Gander Mountain looking to improve performance

ST. PAUL, Minn. – While Gander Mountain Co. (Nasdaq: GMTN), a retail network of stores for hunting, fishing, boating, camping, marine and outdoor lifestyle products and services, reported an increase in sales for its most recent quarter, its comparable store sales saw double digit declines and it experienced a net loss, albeit smaller than the same quarter of last year.

The company therefore is pursuing strategies to better its results for the rest of the year, such as returning to the catalog business after selling this piece of its operation 12 years ago.

“Entering the seasonally-stronger second half of our year, Gander Mountain’s concentration on growth in the direct business, targeted marketing spend, and cost-saving initiatives offer opportunities for improved performance in the remainder of fiscal 2008,” said Mark Baker, president and CEO, earlier this week in a statement reporting the company’s quarterly results.

Gander Mountain reported sales of $252.9 million for the quarter ended Aug. 2, an increase of 16.8 percent over the prior year period. Comparable store sales decreased 11.7 percent in the second quarter. The 2008 period includes $39.7 million in revenue due to the expansion of the company’s direct marketing business through Overton’s, it stated.

Net loss for the second quarter was $4.9 million, compared to a net loss of $9.7 million, in the second quarter of fiscal 2007.

For the 26 weeks ended Aug. 2, the company reported sales of $460.5 million, an increase of 17.4 percent over the comparable period in 2007. The company reported a net loss for the 26-week period of $29.3 million, compared with a net loss of $32.5 million for the 26 weeks ended Aug. 4, 2007.

“As anticipated, second quarter results reflect continuing economic pressure on consumer purchases of discretionary items, and we expect these conditions to persist in the second half of fiscal 2008,” said Baker.

Gross profit increased 30.9 percent to $67.5 million for the second quarter. As a percent of sales, gross profit increased 288 basis points to 26.7 percent, reflecting both improvement in business mix relating to higher-margin direct sales and increased retail product margins, according to the company.

Selling, general and administrative expenses (SG&A) for the second quarter increased 21.1 percent to $66.9 million, reflecting the inclusion of $14.6 million in operational expenses from the direct marketing segment. As a percent of sales, SG&A for the retail segment improved 97 basis points over the comparable quarter last year, the company reported.

Catalog and Web site expected to boost sales and profitability

Gander Mountain has begun a limited national distribution of its 244-page catalog to customers, who can sign up on www.GanderMtn.com to receive the catalogs while supplies last.

The fall 2008 catalog will be the first edition from Gander Mountain since 1996 when it sold its catalog operation. The return to direct marketing allows Gander Mountain the ability to sell products to customers in all 50 states, not just the 23 states in which its 115 retail stores are located.

“Gander Mountain titled catalogs will include a broad assortment of apparel and outdoors products that will always be available in the right size and colors,” said Rick Vazquez, executive vice president of merchandising.

The size of the potential market in the outdoor lifestyle industry is estimated at $50 billion or more in annual sales. Gander Mountain’s fiscal 2007 sales were approximately $969 million and the company said it views direct marketing via catalogs and its new e-commerce website as a significant opportunity to increase sales and profitability.

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