Outdoor financials: VF's outdoor coalition sales jump 127 percent in Q1, plus Columbia Sportswear, Amer Sports, Cabela's, Wellman, West Marine

VF's outdoor coalition sales jump 127 percent in Q1, Columbia stock drops 17.5 percent after guidance forecast, Cabela's reports lowered net income, Amer Sports reports first-quarter earnings, Wellman's earnings and sales up for Q1, Disappointing first quarter for West Marine
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VF's outdoor coalition sales jump 127 percent in Q1
VF Corp.'s acquisitions and strong sales boosted first-quarter net income to $122.9 million, or $1.07 a share, up 18 percent from $103.9 million, or 93 cents a share, last year. The acquisitions of the Vans, Napapijiri, Kipling and Holoubek businesses added $156 million to sales and 10 cents a share to earnings in the latest quarter, VF said. Earnings exceeded analysts' average forecasts by 5 cents.

First-quarter sales rose 9 percent to $1,563.6 million from $1,432.7 million in the prior year's first quarter. Gross margins increased by nearly three full percentage points in the quarter, from 38.7 to 41.5 percent. More than half of this increase resulted from the inclusion of the higher margin acquisitions as well as growth in its higher-margin businesses, with the remainder relating to operational improvements in most of its core businesses, VF said. Operating margins reached 12.7 percent in the quarter, up from 12.0 percent in the prior year period.

VF reported that its outdoor businesses continued to grow rapidly in the quarter. Combined sales of its outdoor group, which includes The North Face, Vans, JanSport, Eastpak, Napapijri and Kipling brands, jumped 127 percent in the quarter to $282 million from $125 million. Total sales of The North Face brand rose 18 percent in the quarter. Fall bookings for the brand are up 27 percent in the United States and 19 percent in Europe. Packs sales also rose in the quarter. VF said its Vans, Napapijri and Kipling brands continue to perform very well and contributed $141 million to outdoor sales in the quarter. Operating income rose in line with sales, with margins stable. Sales growth in its outdoor business could exceed 30 percent this year, it said.

VF ended the quarter with $366 million in cash. Inventories were up 13 percent, with $55 million of the total increase of $114 million due to 2004 and 2005 acquisitions. Debt as a percent of total capital was 27.6 percent at the end of the quarter, or 19.5 percent net of cash. The increase in the current portion of long term-debt reflects $400 million of long-term debt due to be repaid in 2005. For the full fiscal year, VF reaffirmed its outlook for earnings growth of at least 8 percent, on a 6 percent to 8 percent gain in sales.

VF's board of directors also declared a regular quarterly cash dividend of $0.27 per share, payable on June 20, 2005, to shareholders of record as of the close of business on June 10, 2005.

Columbia stock drops 17.5 percent after guidance forecast
Despite a record first quarter in net sales, shares of Columbia Sportswear (Nasdaq: COLM) dropped more than 17 percent after reporting that second-quarter and full-year earnings are expected to fall.

Columbia said that second-quarter profit would be about $3 million -- 70 percent below the $10.7 million recorded in the same period of 2004. And, full-year earnings are projected to decline by 8 percent to 12 percent. A drop in orders scheduled for fall delivery, particularly in the United States, was to blame, it said. After the news, its stock went down 17.5 percent, or $8.92, at $42.04. Shares hit a 52-week low of $41.90 earlier in the session.

On April 29, Banc of America SEC downgraded Columbia from buy to neutral, as did Caris & Company from buy to average.

Columbia said it had record first-quarter net sales of $245.7 million, an increase of 18.9 percent over net sales of $206.7 million for the same period of 2004. It also reported record net income for the first quarter of $21.3 million, a 6.5 percent increase over net income of $20.0 million in 2004. Earnings per share for the first quarter of 2005 were $0.52 (diluted) on 40.7 million weighted average shares, compared to earnings per share of $0.49 (diluted) for the first quarter of 2004 on 41.0 million weighted average shares.

