Cutter and Buck Triples Fiscal Q1 Profits; Sales Growth Next…

Cutter & Buck took a big hit in the Golf specialty channel in their fiscal first quarter ended July 31, but pointed to new moves being made to reverse the declining trend. Jim Grundberg, who held product marketing positions at both Callaway and TaylorMade, started on September 1 as head of the Golf SBU. Although Grundberg was primarily focused on hardgoods until leaving the industry four years ago, CBUK feels his more recent experience in the consumer package goods industry makes him more than qualified to bring more focus to the Golf division customers and get the reps motivated.

The company is also adding a senior golf merchandiser, reviewing sales operations and programs, examining product offerings, increasing marketing activities, and enhancing customer service in an effort to re-build the business that shrunk more than 20% in the quarter.

Net income jumped on a sharp improvement in gross margin, narrower SG&A expenses, and a 57.4% increase in pre-tax income in the ongoing wholesale business. The SG&A improvement was attributed to lower salaries and commissions. CBUK said they saw “little to no turnover” in reps after shifting them to independent status from corporate positions.

Management has clearly made progress in the middle of the P&L to affect the bottom line, but will still need to make investments in IT systems to get to the next level and also support the requirements of Sarbanes-Oxley. CBUK sees spending between $2.0 million to $2.5 million over the next nine to twelve months to upgrade systems. Total CapEx is expected to top out at $4.0 million for the year.