Last week, the newly formed Easton Bell Sports reported strong second quarter sales increases due to the combination of Riddell-Bell Holdings and Easton Sports, as well as solid organic growth in several of the companys segments.
This week, the company provided more detail and insight into their business during a conference call with analysts and the media.
Sales for the quarter were up 9.1% to $198.3 million. Backing out the Easton numbers from Riddell-Bell, sales increased 7.7% due to increased football helmet, reconditioning, and clothing sales in the team sports segment, which was up 12.4%, and increased sales of helmets and fitness products in action sports, which was up 5.1%. Organic growth was not provided for Easton.
Gross margins were 31.6%, compared to 38.6% of net sales in 2005. In the
team sports segment, gross margin declined 19.1 percentage points to
29.2% due to a one time to expensing an inventory write-up from the Easton
Sports acquisition. Action sports gross margin was 35.3%, an increase of 2.3
percentage points due to product mix, offset by higher material costs. In
spite of the $11.6 million inventory charge during the quarter, Easton Bell
generated $4.7 million in net income as compared to $3.5 million in 2005.
The company has formed a number of “cross-pollenization teams,” which will
focus on creative product development, brand management, operational productivity
and supply chain management among the two businesses. The companys
two major business segments, team sports and action sports, were
created with the express intent of driving “its respective brand and product
category as if it were the only category that we competed within.” The structure
of the company in terms of the management team has been established
and “is working very well.” The sales force, for the most part, remains and
will remain independent.