Compared to the first quarter of 2004, U.S. sales increased 18.2 percent to $136.3 million, while other international sales increased 41.4 percent to $36.9 million, European sales increased 8.6 percent to $46.6 million, and Canadian sales increased 15.6 percent to $25.9 million for the first quarter of 2005. Excluding changes in currency exchange rates, other international sales increased 36.4 percent, European sales increased 1.9 percent and Canadian sales increased 7.1 percent. Consolidated net sales for the first quarter of 2005 increased 15.9 percent, excluding changes in currency exchange rates, compared to the same period of last year.

Sportswear sales increased 13.0 percent to $132.2 million, footwear sales increased 29.7 percent to $49.8 million, outerwear sales increased 26.7 percent to $51.2 million, accessories sales increased 11.0 percent to $9.1 million, and equipment sales increased 25.9 percent to $3.4 million, compared to the first quarter of 2004.

Columbia reported that as of March 31, 2005, consolidated backlog decreased 2.4 percent to $758.9 million compared to consolidated backlog of $777.4 million at March 31, 2004. Of this total, fall product backlog was $645.6 million, a 2.8 percent decrease when compared to fall product backlog of $664.0 million in 2004. Excluding changes in currency exchange rates, consolidated backlog decreased 4.0 percent, and fall product backlog decreased 4.5 percent, when compared to the prior year.

"Fall orders declined at March 31 primarily due to significant weakness in North American outerwear orders, particularly in the U.S. market," said Tim Boyle, Columbia's president and CEO. "We attribute the decrease to a variety of factors including the negative impact of poor weather conditions last fall, an increasingly competitive outerwear market, the timing of the receipt of some key customer outerwear orders and the negative impact of retail consolidation at key customers. The weakness in U.S. outerwear at March 31 was partially offset by continued strength in sportswear and international footwear orders."

Cabela's reports lowered net income
Cabela's (NYSE: CAB) reported that total revenue for the first quarter of fiscal 2005 increased 11.7 percent to a record $350.6 million compared to $313.9 million last year. However, the first-quarter net income was $7.8 million, or $0.12 per diluted share, compared to $8.0 million, or $0.14 per diluted share for the same period a year ago. As a result of the company's recent public offering, weighted average diluted shares outstanding increased 12.7 percent to 66.3 million for the first quarter of fiscal 2005 compared to 58.8 million for the first quarter of fiscal 2004.

During the first quarter of fiscal 2005, direct revenue increased 11.4 percent to a record $229.4 million. Total retail revenue increased 7.4 percent to $97.2 million and same-store sales decreased 6.3 percent, primarily due to the strong performance, during the first quarter of fiscal 2004, of the company's Hamburg, Penn., retail store. That store contributed 4.5 percent to the same-store sales decline. Financial services revenue increased 39.3 percent to $22.9 million for the first quarter of fiscal 2005.

During the quarter it announced that it is opening three new stores, including Rogers, Minn., expected to open later this year, Gonzales, La., expected to open in 2006, and Reno, Nev., expected to open in late 2006 or early 2007. All four of its stores scheduled to open in 2005 are on track. It expects at least eight large-format stores over the next three years, which will double its square footage.

The company said it continues to expect revenues and profits for fiscal 2005 to grow at a mid-teens rate.

Amer Sports reports first-quarter earnings
Amer Sports Corp., parent of Suunto and Atomic, reported that first-quarter net sales increased 2 percent to Euro 277.8 million (USD $364.6 million) from Euro 271.6 million (USD $339.3 million) in the year-ago period. In local currencies, net sales grew by 5 percent. Sales of all business areas grew in local currency terms except two divisions, one of which was winter sports.

