Jarden Corporation reported sales dipped at its Outdoor Solutions segment in the quarter ended March 31 as harsh weather forced many U.S. stores to close and stocking issues arose at a major retailer.



Jarden became aware of the stocking issue when sales of its products dropped off at a major retailer that was reporting 100 percent in-stock levels of Jarden products. Jarden Outdoor owns more than 20 sporting goods brands including the winter sports brands Madshus, Marker, Marmot and Volkl.

 

“100 percent in-stock to us means on the shelf and for them it meant in the store,” explained CEO James Lillie for Jarden Corp., which also sells household products through its Branded Consumables and Consumer Solutions segments.
Jarden Outdoor ended up hiring a third party to photograph empty shelves at the retailer’s stores to show them that Jarden’s products were stranded in the backroom.

 

Lillie did not disclose the retailer or the products affected, but said the retailer made progress in correcting the problem in April.
 

 

Jarden Outdoor segment sales declined 1.6 percent to $684.1 million in the quarter ended March 31, when sales typically hit their annual nadir ahead of second quarter sell-in of Jarden’s camping and fishing gear. The lower sales resulted in earnings of $55.3 million for the quarter, down 22.3 percent compared with $71.2 million in the same quarter of 2013. Segment operating earnings, which reflect the effect of inventory valuation adjustments, exchange rates, depreciation and amortization, reached $36.3 million, down 35.4 percent from $56.2 million.


“POS and traffic in general were impacted by consumer credit card security issues and inventory being stranded in the back of stores and not making its way to store shelves,” Lillie said in an apparent reference to the chilling effect a major breach of customer information at Target had on consumer spending during the quarter.


Lillie noted that sales in the first quarter of 2013 were boosted by close out sales of winter product, which had largely sold through and were unavailable by the first quarter this year. For that reason, Jarden’s sales of spring product have gotten off to a good start in the U.S., where many dealers began taking delivery of spring orders in March. Jarden sells camping gear under the Coleman, AeroBed and Campingaz brands and owns seven fishing brands, including Abu Garcia, Berkley, Shakespeare and Stren.

 

In Northern Europe, by contrast, a mild winter resulted in much lower sell through of snowsports products, which represent just 5 percent of the segment’s sales. 

 

Although JAH posted consolidated organic sales growth of just 0.6 percent for all three of its segments during the quarter, Lillie remains confident the company will hit its 3 to 5 percent annual organic growth target in 2014.

 

”We can’t predict the weather, but we are comfortable we will hit our targets given the product launches and orders we are seeing today,” Lillie said.

 

In fact, JAH took up the bottom range of its earnings forecast for 2014 Thursday, which now calls for EPS of $3.85 to $4.02. 

 

Lillie cited Rawlings launch of its online Custom Glove Pro Shop, where consumers can use a tool known as a “configurator” to custom design and order baseball gloves.

 

Just to be sure, however, CFO Ian Ashken disclosed that JAH will launch a ‘Project Lean’ initiative to re-evaluate processes and expenses to drive savings for the balance of the year. While JAH regularly reviews expenses, Ashken said Project Lean will mark the first time the company looks at all back-office processes and costs.