Gander Mountain reported second quarter sales declined 1.8% to $248.4 million from $252.9 million a year ago. The net loss widened to $7.3 million, or 30 cents a share, from a net loss of $4.9 million, or 20 cents, a year ago. The increased loss resulted primarily from discounts and markdowns associated with the withdrawal from PowerSports categories and increased advertising expense.
Consolidated SG&A costs, as a percentage of sales, increased 110 basis points to 27.6% of sales in the quarter, reflecting increased advertising expense.
Retail segment sales for the second quarter were $210.8 million, a decrease of $2.3 million or 1.1%, as compared to the fiscal 2008 second quarter. Direct segment sales were $37.6 million for the quarter, compared to $39.7 million for the same quarter last year, a decrease of 5.4%.
Comparable store sales during the second quarter of fiscal 2009 declined 2.4%. The firearms, ammunition, hunting accessories, fishing, marine and camping categories all experienced comparable store sales gains during the quarter. During the quarter, Gander Mountain substantially completed its withdrawal from the boat, ATV and power sport services categories. Excluding the negative 4.2% impact of these categories, comparable store sales were a positive 1.8% during the quarter.
Retail segment net loss was $9.1 million compared to a retail net loss of $6.8 million for the second quarter of last year. Net income for the direct segment was $1.7 million for the quarter, compared with $2.0 million for the second quarter of last year, reflecting start up costs related to the Gander Mountain direct business.
Improvement in inventory management resulted in a decrease in retail segment inventory of 7.1% per square foot year-over-year.
For the 26 weeks ended August 1, 2009, the company reported sales of $476.1 million, an increase of 3.4% over the same period in fiscal 2008. Comparable store sales for the 26-week fiscal 2009 period increased 2.2%. Excluding the negative 4.8% impact of boat and ATV sales and power sport services, comparable store sales were a positive 7.0% for the first half of 2009. The company reported a net loss for the 26-week period of $26.0 million, or $1.07 per share, compared with a net loss of $29.3 million, or $1.22 per share for the 26 weeks ended August 2, 2008.
“A difficult retail environment slowed Gander Mountain's progress during the second quarter, as overall sales declined slightly,” said David C. Pratt, chairman and interim chief executive officer. “Positive comparable store sales in our core categories and continued gains in initial margin were offset by costs associated with exiting PowerSports as well as increased marketing efforts. We continue to apply a more disciplined approach to our operations, capital, and expense decisions. While we expect the retail environment to be challenging in the second half of the year, our ongoing efforts to improve operating margins, manage costs and reduce debt will continue into the second half of the year.” Gander Mountain Company
Consolidated Statements of Operations – Unaudited
(In thousands, except per share data)
13 Weeks Ended 26 Weeks Ended
—————- —————-
August 1, August 2, August 1, August 2,
2009 2008 2009 2008
—- —- —- —-
Sales $248,413 $252,873 $476,067 $460,535
Cost of goods sold 184,045 185,390 364,796 351,023
——- ——- ——- ——-
Gross profit 64,368 67,483 111,271 109,512
Operating expenses:
Selling, general and
administrative expenses 68,484 66,939 130,611 125,896
Exit costs and related
charges 388 316 673 1,092
Pre-opening expenses – 408 299 2,035
— — — —–
Loss from operations (4,504) (180) (20,312) (19,511)
Interest expense, net 2,611 4,509 5,228 9,351
—– —– —– —–
Loss before income taxes (7,115) (4,689) (25,540) (28,862)
Income tax provision 220 165 440 437
— — — —
Net loss $(7,335) $(4,854) $(25,980) $(29,299)
======= ======= ======== ========
Basic and diluted loss per
common share $(0.30) $(0.20) $(1.07) $(1.22)
