Jarden Corp. reported another quarter of record sales and earnings, but got little help from its Outdoor Solutions segment, where earnings and revenues fell as Coleman failed to beat tough comps from a year earlier.
Net sales for the segment, which also owns the Berkley, Ex-Officio, K2, Marker, Marmot, Penn, Shakespeare, Rawlings and Volkl brands, reached $747.3 million in the second quarter ended June 30, down 3.2 percent from the same period in 2011. The segment earned $95.7 million, down 19.5 percent from the year earlier quarter. Operating earnings declined 17.7 percent to $85.3 million. Segment earnings as a percentage of sales fell 258 basis points to 12.8 percent.
Team, fishing and apparel on track
The company’s initiative to double sales of technical apparel from 2010 to 2013 remains on track. Marmot is tracking ahead of plan thanks in part to the opening of several branded flagship stores. The company expects 7 million people, including many attending the Summer Olympics, to walk by a store opened in London in May. That store will also display Zoot’s new Ultra Kiawe running shoes, which will be worn by five men in the Olympic triathlon. Zoot now has its own plan to double sales in the next five years. Ex-Officio has also launched a plan to double sales.
Coleman can't match tough 2011 comps
The laggard was Coleman, which with $800 million in annual sales is Jarden’s largest brand. Coleman could not meet comps set last year when the tsunami in Japan spurred sales of many camping products. Sales of the brand also fell off in Europe as a result of poor summer weather and the weak economy. Sales of some Coleman categories have also fallen off in the United states since June.
“We do not expect this trend to reverse in the second half of 2012 but are excited by the prospects for 2013,” said CEO Jim Lillie, who attributed some the decline in demand to Coleman dealers taking price increases.
As reported in February, JAH expects ski sales to fall by 5 to 10 percent, or $50 million, this year as K2, Marker and Volkl dealers work through inventory carried over from last winter. About half that decline hit in the first quarter and the bulk of the remaining $25 million will hit in the current quarter. The lack of volume at the company’s ski factories in the second quarter caused much of the margin contraction at the Outdoor segment, where earnings reached 12.8 percent of sales, down 260 basis points from a year earlier.
The weaker performance by the Outdoor segment was more than offset by results at Jarden’s two other segments. Jarden Consumer Solutions segment owns a small kitchen appliance brands such as Oster and Sunbeam, while its Branded Consumables Segment owns an eclectic portfolio of household brands ranging from Diamond playing cards to First Alert fire and carbon monoxide alerts. Including those businesses, Jarden reported total net sales were essentially flat at $1.67 billion. Corporate wide net income increased to $83.2 million compared to $73.9 million for the same period in 2011. Gross margin increased 110 basis points to 29.6% compared to gross margin of 28.5% for the same period in 2011.
Retailers becoming more cautious
“I think they've gone back to their — I don't want to say bunker mentality, but they are very cautious about even having reorders at the level of POS,” Ashken said. “So our view is now that they're not going to do anything dramatic to cut down, but we're not looking for the floodgates to open, either.”
JAH expects the weakening Euro and other currency fluctuations will trim $125 million to $150 million off their sales in 2012, up from $90 million to $90 million forecast in the first quarter. Still, the company remains on track to improve gross margins by 50 basis points thanks to lean manufacturing initiatives and lower commodity and distribution costs. JAH affirmed its earnings guidance for FY 2012 at $4.04 to $4.15 per share.
