by The Editors on August 22, 2008
PacSun shares opened down this morning after the company announced yesterday a “weak outlook that resulted in a series of investment downgrades,” according to Forbes.com. Not surprising, it also pulled down shares of Volcom down more than $2 by mid-morning.
Pacific Sunwear reported after the regular markets closed Thursday that it swung to a fiscal second-quarter loss from discontinued operations but offered downbeat profit projections for the third and fourth quarters amid a weakening economy. . . “The retail environment is extremely difficult and the primary root of (Pacific Sunwear’s) poor performance,” Mitch Kummetz, an analyst at Robert W. Baird & Co., wrote in a note released early Friday. “However, given the company’s revised back-half outlook, its strategy of refreshing stores and refining its merchandise mix isn’t making enough of a difference to warrant an Outperform rating anymore.”
We thinking we prefer the Zumiez strategy.
[Link: Forbes.com]
by The Editors on August 21, 2008
In Billabong’s financial report today they announced the following: net profit of AUS$176.4 million, up from AUS$167.3 million a year ago.
Mr O’Neill said Billabong’s second half was a “highlight” as sales revenue in North America grew by 18.6 per cent, earnings in Europe rose by 20.8 per cent and Australasia recorded 19.8 per cent growth, in constant currency terms. . . . The Billabong CEO remained confident about fiscal 2009 and said good growth was evident in early forward orders in the US and Europe amid more moderate Australasian growth.
But the really big news was that Billabong announced that they were paying $99.9 million dollars for DaKine Hawaii.
Mr O’Neill said: “DaKine has built a strong sales base in North America and a growing sales base in several international territories, making it a powerful addition to the group.” . . . DaKine is expected to contribute approximately 4 per cent of group sales in fiscal 2009 and be earnings per share positive in year one.
Billabong really is dakine now, gobble, gobble, gobble. Kind of makes us wish we had something to sell them.
[Link: The Australian]
by The Editors on August 21, 2008
Teen retailers and especially mall retailers have had a tough year this year and Zumiez has has not escaped, however in the second quarter conference call held at 2 PM PST on August 21, 2008 CEO Rick Brooks and CFO Trevor Lang believe the company is doing very well compared to competitors.
Total net sales for the second quarter (13 weeks) ended August 2, 2008 increased by 12.5% to $92.3 million from $82.0 million reported in the second quarter ended August 4, 2007 (13 weeks). The company posted net income for the quarter of $2.7 million or $0.09 per diluted share versus $3.1 million or $0.11 per diluted share in the second quarter of the prior fiscal year. Comparable store sales decreased 1.7% for the second quarter of fiscal 2008 compared to an 11.6% increase in the second quarter of fiscal 2007.
Rick Brooks, President and Chief Executive Officer of Zumiez Inc., stated: “We continue to make positive strides in our ongoing efforts to give our customers a unique specialty retail experience, while controlling costs and effectively managing inventories during this very difficult operating environment. Due to this focus, we exceeded our earnings projection for the first six months of this year. We have opened 39 stores this year and continue to make the investments necessary to build the Zumiez chain to our goal of 800 stores.”
And here are some of the notes we pulled from the call:
- The thing thing that surprised us most is not news to anyone who follows the Zumiez stock. The company has no debt. None.
- Zumiez is focused on remaining true to the brand. “Our business model has the strength of being a branded business model,” Rick Brooks said. “We work with our brands to leverage inventories. We work very closely with the brands . . . we have a very dynamic process of moving product to where it is selling strongest.”
- “This is a very promotional environment,” Rick continued. “This macro economic climate is tough. That is making it much more price point. While I’m not going to comment on specific brand performance, this is how we see it: Those brands that we are carrying that are focusing on distribution in core shop are doing very well.. . . On the other hand there are other brands that have wider distribution outside the core retailers, brands that we’re finding are being price promoted by our competitors in the mall outside the core, and on those we’re having to be price promotional. The places we have to be promotional are with the brands that are in our non-core competitors.”
- The company believes that opening more stores is still the best use of its cash. They are completely focused on the 800 stores target and will open 57 new stores in the fiscal year.
- Performance in the stores was broken up regionally. “California, Nevada, Arizona, was rough. Texas, Illinois, Wisconsin performed nicely for us.”
- “I just want to be clear with the investment community that we feel very good with the returns that we are getting on our stores,” CFO Trevor Lang said.
- eCommerce was up 75 percent in the second quarter and 65 percent year to date. “Our ecommerce business is very strong, yet it is still a very small part of our business,” Brooks said. “We believe that there is a big opportunity to build that business over the next five years. We’re starting to do a number of things along that front.”
- Snowboard business still plays a major roll in quarter four. In October it is about 11 percent of sales and goes to 18 percent by the end of the quarter: “We’ve been doing the snowboard business for a long time,” Brooks said. “Over the last number of years we have taken the strategy that we buy well below what we think we’re going to sell. We chase the weather. Where it snows is where we move the product. Based on the results last year. We are going after the technology driven products at the high end. And at the other end we have shipped more pricepoint driven packages as we get into the season were we can move on some in the price issue.”
- There are no plans to de-emphasize snowboarding.
- Zumiez sales percentages breakdown: footwear 18%, accessory 18%, hardgoods (skate and snow) 14%, men’s apparel 33%, junior 15%, boys 2% percent.
- Investing in information technology organization, is high on the list. Zumiez thinks there are some strategic investments we will make there.
- The company is working to get better deals on real estate on a landlord-by-landlord basis. “We are one of the few growing retailers,” Brooks said. “I think we are a very attractive tenant for the landlords and we try to look at our landlords are partners. We are doing deals with the landlords that value our position and ability to generate sales.
