The light seen at the end of the industrys third quarter last year started to shine a bit brighter in the fourth quarter as more companies saw sales increase, margins improve and losses either narrow or move into profit territory to finish off a year that started as bad as any in recent memory.
Fourth quarter results shown in the charts on pages 4 and 5 are posted for those vendor companies that have reported for the period ended closest to the end of December. However, because the report is based mostly on public company filings and is not a complete picture of the entire industry, Sports Executive Weekly feels the total numbers are less significant than the trending information provided in the percentage increases and decreases.
Based on the consolidated figures presented herein, the industrys publicly-traded vendors posted a slight increase in revenues for the fourth quarter. Eleven of the reporting softgoods companies reported sales increases for the fourth quarter compared to seven companies in the third quarter.
Looking at the softgoods vendor sector, sales for the reporting companies inched up ever so slightly on a consolidated basis, with the pure apparel segment posting a 3.9% increase, nearly offset by a 1.0% decline in the consolidated athletic footwear & apparel segment for the quarter. The outdoor footwear & apparel segment rose 2.4% for the period.
Of the 26 companies reporting in the Softgoods vendor sector, only eleven posted a revenue increase for the quarter, but that was still an improvement over the seven that reported gains in the third period. On the hardgoods side, revenues inched up 0.4% for the period, driven by growth in firearms (+7.8%) and golf (+7.9%), offset by continued weakness in fitness and snow sports. Eleven of the 23 hardgoods companies reported revenue increases for the quarter.
Bottom line health started to return in the third quarter as companies cut inventories and pared expenses, including payrolls, and moved more aggressively into owned-retail. Those moves paid big dividends in Q4 as overall consolidated industry vendor gross margins improved more than 130 basis points for the quarter (versus a 50 basis point decline in the third quarter), with overall consolidated softgoods companies posting a 150 basis point improvement to 46.0% of sales and overall consolidated hardgoods companies tallying a 110 basis point gain in gross margins to 35.9% of sales for the fourth quarter. This signals the first GM improvement of the year and reflects the cleaner inventory position for many.
On average consolidated industry vendor inventories fell nearly 15% at year-end versus the comparable period for the prior year. Both softgoods and hardgoods companies saw inventories decline in the mid-teens versus the previous year-end.
With very few exceptions losses either disappeared or were narrowed considerably-even for those companies still challenged by sales declines.
Profits got a healthy lift from the improved margins and reduced costs as overall consolidated bottom-line results jumped more than 43% for the quarter. Only six of the 26 softgoods companies posted bottom-line results that failed to improve from the prior-year period, helping push overall consolidated softgoods profits up nearly 37% for the quarter. But the real bump came from the hardgoods side where overall consolidated profits more than doubled versus the prior-year period as eight companies swung to profits from prior-year losses and seven others improved their bottom-line position.
Based on some of the early preliminary results reported for the first quarter, it appears that improvements are continuing into the new year.