Gander Mountain Co. reported fourth-quarter revenues increased 5.2% to $334.1 million from $317.6 million a year ago. Net earnings more than doubled to $13 million, or 54 cents a share, from $5.8 million, or 25 cents, a year ago.
Retail segment sales for the fourth quarter were $322.0 million, an increase of $10.0 million or 3.2%, as compared to the fiscal 2007 fourth quarter. Direct segment sales were $12.1 million for the quarter, compared to $5.5 million for the same quarter last year. The increase in Direct segment sales resulted primarily from the startup of the new Gander Direct internet and catalog operations in the third quarter of fiscal 2008 and the inclusion of Overton's, acquired in December 2007, for the full quarter in fiscal 2008.
Retail segment net income in the fourth quarter was $16.6 million, which includes a $6.5 million non-cash charge for impairment of goodwill in light of current market conditions. Excluding the non-cash impairment charge, retail segment net income in the fourth quarter was $23.1 million. For the fourth quarter of fiscal 2007, retail net income was $7.0 million. The improvement resulted primarily from increased product margins and decreased SG&A costs. Direct segment net loss for the fourth quarter was $3.5 million, compared with a net loss of $1.2 million in the fourth quarter of 2007.
Consolidated net income improved to $13.0 million for the fiscal 2008 fourth quarter, including the $6.5 million non-cash charge for impairment of goodwill, compared to net income of $5.8 million for the same quarter last year. Excluding the non-cash impairment charge, consolidated net income for the fiscal 2008 fourth quarter was $19.6 million.
As reported, comparable store sales during the fourth quarter of fiscal 2008 were (0.2)%, an improvement over (6.5)% in the third quarter of fiscal 2008. The firearms, ammunition, seasonal hunting and footwear categories all experienced strong sales performance during the quarter. Comparable store sales were a positive 2.7% during the quarter, excluding the (2.9)% impact of boats, ATV sales and power sport services, which are categories the company is in the process of exiting.
Consolidated SG&A costs, as a%age of sales, improved 168 basis points to 20.0% of sales in the fourth quarter of fiscal 2008 as compared to the fourth quarter of fiscal 2007.
2008 Fiscal Year
For the fiscal year, the company reported record sales of $1.1 billion, an increase of 9.8% over the prior year. The company reported a net loss for the year of $15.5 million, or ($0.64) per share, compared with a net loss of $31.8 million, or ($1.52) per share for the 2007 fiscal year.
Retail segment results for the year were a net loss of $9.4 million compared with a net loss of $30.6 million in fiscal 2007. Comparable store sales declined 5.6%. Direct segment results were a net loss of $6.1 million compared with a net loss of $1.2 million in fiscal 2007 reflecting additional investment in the launch of Gander Direct in fiscal 2008.
Improvement in inventory management resulted in a decrease in Retail segment inventory of 18% per square foot, year-over-year, and a 23% decrease in Retail segment clearance inventory.
Record cash flows from operating activities for the year were $59.2 million, an improvement of approximately $90 million over fiscal year 2007. During the year, the Company reduced its total debt by approximately $38 million.
“Gander Mountain improved its performance through the year in total revenues, operating performance and cash generation as we applied a more disciplined approach to our operations, capital, and expense decisions,” said David C. Pratt, chairman and interim chief executive officer. “Thus far into 2009, in a difficult retail environment, we continue to see progress in operating performance. Our ongoing efforts to build the leadership team, improve operating margins, and reduce debt should continue the momentum we generated in the 'New Gander Mountain' this last fiscal year.”
Gander Mountain Company
Consolidated Statements of Operations
(In thousands, except per share data)
13 Weeks Ended 52 Weeks Ended
—————- —————-
January 31, February 2, January 31, February 2,
2009 2008 2009 2008
—- —- —- —-
Sales $334,114 $317,604 $1,064,569 $969,403
Cost of goods sold 242,897 232,357 794,080 728,649
——- ——- ——- ——-
Gross profit 91,217 85,247 270,489 240,754
Operating expenses:
Selling, general
and
administrative
expenses 66,951 68,988 257,822 240,744
Exit costs,
impairment and
other charges 927 4,285 907 6,493
Goodwill impairment
charge 6,514 – 6,514 –
Pre-opening
expenses 13 84 2,048 4,836
— — —– —–
Income (loss) from
operations 16,812 11,890 3,198 (11,319)
Interest
expense, net 3,707 5,696 18,008 19,745
—– —– —— ——
Income (loss) before
income taxes 13,105 6,194 (14,810) (31,064)
Income tax provision 68 375 687 750
— — — —
Net Income (loss) $13,037 $5,819 $(15,497) $(31,814)
======= ====== ======== ========
Income (loss) per
common share
Basic $0.54 $0.25 $(0.64) $(1.52)
Diluted $0.54 $0.25 $(0.64) $(1.52)
