Thule Group reported that sales at its Outdoor&Bags segment declined 2.7 percent in the Americas in currency-neutral (c-n) terms in the third quarter as big box consumer electronics retailers in the United States slashed their assortment of camera bags from Case Logic and its competitors.
The Swedish company reported total net sales at the Outdoor&Bags segment increased SEK 135 million ($16 mm) to SEK 1.22 billion ($144 mm), or nearly 84 percent of its total revenue for the quarter ended Sept. 30. Segment sales rose by SEK 60 million ($7 mm) in the Americas and SEK 75 million ($9 mm) in Europe/ROW.
President and CEO Magnus Welander said the company’s sales of Bags for Electronic Devices declined in the high-double-digits in North America, where Colorado-based Case Logic is pivoting away from dying categories like camera bags. Thule cut jobs at Case Logic during the quarter, but Welander said the company remains committed to the brand or the categories it serves.
“We've moved Bags&Electronics Devices categories to categories that have a much closer fit to the rest of group,” said Welander. “Today the biggest category is laptop day packs, which is less device dependent, less depending on pure CE [consumer electronics] retail. Thule is also a growing share as a brand of this category and due to those items I am still convinced it is the right category to have within the company.”
Thule has had more success making the transition in Europe than in the United States, where Case Logic has a much higher percentage of its distribution through Walmart, Best Buy, Office Max and Office Depot, said Welander.
“They have generally cut back on shelf space for the entire category,” Welander said of those retailers. “So it’s not that we have been losing our pegs to competitors.”
In Europe and the Rest of the World (Europe/ROW), Outdoor&Bags revenue grew 10.8 percent (6.2 percent c-n), led by bike carriers and Active with Kids sports strollers. Thule also gained momentum selling bike carriers, awnings and tents to European RV dealers. A line of technical backpacks launched this spring also performed well.
The decline in sales of camera bags actually enhanced profit growth as higher margin bike carries, strollers and backpacks accounted for more of the sales mix. In currency-neutral terms, earnings before income taxes (EBIT) at the Outdoor&Bags segment grew 11.2 percent in currency-neutral terms, ore more than four times faster than sales, which increased 2.7 percent compared with the year earlier quarter.
The profit growth was all the more impressive given that exchange rates boosted sales, but acted as a drag on profits. As a result, the segment’s EBIT margin declined 1 basis point to 19.0 percent compared with the third quarter of 2014.
The balance of Thule’s SEK 1.34 billion ($158 mm) in third quarter revenues came from its dwindling Specialty segment, where net sales reached grew 27.8 percent (5.5 percent c-n) to SEK 119 million ($14 mm). Thule announced in September that it had sold the segment’s snow chain business and was studying divesting its remaining business, which sells work apparel in the United States.
