Outdoor financials: Wolverine says sales growth, cost controls boost Q2 profit, plus Sport Chalet

Wolverine said sales growth and cost controls boosted Q2 profit, and Sport Chalet signed an expanded senior credit facility.
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Wolverine says sales growth, cost controls boost Q2 profit

Wolverine World Wide (NYSE: WWW), parent of Merrell and licensee of Patagonia Footwear, said sales growth and cost controls drove second-quarter profit up 8 percent.

For the quarter ended June 14, net income rose to $16.8 million, or $0.33 per share, from $15.5 million, or $0.28 cents per share, a year ago.

Revenue climbed 7 percent to $267.4 million from $250.3 million in the prior year.

Wolverine said its gross margin increased modestly to 38.3 percent, as strong international results linked to the weaker dollar were mostly offset by increased product and freight costs.

The company said backlog at the end of the quarter was up 4 percent, hurt by about 2.4 percentage points because of discontinued business. It also said it saw a "significant" shift from future orders to at-once orders, as retailers remained cautious, waiting to order what they need rather than ordering for the future.

Wedbush Morgan Securities analyst Jeff Mintz, who rates the company "Hold," wrote in a client note that results show Merrell continues to perform well amid a difficult environment, but said the company was not impervious to the weakening economy.

"The company's backlog at the end of the second quarter was up only mid single-digits compared to up over 10 percent at the end of first quarter, which reflects higher levels of at-once orders, but also could be indicative of weakening trends," he wrote.

"We continue to believe that Wolverine is one of the best managed companies in our coverage universe," he added. "Nonetheless, we believe the environment is impacting the company as demonstrated by reduced backlog and accounts receivable that have grown significantly faster than revenue in each of the past two quarters."

The company is maintaining its full year 2008 revenue guidance of $1.23 to $1.26 billion and its earnings per share range of $1.83 to $1.90, representing growth of 7.6 percent to 11.8 percent over the $1.70 reported for 2007.

Its shares fell $3.53, or 13.29 percent, to close at $23.04 on July 9. The stock has traded between $19.85 and $31.21 over the past year, and is up 8 percent year-to-date.

Sport Chalet signs expanded senior credit facility

Sport Chalet (Nasdaq: SPCHA and SPCHB) said it has signed a new expanded senior credit facility with its existing lender, Bank of America, N.A. The new senior credit facility expands total availability to $70 million from $40 million and expires in June 2012.

"As we work to position our company for the future, and continue to take a long-term approach to managing our business, this increased capacity provides us with additional financial flexibility and enhances our capital structure," Craig Levra, chairman and CEO, said in a statement. "In addition, given the current environment, we believe our ability to secure this financing is a clear indication of the continued support that our lender has in our business strategy."

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