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Today's news...8/17/05
AUGUST 17, 2005 --
Gander Mountain's Loss Widens
For 2Q05, Gander Mountain's sales increased to $173.6 million, an increase of 35.5%. Comp-store sales decreased 4.2% after an increase of 1.8% in 2Q04. The 2Q net loss was $10.4 million, compared to a $3.9 million restated loss for 2Q04.
For the YTD, sales increased $81.9 million, or 36.1%, to $308.7 million. Comp-store sales decreased 2.7%. The net loss was $27.9 million, compared to a restated net loss of $17.7 million for the 26 weeks ended July 31, '04.
"We have now reported sales growth of over 30% for eight of the past nine quarters," said Mark Baker, president/CEO. "Given the success of our 10 new stores opened so far in '05, we have confidence in our ability to continue to enter new markets and gain scale. While we were disappointed in our comparable-store sales performance and loss, we had anticipated incurring a loss in the second quarter because of the seasonality of our business. With nearly two-thirds of our business for the year still ahead of us as we enter the important fall hunting and holiday seasons, we believe that our broad assortment of goods and services and the knowledge and experience of our store associates position us well to meet the needs of outdoor enthusiasts."
Gander Mountain completed a private placement of $20.0 million of floating rate convertible subordinated notes with David Pratt, a private investor. Pratt also owns 1.4 million shares of Gander Mountain common stock. The convertible subordinated notes have an initial conversion price of $16.00 per share and bear interest at 7.0% for the first two years, after which time the rate will float with the federal funds rate to a maximum rate of 8.5%. The notes mature on August 16, '10, and may be prepaid without penalty at any time after August 16, '07.
Richard Vazquez is joining the company as EVP/merchandising. Vazquez has served in various positions at Home Depot since '94, most recently as vice president, merchandising and marketing, Mexico Division, where he oversaw all merchandising, sales and marketing activities, integrated a major acquisition and redesigned the assortments for the acquired stores. CEO Baker also came from Home Depot.
Dick's Upgraded To Buy By ThinkEquity
ThinkEquity reduced its estimate of Dick's FY revenues from $2,689 million to $2,619 million, from up 27% to up 24% compared to the prior year. Comp-store sales, which will not include the former Galyan's stores until 2Q06, and which suffer under the burden of "re-branded" former Galyan's stores in some markets, are forecast to rise 2% for the year, ThinkEquity said. FY05E EPS has been reduced from $1. 85 toward the lower end of management's reduced guidance of $1.70-$1.75. Though the analyst sees no "catalyst" that could lead to a significant revaluation in the near term, his analysis does suggest potential upside in the stock price over the next 12 months (about 24% from the recent stock price). The rating has been upgraded to buy from accumulate
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Categories
Sporting goods industry
Merchandising
Losses
Stocks
Comparable-store sales
Companies
Gander Mountain Inc.
Home Depot
Galyan's
EVP/merchandising
Mexico Division
Concepts
Gander Mountain
net loss
stock price
store associates position
restated net loss
People
Mark Baker
ThinkEquity
David Pratt
Richard Vazquez
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