Fenix Outdoor International AG reported sales declined 6.5 percent in what the company described as a “very challenging” second quarter. Fenix is the latest to attribute sales decreases to the over-inventory position of outdoor products at retail and the retailers’ inability to refill their inventory as needed.
In March, the company warned, after a solid sales growth period in Q1, that results in upcoming quarters could be pressured by elevated inventories and promotions in the marketplace.
In the second quarter ended June 30, consolidated sales declined 6.1 percent to €152.7 million, compared to €162.7 million in the prior-year comp quarter, with most of the impact coming from lower reorders in Europe. The Brands and Global sales business were said to have the most negative effects and despite North America performing “reasonably well,” the wholesale business came in below last year’s Q2 sales level. The Chinese JV results indicated a recovery in that market and showed “significant growth in profitability.
Second quarter operating profits fell sharply year-over-year to €149,000, or 0.1 percent of sales, from €9.6 million, or 5.9 percent, in Q2 2022.
EBITDA contracted 40.2 percent to €13.5 million from €22.6 million a year ago. Earnings per share were just €0.05 a share for the period compared to €10.6 million from €0.58 per share a year ago.
Brands Segment Sales Decline 9.2 Percent
The company’s Brands segment, which includes Fjällräven, Tierra, Primus, Hanwag, and Royal Robbins, rose declined 9.2 percent to €34.61 million in Q2 from €38.2 million in Q2 last year. Operating profits fell 67 percent to €2.6 million from €7.9 million in the year-ago period.
Fenix Outdoor said the decrease in sales was driven by a lack of reorders, predominantly in Europe, while the consumer business showed continued growth.
Frilufts’ Sales Inch up 0.9 Percent
Sales at the Frilufts segment, which includes retailers operating under the banners, Naturkompaniet AB, Partioaitta Oy, Friluftsland A/S, Trekitt, and Globetrotter Ausrüstung GmbH, reached €85.8 million against €85.0 million in Q2 last year. The segment posted an operating loss of €1.0 million against a profit of €0.3 million a year ago.
Fenix Outdoor noted that the overall warm and dry weather limits sales for the period. The Frilufts business struggled with hardwood products like tents and sleeping bags and heavy hiking boots, in general. Higher rent and higher personnel costs impacted the operating profit for the quarter.
Global Sales Fall 18.7 Percent
Global Sales, which includes distribution companies selling more than one Fenix Outdoor brand, delivered €32.1 million in sales in the quarter versus €39.5 million in the year-ago quarter. The segment posted am operating loss of €1.0 million, compared to an operating profit of €2.1 million a year ago.
Third Quarter Outlook
Looking ahead, the company said the third quarter “looks reasonable” due to a solid order book in Brands and Global sales. However, given what was experienced in Q2, as well as the possibilities of a recession and the current warm weather situation, the company refrained from making any predictions for the current quarter.
Photo courtesy Fjällräven
