VF's outdoor coalition boasts 40 percent jump in Q1 revenues
VF Corp. (NYSE: VFC), parent of The North Face, JanSport, Eastpak and Eagle Creek, to name a few, saw its first-quarter profit climb 8 percent on strong revenue in the company's outdoor, jeanswear and imagewear businesses.
Net income rose to $138.3 million, or $1.20 per share, from $128.2 million, or $1.14 per share, in the prior-year quarter. The company earned $1.17 per share from continuing operations in this year's first quarter.
Revenue grew 15 percent to $1.67 billion from $1.46 billion in the first quarter of 2006. Analysts were looking for revenue of $1.6 billion.
"We're off to a strong start for the year," said Mackey McDonald, VF's chairman and CEO, in a statement. "Organic growth was 12 percent in the quarter -- better than our initial guidance of 10 percent -- while acquisitions added an additional three percentage points of growth to our top line."
Sales of jeanswear -- the company's biggest division -- rose 8 percent. And, the company said its earnings were also helped by the acquisition of Majestic Athletic, which added 3 cents per share to net income for the quarter.
The company said the momentum continued in its outdoor coalition, with total revenues up 40 percent -- the biggest rise across the entire company -- to $538.8 million and strong gains across nearly every brand. Domestic revenues grew 31 percent in the quarter, while international revenues rose 52 percent.
The North Face, Vans, Kipling, Reef, Napapijri and Eastpak brands each posted double-digit revenue gains in the quarter. The acquisition of the Eagle Creek brand of adventure travel gear added $6 million to revenues in the quarter.
Operating income for the outdoor segment jumped 66 percent in the quarter, and operating margins expanded sharply reflecting the strong revenue gain.
VF said it now expects its earnings per share for the 2007 fiscal year to rise 12 percent, meaning the company would earn $5.29 per share. Previously, the company had said its earnings would climb 10 percent in the year, which would have meant the company would earn $5.20 per share.
The company said it expects its revenue would be about $7 billion for the year, based on the strength of the Majestic Athletic and Eagle Creek brands that the company recently acquired. Those brands, the company said, should add about $180 million to revenue during the year. VF had previously said it would post revenue of about $6.72 billion.
For the second quarter, VF said its earnings per share from continuing operations would grow 8 percent with revenue up 14 percent. That would mean the company expects to earn $0.95 per share on revenue of $1.79 billion.
Additionally, VF's board has declared a cash dividend of $0.55 per share, payable on June 18, 2007, to shareholders of record as of June 8, 2007.
Weak winter rocks Amer Sports' Q1 sales
Amer Sports sales took a 9 percent hit in the first quarter after an exceptionally weak winter season, especially hurt by declines in Salomon and Atomic equipment sales.
Net sales for the company were EUR 381.8 million (USD $521.4 million) compared to EUR 417.4 million in 2006. Net sales in local currency terms declined by 4 percent. Gross profit was down 6 percent to EUR 143.9 million (USD $196.5 million) versus 2006's EUR 153.8 million.
Earnings before interest and taxes (EBIT) posted a loss of EUR 7.8 million (USD $10.6 million), or a loss of EUR 0.15 per share (USD $0.20), versus EUR 1.6 million, or a loss of EUR 0.03 per share, in 2006.
"Uncommonly weak snow conditions in nearly every market have affected our Q1 result," said Roger Talermo, president and CEO of Amer Sports, in a statement. "Pre-orders will most likely fall clearly short of the previous year. This is due to, among other things, high inventory levels in the winter sports industry and uncertainty regarding the next winter season.
"The beginning of 2007 has otherwise measured up to expectations, and we believe that in this respect we will achieve our full-year objectives," he added. "Of our business segments, Salomon apparel and footwear, Precor and Suunto posted solid growth."
For the Salomon segment, net sales were down 10 percent to EUR 110.5 million (USD $150.9 million) for the first quarter of 2007 compared to EUR 123.3 million in 2006. Sales were down 8 percent in local currencies. Of Salomon's net sales, EMEA generated 71 percent, the Americas 22 percent, and Asia Pacific 7 percent. Sales in local currencies were up 6 percent in the Americas and down 10 percent in EMEA and 25 percent in Asia Pacific.
