwear increased 19 percent in local currency terms to EUR 264.9 million (USD $342.8 million).



In January 2008, Amer Sports restructured the winter sports business, closing four production sites and laying off approximately 400 jobs worldwide. The company said the savings of more than EUR 20 million (USD $25.8 million) will be visible in 2009. The cost cuts already helped to improve the profitability of the business area in 2008, it added.



Looking to 2009 for the division, Amer Sports reported that despite an expected slowdown in retail sales, the profitability of the winter and outdoor segment is expected to improve in 2009 due to the positive impacts of the changes in the winter sports equipment business that were completed during 2008. In the apparel and footwear business, it added that the strong order book and good sell-through of products should allow it to grow faster than its peers in the industry. And, it noted, Suunto's sales are expected to grow.

"The sporting goods sector is affected by the financial crisis. Even if sell-out from stores has remained on a relatively healthy level, many of our retail clients have taken a cautious approach and are destocking their inventories," Talermo said in a statement. "In some cases again, our clients have been postponing their ordering due to the tight credit conditions in the financial markets. All in all, in the environment we are in, our outlook is more uncertain than normally. Our current view is, however, that our earnings in 2009 will improve thanks to the improved cost efficiency, in winter sports equipment in particular."

The company declined to offer further guidance for 2009.

(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 Feb. 5.)



Dick's Sporting Goods shares rise on updated Q4 forecast


Dick's Sporting Goods (NYSE: DKS) said it expects fourth-quarter profit will at least reach the midpoint of its prior guidance, sending the company's stock shares up.

Dick's will record a pretax impairment charge between $165 million and $180 million for the fourth quarter ended in January. Despite that, the company said it doesn't plan to close any stores, and said its liquidity position won't be hurt by the charge.

The impairment charge consists of $140 million to $150 million for goodwill and other intangible assets acquired as part of the 2007 Golf Galaxy acquisition. It also includes $25 million to $30 million for the write-down of Golf Galaxy, Dick's Sporting Goods, and Chick's Sporting Goods store assets.

Excluding the one-time items, the company estimates fourth-quarter earnings per share at least at the midpoint of its previously forecast of $0.49 to $0.56 per share.

Shares rose $1.89, or 16.79 percent, to close at $13.15 on Feb. 6.

--Compiled by Wendy Geister

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