Easton-Bell Sports reported its loss widened in its fourth quarter to $15.2 million from $10.2 million a year ago. Sales slid 3.3% to $163.7 million from $169.2 million, according to a filing with the Securities & Exchange Commission.

The company provided the following highlights:

 


  • Gross margins improved to 31.3% from 30.2%. Operating profit slid to $2.6 million from $4.3 million.
  • For the full year, revenues were down 7.6% to $716.3 million from $775.5 million. A net loss of $4.1 million in the year compares with earnings of $13.4 million in 2008.
  • Overall gross margins declined to 32.7% from 34.4%. SG&A expenses increased slightly to 24.4% of sales from 23.1% a year ago.
  • Net interest expense increased $3.0 million to $44.9 million for 2009 from $41.9 million in 2008 due in part to the write-off of deferred financing fees of $8.8 million and payment of $2.9 million of premium/tender fees in relation to redeeming the senior subordinated notes, partially offset by reduced debt levels, lower borrowing rates in 2009 and an adjustment of $7.7 million to interest expense to reflect the change in the fair value of the interest rate swap during 2008.
  • Team sports operating earnings in the year declined 36.9% to $46.1 million from $73 million. Team sports sales in the year were down 10.8% to $387.0 million from $433.7 million.
  • Action sports operating earnings rose 18.6% to $42.2 million from $35.6 million. Action sports sales declined 3.7% to $329.3 million from $341.8 million.

Easton said sales in both Team Sports and Action Sports were negatively impacted by the overall economic climate and by unfavorable foreign currency exchange rate movements in each segment.

“Consumers traded down in price points and deferred discretionary purchases and as a result, retailers were reluctant to make advance purchases and closely managed inventory positions,” Easton said in the filing.

Net sales in both segments were negatively impacted by unfavorable foreign currency exchange rate movements of $4.9 million and $3.1 million in Team Sports and Action Sports, respectively. On a constant currency basis, net sales in Team Sports and Action Sports were down $41.8 million, or 9.6% and $9.4 million, or 2.8%, respectively.
 
The Team Sports net sales decrease resulted from the decline in sales of baseball and softball equipment, hockey equipment (partially due to the foreign currency exchange rate impact on products sold in Canada and Europe), football equipment (resulting primarily from institutions scaling back purchases due to budget constraints), apparel and collectible football helmets (discretionary purchases). Performance of reconditioning services decreased slightly during the year.

Action Sports net sales decreased due to lower sales of cycling helmets and accessories, OEM cycling components and powersports helmets, partially offset by increased sales of snowsports helmets and sales of the recently introduced Giro branded cycling gloves. Sales of fitness-related products were relatively flat for the year.

The Team sports segment’s gross margins eroded to 36.4% from $39.3%. The erosion primarily relates to unfavorable mix due to a higher concentration of sales of mid and lower price point products, closeout sales of baseball and softball equipment and the negative impact of changes in foreign currency exchange rates on hockey products sold in Canada and Europe, partially offset by lower warranty costs due to reduced defective product returns.

Action Sports gross margins improved slightly to 28.2% from 28.1%. The improvement reflects the benefit of lower sourced product costs offsetting the negative impact of changes in foreign currency exchange rates on net sales and closeout sales of snowsports and powersports helmets.