In a quarter that is largely dependant on football and hockey sales, Easton-Bell Sports, Inc. saw lagging Team Sports sales fall 19.0% to $91.2 million from $112.6 million in the year-ago period. Sequentially, the decline mark a small improvement from second quarter Team Sports sales, but management for the Van Nuys, CA-based sporting goods manufacturer said soft football and hockey sales had kept the decline in double digits for what is typically a strong quarter for the company.
On a conference call with analysts, management for Easton-Bell attributed a crippling drop in football sales to schools reducing their purchases for the upcoming season. Falling hockey sales were attributed to the timing of new product introductions. Margins for the company’s Team business fell 290 basis points for the quarter, which CFO Mark Tripp said was due to a higher concentration of sales for mid and lower price points, close out sales in the diamond sports segment, the negative impact of changes in foreign currency exchange on hockey products in Canada and Europe and higher sourced finished goods costs.
For the action sports segment, lower sales of OEM cycling
components and cycling accessories caused revenues to slide 1.7% to $89.2 million from $90.8 million in the year-ago period. Margins for the Action Sports segment inched up 140 basis points due to lower sourced goods costs, lower close-out sales of mass channel products and inventory write-offs. Year to date, margins for the Action Sport segment are off just 50 basis points, impacted by the stronger dollar, close out sales of snow sports helmets and inventory write-offs.
To combat a cautious consumer market in upcoming quarters, management for Easton-Bell said the company would focus on product launches and cost reductions and cash management to drive margin improvement. Fourth quarter diamond sports launches will be highlighted by the Stealth Speed ($299), the Synergy Speed ($249) and the CV-12 ($199) all of which are set at relatively moderate price points.
Likewise, the company said its recently introduced Natural Elite Ball Gloves “continue to outpace original sales expectations” with bookings up 45% year-over-year.
Likewise, management expressed optimism regarding Riddell’s recent football pad launch and looked towards 2010 to bolster marketing efforts and product awareness.
For the Giro (Action Sports) side, management said the recently released high-end “The Seam” snow helmet has been “very encouraging” while the rest of the snow helmet and goggles lines have been very positive, as well. On the Bell side, management said pre-season bookings have increased in the low-singles, while a $30 to $35 increase in retail pricing has warranted a positive response from the market.
Finally, the hockey segment looks to prosper from the recent launches of the Stealth S19 stick and a jet black version of the Stealth 17 skate. Management said both products have sold into retailers well, with sales volume doubling from the Q408 launches.