- Sales per square foot is currently running at about $470 versus $500 last year. “We look at total flow through on the business,” Lang said. “We’ll look at our high-volume stores that do more than 800 spsf and we expand them so the sales per square foot may go down but the profitability goes up.
- Regarding the tough economic retail climate: “What we need is for the consumer to feel better,” Brook said. “And when that happens we’ll be doing better.”
And just as Brooks and Lang were about to answer a question regarding employee retention and turnover the Internet broadcast crashed mid response. The operator apologized and we disconnected.
[Link: Zumiez]
by The Editors on August 21, 2008
by The Editors on August 20, 2008
Jeffery A. Berg, the chairman and lead investor in Surfline/Wavetrak Inc., lead director of Swell.com, and founder and owner of Airborne Media LLC (publishers of FOAM magazine, Girls Learn To Ride, etc. . . . ) has just been named to the board of a Carlsbad, California-based interactive entertainment company NTN Buzztime.
Between 1995 and 2000, Mr. Berg was Chairman of AccentHealth. He led its financing and strategic development from its pilot phase to a network now providing segmented, patient education-oriented TV programming to over 10,000 medical waiting rooms. AccentHealth programming reaches 11.7 million consumers every month. . . . Mr. Berg has over 20 years’ experience as a professional investor, having founded Matador Capital Management in 1993, and before that working for 9 years at Raymond James Financial as an institutional securities analyst. He holds a Bachelor of Business Administration degree from the University of Florida and certification as a Chartered Financial Analyst.
For someone so involed in action sports online, we hardly knew Mr. Berg.
[Link: eMedia World]
by The Editors on August 13, 2008
Looks like 2008 is shaping up pretty well for Spy Optic’s parent company Orange 21. In a financial report released yesterday the company showed that net sales increased 17% to $14.0 million for the three months ended June 30, 2008. That’s up $2 million over the same period in 2007. The company still had a net loss.
A net loss of $0.3 million was incurred for the three months ended June 30, 2008 compared to a net loss of $1.6 million for the three months ended June 30, 2007.
For all the details click the link.
[Link: Trading Markets]
by The Editors on August 12, 2008
Sometimes we forget that Hayes Brothers Snowboards is wholly owned by a private equity firm. Now, we won’t have to remember that any more because their parent company Ault Glazer & Co., Inc. has announced that it will no longer be a PE firm and that the business that’s left over will now be called Global Sports and Entertainment, Inc. This firm will be run by Bill Dully.
The new holding company will have minority ownership in Freedom Grill and Boom Entertainment, and will wholly own The Collectors X, Hayes Brothers Snowboard, as well as Global Authentication, Inc. as its flagship operation.
How’s that for a portfolio of companies: grills that attach to your trailer hitch, sports memorabilia athentication, oh, and snowboarding. Talk about synergy.
[Link: MarketWatch]
by The Editors on July 28, 2008
Things haven’t been going so well since last Thursday’s Volcom Conference call. Shares are down, the market is down, but the Motley Fool investing site is still “stoked” on the stock.
Volcom is one of the smartest consumer-goods companies I can think of, boasting what I consider an intense, in-depth understanding of its customers. That kind of deep understanding of and affinity for a specific client base similarly attracted me to Urban Outfitters (Nasdaq: URBN). . . Furthermore, Volcom’s recent stock’s weakness is giving investors a great opportunity to buy, although the short term might be rough.
Rough, indeed.
[Link: Motley Fool]
by The Editors on July 25, 2008
If you were basking in the sun at Huntington Beach yesterday (like much of the surf industry) and missed the Volcom conference call, here it is transcribed in it’s entirety. Here’s how Wooly kicked it off:
We are no more than half way through the year and I feel good about the progress that we have made managing our business in the U.S. running our new European operation and integrating Electric. The power of Volcom brand continues to capture the attention of consumers around the world and we are excited about the global opportunities that lay ahead.
His comments about electric:
Last quarter we added the full product line from electric, which includes sunglass, goggles, soft goods and accessories. During this period we launched three new sunglass styles, the Technician XL in May and the Detroit and Hoodlum the last week of June. So far the initial sell-through on all three styles has been very positive and we look forward to continuing to build on this excitement.
The Laguna Surf & Sport story:
The multi branded concept of the LS&S stores is a little different for us, but we believe it helps diversify our retail business by providing us with greater insight about our customers and market trends. It also brings an experience team to the company adding strength to our overall retail infrastructure. We plan to keep these stores operating under the LS&S name with the same employees, management and general product and brand mix.
For the rest of the call (including analyst questions) click the link.
[Link: Seeking Alpha and Reuters]
by The Editors on July 23, 2008
Tomorrow, July 24, 2008 at 1:30 PST Volcom will host a conference call to discuss their financial results for the quarter ended June 30, 2008.
The conference call will be available to interested parties through a live audio Internet broadcast at www.volcom.com. Volcom intends to utilize this webcast event to discuss financially-oriented goals and objectives and to disclose material company and industry-based topics in an open manner. The company does not plan to report or comment on its progress during the current fiscal quarter.
For those who are not available to listen to the live broadcast, the call will be archived for one year on the Volcom website. A telephone playback of the conference call will also be available until 11:59 p.m. EST, Thursday, July 31, 2008. Listeners should call (800) 642-1687 (domestic) or (706) 645-9291 (international) and use reservation: 55485369.
[Link: BusinessWire]
PacSun shares opened down this morning after the company announced yesterday a “weak outlook that resulted in a series of investment downgrades,” according to Forbes.com. Not surprising, it also pulled down shares of Volcom down more than $2 by mid-morning.