The company's EBIT totaled Euro 21.5 million (USD $28.2 million) versus Euro 27.4 million (USD $34.2 million) in 2004, due primarily to investments made in sales and marketing especially in the fitness equipment and winter sports divisions. Net earnings for continuing operations were down 15 percent to Euro 14.2 million, compared to Euro 16.7 million in the year-ago period. Earnings per share were 0.20 versus 0.24 in Q1 last year.

The winter sports division's net sales decreased 8 percent in the first quarter to Euro 26.5 million (USD $34.8 million) from Euro 28.9 million (USD $36.1 million) in 2004. In line with its business cycle, its deliveries are heavily weighted toward the latter part of the year, the busiest months for deliveries being September and October, the company said. Sales fell by 4 percent in EMEA and 27 percent in the Americas. Poor weather conditions reduced the amount of additional orders received in the United States.

EBIT loss expanded to Euro 8.4 million, versus Euro 5.1 million last year. Two of the main factors affecting EBIT were increased investment in sales and marketing as well as the sales decline in North America.

From the beginning of the year, sales of winter sports' products in Italy and Russia have been handled by its new locally based Amer Sports sales and distribution companies.

The sports instruments division posted a 6 percent increase in sales to Euro 20.0 million (USD $26.2 million) in the first quarter, compared to Euro 18.8 million (USD $23.5 million) a year ago. Net sales in the January to March period grew by 7 percent in local currency terms. Sales rose by 10 percent in EMEA and 5 percent in the Americas.

Sales of Suunto's diving instruments grew by 15 percent during the review period. Sales were boosted especially by the Suunto D9 dive computer, which has attracted great interest in the market. Sales of wrist-top computers grew by 2 percent. Wrist-top computers and diving instruments accounted for 62 percent of Suunto's net sales in the review period. Diving and watersports suits grew by 10 percent.

For the year, Amer Sports comparable net sales in local currencies are expected to grow by 3 percent to 5 percent compared with 2004. Earnings per share for 2005 are expected to be 0.90 to 1.05.

Wellman's earnings and sales up for Q1
Wellman's (NYSE: WLM) net earnings for the quarter ended March 31, 2005, were $11.0 million, or $0.20 per diluted share. This compares to a net loss of $28.2 million, or $0.99 per diluted share for the same period in 2004 and a net loss of $1.5 million, or $0.15 per diluted share, for the fourth quarter of 2004. The company also reported record quarterly sales of $386.3 million for the first quarter 2005, which was $92.5 million or 31 percent higher than the same period a year ago, and $14.1 million or 4 percent higher than the previous record set in the fourth quarter of 2004. This increase in sales was due to higher selling prices, the company said.

Disappointing first quarter for West Marine
First-quarter net sales for West Marine (Nasdaq: WMAR) were down 3 percent to $125.3 million from $129.2 million in the first quarter of 2004. Net loss for the quarter was $5.5 million, or $0.26 per share, compared to a net loss of $3.1 million, or $0.15 per share, a year ago and consistent with previously reported guidance.

Same-store net sales for the first quarter decreased 6.8 percent, as compared to the same period a year ago. In the first quarter last year, same-store sales increased 10.2 percent. Same-store sales by region for the first quarter were as follows: Northeast down 22.4 percent, Southeast up 1.3 percent and Western down 4.8 percent. Net sales and same-store sales for the first quarter of 2005 were slightly lower than previously reported due to adjustments for a newly implemented customer rebate program.

The company said its results were down primarily because boating season activity was delayed in markets from the mid-Atlantic states up into the northeast and across to the Great Lakes. The first quarter typically is less than 20 percent of its annual revenue and also its weakest quarter, it added.

After talking with customers, West Marine also announced certain long-term strategic initiatives that include: lowering its inventories without reducing merchandise in-stock levels by reducing inventory purchases in 2005; refocusing on value pricing in certain key merchandise areas; increasing associate hours in its stores during peak selling periods; expanding its efforts to build sales through the Internet; delaying store openings during the key boating season; and restructuring its merchandising organization to add accountability and allow for more assortment strategy and analysis.

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