In the first quarter, Amer Sports said Salomon's EBIT was on a par with the previous year even though sales declined. EBIT for the quarter was a loss of EUR 22.6 million (USD $30.8 million) versus a EUR 22.4 million loss last year. The impact of the sales decline was compensated for by the synergies that were achieved and higher efficiency in cost control, it added.
Salomon's winter sports equipment segment took the hardest hit -- down 54 percent to EUR 19.8 million (USD $27.0 million) from EUR 43.4 million in the same period last year. Amer Sports said Salomon's net sales of winter sports equipment declined by 54 percent in local currency terms when retailers downscaled inventory levels after the weak winter. The largest decline in net sales was seen in Europe, where the scarcity of snow impacted particularly on re-orders of cross-country skiing equipment, it noted. Amer said that sales for the 2007/2008 season appear to fall about 15 percent to 20 percent short of the previous season, adding that Salomon has adjusted its production plans and inventory levels to match.
Apparel and footwear posted a 19 percent gain to EUR 60.5 million (USD $82.6 million) from EUR 50.8 million in 2006. Net sales of apparel and footwear increased by 23 percent in local currencies. Judging from the amount of pre-orders, the solid trend in sales of apparel and footwear is expected to hold, Amer said.
Mavic was up 4 percent (6 percent in local currencies) to EUR 30.2 million (USD $41.2 million) versus EUR 29.1 million last year.
For Suunto, net sales were up 11 percent to EUR 21.4 million (USD $29.2 million) for the first quarter of 2007 compared to EUR 19.2 million. Sales were up 16 percent in local currencies. Of net sales, EMEA generated 54 percent, the Americas 34 percent, and Asia Pacific 12 percent. Sales in local currencies increased by 24 percent in Asia Pacific, 16 percent in EMEA and 12 percent in the Americas.
Amer Sports said that sales of wrist-top computers increased 43 percent during the period, boosted from the solid demand for the new T-line product series. Sales of Suunto's diving instruments decreased 5 percent.
Suunto's EBIT was up 36 percent to EUR 1.5 million (USD $2.0 million) versus EUR 1.1 million last year.
Hit by warm weather in its main market areas in the first quarter, which reduced the amount of re-orders, Atomic's sales sank 47 percent. Net sales were EUR 12.5 million (USD $17.0 million) for the first quarter of 2007 compared to EUR 23.7 million in 2006. Net sales declined by 46 percent in local currencies. Of net sales, EMEA generated 70 percent, the Americas 22 percent and Asia Pacific 8 percent. Sales in local currencies were up 44 percent in Asia Pacific and down 51 percent in EMEA and 44 percent in the Americas.
EBIT was down 41 percent to a EUR 13.3 million (USD $18.1 million) loss.
Amer Sports reported that the latest market share statistics indicate that Atomic's product collections have gained market share, particularly in alpine boots, but also in alpine and cross-country skis in its main market areas in Europe.
Atomic has a wider product offer with its key accounts for the 2007/2008 season than it did in 2006/2007, but uncertainty in the market is expected to cause a 15 percent to 20 percent decline in sales compared to the previous year, Amer Sports added. During the first quarter, Atomic downscaled its operations to match by reducing personnel and lowering expenses.
For the company as a whole, Amer Sports said it is lowering its full-year earnings forecast due to the effect of uncommonly weak snow conditions on the winter sports market. Net sales are expected to decline slightly in 2007, but EBIT is estimated to reach the previous year's level. The weaker outlook is the result of high inventory levels in the winter sports industry. In addition, the poor snow conditions have created general caution for retail pre-orders regarding both timing and volume. Net sales of Amer Sports winter sports equipment in 2007 are expected to fall about 15 percent to 20 percent short of the previous year. Cash flow from operating activities is forecasted to improve.
(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 April 25.)
Columbia's Q1 profit up 34 percent
Boosted by sales growth across all product categories, Columbia Sportswear's (Nasdaq: COLM) first-quarter profit grew 34 percent.
For the quarter, net income rose to $26.1 million, or $0.71 per share, from 2006's $19.5 million, or $0.52 per share. Revenue rose 11 percent to $289.6 million from $260.2 million in the first quarter of 2006.
Compared to the first quarter of 2006, other international sales increased 30.9 percent to $54.2 million, U.S. sales increased 7.7 percent to $155.5 million, European sales increased 12.7 percent to $54.1 million, and Canadian sales decreased 2.3 percent to $25.8 million for the first quarter of 2007.
