Jarden Corp. reported sales in its Outdoor Solutions group slid 8.8% in the third quarter to $565.7 million from $620.1 million in the year-ago period. The decline for the group, which includes Coleman, Pure Fishing and the former K2 Inc. business, was primarily a result of unfavorable foreign currency translation (approximately $9 million) and declines in domestic and international sales resulting from overall economic weakness and lack of strong hurricane-related sales in 2009 compared to the third quarter of 2008. On a currency-neutral basis, sales in the Outdoor Solutions group were down 7% for the period.
Group operating earnings improved 4.1% to $63.4 million from $60.9 million as the result of lower SG&A ($23.0 million) and a $2.5 million decrease in reorganization and acquisition-related integration costs, partially offset by the gross margin impact of lower sales. Group reorganization costs were $4.3 million in the latest period versus $6.8 million in the year-ago period.
Overall, Jarden's sales for the three months ended Sept. 30 decreased to $1.4 billion compared to $1.5 billion the previous year. Approximately $44 million of the $104 million decrease in net sales was due to foreign exchange fluctuations and declines in Jarden Process Solutions between the periods. The balance of the decrease was primarily due to overall retail weakness as a result of the current macro economic environment. Net income reached $73.7 million, or 83 cents a share, up from $63.8 million, or 83 cents, a year ago.
On a conference call with analysts, Martin Franklin, Jarden Corp's chairman and CEO, said that he expects the overall macro economy “will continue to bump along the bottom for the foreseeable future, as overall consumer grows at a much slower pace than historically after a recession, given high unemployment levels and consumers' inability or unwillingness to take on debt to drive consumer spending.” But he expects Jarden to show 2% to 4% organic growth with all three primary business segments — Outdoor Solutions, Consumer Solutions and Branded Consumables — producing organic sales growth during 2010.
He noted that Jarden's businesses have gained market share during the downturn and “as the overall category starts to rebound on a relative basis, our growth should be higher.” He particularly cited the camping and fishing business as two areas where Jarden has been gaining market share and shelf space at retail.
Franklin also noted that Jarden's integration of its fishing businesses into a new world headquarters in Columbia, SC that will officially open next month “is on the back of growth in sales and margins during 2009.”
James Lillie, Jarden Corp's president and COO, also said the company is beginning to realize the benefits of integration efforts in the Outdoor Solution's group. Said Lillie,” The manufacturing platform that we are utilizing is much more efficient this year than it was last year.”
He said Coleman “overall is improving,” noting that its gross margins were near 20% when Jarden bought the brand.
