Sales were brisk in the second quarter for both vendors and retailers in the outdoor industry. However, margins contracted during the period, forcing declines in profits and return on sales. Inventories grew at nearly the pace of sales on a consolidated basis, a good sign as the industry continues to find stasis amid increasing costs for
everything from raw materials to transportation and utilities.
Finanicial statments suggest the back-end was harder to manage this quarter as a result of the increased costs in manufacturing and sourcing and everything else. Margins declined for retailers, softgoods vendors and hardgoods vendors in the quarter.
More noticeable was the over 150 basis point declines in gross margins for both softgoods and hardgoods vendors as they absorbed increased costs. Retail margins declined over 60 basis points, suggesting they too had to absorb some costs and share the pain.
The decreased margins led to consolidated vendor net income that was
down in the mid-single-digits. Removing Jarden Corp.s profit growth, which was goosed by its K2 acquisition, pushes the overall decline even further south. Retail profits faired even more poorly with only Lululemon posting a bottom line improvement for the second quarter.
For a more detailed analysis, including a full-page chart breaking out performance of 29 outdoor businesses, see this week’s The B.O.S.S. Report.