The company said that sales increased across every product category from footwear to coats to accessories, with sales in Columbia's sportswear division particularly strong, rising 15 percent. Global sportswear orders for fall also rose by double digits, offsetting declining orders in footwear and flat order growth in outerwear.
"Orders for cold weather footwear and outerwear were negatively affected by extended periods of above average temperatures and lack of precipitation in many markets last fall and winter, but most specifically in Western Europe, where orders in all product categories decreased substantially," said CEO Tim Boyle in a statement.
Columbia said it expects earnings per share of $3.65 per share for the year, with revenue growing 5 percent to about $1.35 billion. Analysts, however, are looking for higher profit of $3.72 per share on revenue of $1.41 billion.
For the second quarter, the company also forecast sales below consensus estimates. Sales are expected to grow 6 percent, implying revenue of $224.3 million -- below analysts' $232.1 million average estimate. Columbia said it expects to earn about 18 cents per share in the second quarter, up from 13 cents per share a year ago, and above Wall Street's 15-cent estimate.
Timberland cancels Q1 earnings call
Timberland (NYSE: TBL) had to delay reporting first-quarter results on April 26 as it restates financials following a review of its accounting for some foreign currency hedging instruments.
Timberland said financial statements between fiscal 2001 and 2006 should not be relied upon. The company will restate financial statements for 2004 to 2006, and will restate financial information for 2003 and 2002 as well as each quarter in 2006 and 2005. The review determined some technical requirements for accounting for derivative instruments and hedging activities were not met.
Timberland said revenue, cash flow and liquidity will not be changed by the restatement, adding that the entire restatement will reduce earnings by less than $10 million.
Timberland said it expects first-half and full-year financial results in line with its previous outlook. It will release first-quarter earnings when the restatement is complete.
Deckers Q1 profit jumps, surpasses analyst expectations
Deckers Outdoor's (Nasdaq: DECK) first-quarter earnings rose sharply, boosted by sales of its Ugg and Teva brands.
Deckers, which also makes Simple brand shoes, said net income jumped to $9.7 million, or $0.75 per share, from $5.7 million, or $0.44 per share, in the year-ago period. Sales rose 30 percent to $72.6 million from $56 million last year.
The result exceeded analyst expectations who were looking for profit of $0.51 per share on sales of $65 million.
Teva's net sales for the first quarter increased 11.6 percent to $38.7 million compared to $34.7 million for the same period last year. Sales for Uggs increased 67.7 percent to $29.8 million compared to $17.8 million for the same period a year ago. Simple's sales increased 14.0 percent to $4.0 million for the first quarter compared to $3.5 million for the same period last year.
Despite the sharp increase in first-quarter results, Deckers is forecasting an 80 percent decline in second-quarter per-share earnings from last year's $0.21 per share. The company did not provide a reason for the expected decline.
For the year, Deckers now expects earnings per share to rise 15 percent from $3.30 in 2006, faster growth than the 5 percent previously forecast.
Johnson Outdoors Q2 sales up 14 percent
Johnson Outdoors (Nasdaq: JOUT), parent of Old Town Canoe, Ocean Kayak and Necky Kayak, among others, said gains in its marine electronics, watercraft and diving business units more than offset the anticipated continued slowing of military sales for the second quarter.
Net sales were $122.1 million for the second quarter ended March 30 -- a 14 percent increase compared to net sales of $107.4 million for the prior year quarter. Excluding the $2.4 million military sales decline, Johnson Outdoors said that total company net sales would have increased $17.1 million or 16 percent.
Net earnings were $1.6 million, or $0.17 per diluted share, compared to net earnings of $4.2 million, or $0.46 per diluted share, in the prior year quarter. Total company operating profit was $4.1 million compared to operating profit of $8.3 million in the prior year quarter.
Various factors helped drives sales during the quarter, the company said. Marine electronics revenues rose 25 percent above last year due to favorable reception to new products across all brands, while diving revenues increased 14 percent based on the strong performance of its brand internationally.
Johnson Outdoors added that watercraft sales were 12 percent ahead of last year led by strong performances across the entire paddle sport brand portfolio. Key international markets posted double-digit growth year-over-year led by market and distribution expansion in Europe, it said.
