Jarden Outdoor Ends 2009 with 4.7% Sales Gain, Thin Winter Sports Inventory

Segment earnings fell 12.4% to $50.2 million from $57.3 million a year ago. Operating earnings, however, rose to $3.3 million, compared to a loss of $400,000 in the fourth quarter of 2008, due largely to lower adjustments related to the companys $1.7 billion acquisition of K2 Sports in 2007. Adjustments in the most recent quarter included reorganization and acquisition-related integration costs of $29.2 million; impairment of goodwill and other intangibles of $800,000 and depreciation and amortization of $16.9 million. That compared to adjustments of $11.8 million, $30.2 million and $15.7 million respectively a year earlier.

Jardens outdoor brands include Coleman, Berkley, Ex Officio, K2 Skis, K2 Snowboarding, Marmot, Penn, Rawlings, Shakespeare, Ugly Stick and Volkl.

For all of 2009, Jarden Outdoors sales reached $2.31 billion, down 6.8% from the prior year. Operating earnings dropped to $161.6 million from $172.3 million a year earlier after $106 million in adjustments, compared to $125.3 million in adjustments in the year earlier period. Jarden executives said they dont expect to take any more charges related to the K2 acquisition.

Jarden CEO Martin Franklin said the companys greatest achievement in 2009 was generating record cash flow of $641 million that resulted in a year-end cash balance of $825 million even after sustaining R&D spending and doubling the companys media buy.

Jardens continued spending on innovative products is helping it gain shelf space, Franklin said. In Outdoor Solutions, he singled out a new line of Coleman LED flashlights, new fishing combo sets designed to enable novice anglers to catch more fish and new baseball helmets by Rawlings designed to protect batters from 100-mph pitches.

Jarden lowered its guidance on consolidated organic sales growth for 2010 to 2 -3%, down from 2-4% a few months ago, citing the 50% devaluation of the because of the Venezuelan bolivar in mid-January.
Franklin said much of Jardens growth this year will come from gaining shelf space in a slowly improving economy. The company expects gross margins to increase by at least 50 basis points.

The company remains uncertain whether retailers will increase their reorder to sales ratio significantly in 2010, but added that retailers blew through a lot of product last year and that buyers are now back firmly in charge of the buying process as opposed to the accountants.

 

President and COO Jim Lillie predicted 2-3% of Jardens winter sports inventory would be left over at the end of this season, compared to 6% normally and 5% last year. So inventories are way low at retail, which bodes well for reordering activity as we head into the 2010, 2011 ski seasons, Lillie said.

 

Orders for fall/winter 2010-11 are running 7-8% below their level of a year ago, or about half the decline Jarden was forecasting coming into the selling season. Franklin said initial orders for Marmot apparel came in very strong after the SIA Snow Show and ispo show.