Outdoor financials: Wolverine's Q3 profit up on Merrell sales boost, plus Forzani, Dick's Sporting Goods, Cabela's

Wolverine's Q3 profit up on Merrell sales boost. Analysts downgrade Forzani after disappointing sales period. Dick's Sporting Goods taps new president. Cabela's closes $200 million securitization.
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Wolverine's Q3 profit up on Merrell sales boost. Analysts downgrade Forzani after disappointing sales period. Dick's Sporting Goods taps new president. Cabela's closes $200 million securitization.

Wolverine's Q3 profit up on Merrell sales boost

Wolverine World Wide (NYSE: WWW), parent of Merrell and licensee of Patagonia Footwear, said its third-quarter profit rose 6 percent, boosted by sales of Merrell shoes.

Profit for the quarter ended Sept. 6 rose to $31.2 million, or $0.62 per share, from $29.5 million, or $0.54 per share, a year earlier.

Revenue rose 3 percent to $318.9 million from $310.2 million last year.

"The company's financial performance in the quarter was highlighted by the Merrell brand, which delivered a high single-digit revenue gain and a double-digit increase in earnings contribution," said CEO Blake Krueger in a statement.

The company's operating margin of 14.5 percent in the quarter was a 22 basis point improvement over the prior year, and driven by modest gross margin expansion and operating expense leverage, it said. Inventory levels were down 2.1 percent for the quarter, while accounts receivable increased 2.1 percent on the 2.8 percent revenue increase.

The company also raised its fiscal-year earnings outlook on the strong results, but lowered its revenue view amid a difficult economic environment. It now expects earnings of $1.87 to $1.92 per share, from previous expectations of $1.83 to $1.90 per share.

It also anticipates revenue of $1.22 billion to $1.24 billion, from previous guidance of $1.23 billion to $1.26 billion.

Analysts downgrade Forzani after disappointing sales period

Following the report of disappointing same-store sales and a weak economic environment, analysts lowered the stock price target of Forzani Group (TSX: FGL) and cut its earnings-per-share estimates.

For the seven-week period, the Canadian sporting goods retailer said corporate same-store sales were down 2 percent during the back-to-school period versus a year ago with sales flat in Western Canada, while sales in the east, particularly Ontario, slipped 3.2 percent. Franchise store sales, predominantly in Quebec, increased 3.5 percent for the seven-week period.

Analysts said this period is traditionally one of the strongest sales periods for a retailer and a gauge of the sentiment of shoppers going forward.

"Same-store sales for the seven-week period were relatively flat as the positive impact of a strong Labor Day and back-to-school sales were offset by unfavorable consumer spending patterns," Raymond James Ltd. analyst Andy Nasr wrote in a note to investors.

The analyst dropped the company's stock price target 25 percent to CDN $15 (USD $14.27) a share from CDN $20 (USD $19.03). Nasr also lowered his 2009 earnings-per-share target to CDN $1.18 (USD $1.12) from CDN $1.28 (USD $1.21), and his 2010 figure to CDN $1.42 (USD $1.35) from CDN $1.59 (USD $1.51), citing macroeconomic headwinds and lower-than-anticipated same-store sales.

BMO Capital Markets analyst Adam Clark also lowered his share price target to CDN $11.50 (USD $10.94) from CDN $15 (USD $14.27), while maintaining a "market perform" rating. Genuity Capital Market's analyst cut its target 13.6 percent to CDN $17.50 (USD $16.65) a share.

"We are not compelled to move to an 'outperform' rating at this point given the increased potential for EPS risk from macro headwinds and general market turbulence as it sorts out the credit crisis," Clark wrote in a research note.

Earlier this month, Forzani reported a 72-percent drop in second-quarter profit as cool and wet summer weather, a tough economy and store renovations hurt results.

(Conversion of Canadian dollars into U.S. dollars is for information only, is not necessarily relative to earnings, and is based on the currency rate as of Oct. 1.)

Dick's Sporting Goods taps new president

Dick's Sporting Goods (NYSE: DKS) said Joseph M. Schmidt, who has been executive vice president of operations and chief operating officer since February, will become president and COO in February 2009. Before becoming chief operating officer, he had been vice president of store operations.

Edward W. Stack, the company's longtime chairman and CEO, will relinquish the title of president that he picked up in February when William J. Colombo moved on to become vice chairman of the company's board.

Cabela's closes $200 million securitization

Cabela's (NYSE: CAB) reported that Cabela's Credit Card Master Note Trust successfully completed the sale of $200 million in asset-backed notes. The securitization transaction included the issuance of five classes of notes. It financed the growth of World’s Foremost Bank’s credit card portfolio and is expected to provide adequate liquidity to World’s Foremost Bank through the first quarter of 2009.

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