Gander Mountain improves third quarter results

ST. PAUL, Minn. – Gander Mountain Co. (Nasdaq: GMTN), a chain of stores for hunting, fishing, boating, camping, marine and outdoor lifestyle products and services, improved its net income by $8.7 million in the fiscal third quarter ended Nov. 1, according to preliminary results reported in a statement earlier this week.

Based on unaudited preliminary results, the company expects fiscal 2008 third quarter consolidated sales of approximately $270 million, compared to consolidated sales of $260 million for the comparable quarter of fiscal 2007, a 4-percent increase.

Retail segment sales are expected to dip to approximately $255 million, a decrease of $4.0 million or 1.6 percent, as compared to the fiscal 2007 third quarter. Direct segment sales were approximately $14.4 million for the quarter. There were no direct segment sales in the third quarter of fiscal year 2007, due to the acquisition of Overton’s direct marketing operations by Gander Mountain in December 2007, the company explained.

The company expects retail segment net income of approximately $3.6 million, compared to a net loss of $5.1 million for the comparable quarter last year.

Its consolidated net income is expected to total approximately $700,000 for the third quarter 2008 compared to a net loss of $5.1 million for the same quarter last year. Consolidated net income includes a net loss from the direct segment of approximately $2.9 million. As compared to the same quarter last year, results reflect a reduction in pre-opening expenses, the reversal of certain liabilities related to previously-closed stores which are being reopened as outlet centers, and the absence of certain exit costs, impairment and other charges that were present last year, according to Gander Mountain.

Comparable store sales during the third quarter of fiscal 2008 declined 6.5 percent, an improvement over the decline of 11.7 percent in the second quarter of fiscal 2008, the company stated.

Gander Mountain expects reduced consolidated SG&A costs, as a percentage of sales, of approximately 100 basis points in the third quarter of fiscal 2008 as compared to the third quarter of fiscal 2007. This improvement results from cost reductions in both store operating and general and administrative expenses, the company stated.

Current availability under its existing credit facility is approximately $45 million.

“We are pleased with the operational progress visible in these results at Gander Mountain. We are applying a more disciplined approach to our operations, capital, and expense decisions,” said David C. Pratt, chairman and interim CEO. “The current retail environment is as difficult as any in recent memory and our efforts to conserve costs, improve operating margins, reduce capital expenditures and increase operating cash flow have borne results.”

The preliminary results are subject to the completion of the customary quarterly review procedures by the company’s independent auditors, it said. The company will report final results in December 2008.

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