Outdoor Equipment revenues were down 16 percent due to a 25 percent decline in military sales versus the prior year quarter.
Cabela's receives $43 million from bonds
Cabela's (NYSE: CAB) has received about $43 million through retiring economic development bonds for its Wheeling, W.Va., location.
Due to the stores' economy-boosting tourist destination attributes, part of Cabela's strategy is to negotiate economic development arrangements with local and state governments. Cabela's said it has several economic development arrangements with local and state governments, which result in the company owning economic development bonds that represent the present value of the future taxes generated by a store.
Cabela's said it views the monetization of the economic development bonds in Wheeling as an important validation of its strategy, proving that it can monetize these bonds and recycle this cash into future store locations.
Outdoor Channel sells membership division segment
Outdoor Channel Holdings (Nasdaq: OUTD) has sold all assets, liabilities and operations related to its membership division segment. Thomas Massie, vice chairman of the board of Outdoor Channel Holdings, purchased all outstanding shares and membership interests in Gold Prospector's Association of America LLC (GPAA) and LDMA-AU, Inc. (Lost Dutchman's) for $3.6 million cash, which represents the net book value of the division including approximately $2.4 million of cash on its books.
Members of the Massie family, including Thomas Massie and Perry Massie, chairman of the board of Outdoor Channel Holdings, founded GPAA and LDMA in 1968 and 1976, respectively, as gold prospecting-themed organizations.
Wellman's loss for Q1 widens
Wellman (NYSE: WLM) reported a wider first-quarter loss, despite record PET resin sales and volume.
The net loss was $26.9 million, or $0.84 per share, compared with a loss of $19.4 million, or $0.61 per share for the same period in 2006, the company said.
The loss from continuing operations was $26.0 million, or $0.81 per share, Wellman said.
"Although we experienced disappointing overall results in the first quarter, we achieved record quarterly PET resin sales and volume due to strong demand," said Thomas Duff, Wellman's chairman and CEO, in a statement.
West Marine narrows Q1 loss
West Marine (Nasdaq: WMAR) posted a slightly narrower first-quarter loss due to reduced costs.
The company reported a loss of $11.2 million, or $0.52 per share, compared with a loss of $11.9 million, or $0.56 per share, during the same period last year. Selling, general and administrative expenses declined to $43.8 million from $48.1 million.
Revenue for the quarter dropped 5 percent to $126.1 million versus $132.6 million in the previous year. Same-store sales fell 2.1 percent.
Winmark reports Q1 profit decrease
First-quarter profit for Winmark (Nasdaq: WINA), parent of Play It Again Sports, dropped nearly 41 percent as expenses from its leasing companies offset a revenue increase.
The company reported net income of $662,200, or $0.12 per share, for the quarter ended March 31, compared with $1.1 million, or $0.18 per share, in the year-ago period. Last year's first quarter included a $360,000 non-operating gain.Sales rose to $7.6 million from $7 million in the first quarter of 2006.
John Morgan, chairman and CEO, said in a statement, "Our results in the first quarter continue to be impacted by the ramp up of our two leasing companies Wirth Business Credit and Winmark Capital. Our franchise business performed adequately despite getting off to a slow start. The first quarter of last year included a $360,000 non-operating gain included in interest and other income."
GSI Commerce narrows Q1 net loss
GSI Commerce (Nasdaq: GSIC) narrowed its net loss for the first quarter to $2.3 million, or $0.05 per share, compared to a net loss of $4.4 million, or $0.10 per share, for the same period last year.
Net revenue for the quarter increased 28 percent to $146.3 million from $114.2 million. Merchandise sales increased 69 percent to $322.5 million from $191.0 million. Loss from operations was $4.8 million compared to a loss of $3.9 million. Adjusted EBITDA increased 45 percent to $3.8 million from $2.6 million.
"I am very pleased with our first quarter performance. We executed well against our plan and our business maintained a healthy pace coming off a strong fiscal 2006," said Michael Rubin, chairman and CEO of GSI, in a statement. "Net revenues and merchandise sales grew 28 percent and 69 percent, respectively, and we exceeded the high end of our first quarter guidance on all of our key profitability metrics. I am optimistic about the balance of the year based on underlying momentum and a robust pipeline of prospects."
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