After a third quarter that saw weakness from the Team Sports business cripple overall revenues for Easton-Bell Sports, management at the Van Nuys, CA-based manufacturer said operations for the fourth quarter of fiscal 2009 had finally exhibited a degree of stabilization. Consolidated revenues for the fourth quarter ended January 2 slipped 3.3% to $163.7 million from $169.2 million in the prior-year period, but Q4 results were much improved versus the double-digit weakness during the second and third quarters of fiscal 2010. In constant-currency terms, revenues were down 5.5% for the fourth quarter.
In a conference call with analysts, Easton management said the fourth quarter reflected the companys effort to balance out revenues by adjusting product introduction calendars for baseball, hockey and the snow business and offering product when the consumer is in the marketplace.
By segment, Team Sports was flat for the quarter, marking dramatic sequential improvement from a second and third quarter that saw Team Sports revenues plummet 23.8% and 19.0%, respectively. Management said strong sales from ice hockey equipment were offset by a decline in sales of football equipment that came as a result of institutions and schools cutting their team sports budgets. Management noted that within the Team Sports segment, the company recorded notable strength from sales of the S19 Hockey Stick launch, the CV12 Slowpitch bat and the moderately-priced Natural Elite baseball glove line.
For the Action Sports segment, revenues slipped 5.9% on lower sales of cycling helmets and accessories as some retailers pushed pre-season orders back to the first quarter. Likewise, management said lower sales of OEM cycling components to bike manufacturers partially offset improved sales of snow sports helmets, cycling apparel and fitness-related products. Management noted that snow helmets were very strong for the recent snow season, driven by the recently-introduced Seam model and the G10 and G9 model helmets which performed well at the sporting good channel.
For the year, CFO Mark Tripp noted that Team Sports sales suffered as a result of reduced sales in the baseball/softball and ice hockey segments, which was partially due to the impact of foreign currency exchange rates. Sales of football equipment suffered from the aforementioned athletic budget cuts at schools and institutions.
Action Sports suffered from lower sales of cycling helmets and accessories and weaker results from power sports helmets and OEM cycling components as high-end bike manufacturers reduced production due to limited consumer spending. Sales growth from snow sports helmets and Giro branded cycling gloves partially offset weakness from other product segments.
Gross margins for the fourth quarter of fiscal 2009 improved 120 basis points to 31.4% of sales from 30.2% of sales in the prior-year quarter on lower product costs across channels, improved performance of Eastons Mexico facility and sales of higher margin hockey products. These factors were partially offset by a negative mix and short-term margin challenges in the cycling and baseball business related to clearance sales. SG&A for the quarter was down 110 basis points from last year.
Inventories were down 13.1% at year-end as management said the company has achieved year-end inventory reduction goals. Inventory levels entering 2010 were called higher quality and much healthier.
