RACINE, Wis. – Johnson Outdoors Inc. (NasdaqGM: JOUT), a global outdoor recreation company, experienced sales decreases and net losses in both the fourth quarter and fiscal year, the company reported in a statement this morning.
The company acknowledged the impact of economic conditions on its sales and profit, but suggested non-cash charges had the greatest impact on 2008 fiscal fourth quarter and full year financial results. As a result, the company is intensifying efforts to reduce operating costs, working capital and capital spending by more than $30 million combined, it reported.
“This was a challenging year and given the 2009 economic outlook, we are acting quickly to protect profitability going forward while making smart investments behind future growth opportunities. While we work to scale back our cost-structure, we remain focused on leveraging our marketing and innovation expertise to create consumer demand and drive increased volume in the year ahead. We have tremendous brand equities that held or gained share throughout 2008 due to innovative new products that generated a third or more of total company sales for the fifth straight year,” observed Helen Johnson-Leipold, chairman and CEO.
The company recorded non-cash goodwill and other intangible asset impairment charges of $41.0 million and a non-cash deferred tax asset valuation allowance of $29.5 million during the fourth quarter ended Oct. 3, it reported.
Net sales for the seasonally slow fourth quarter were $81.8 million compared to $87.3 million in the prior year quarter. Net loss for the quarter was $74.6 million compared to net income of $0.9 million for the prior year quarter.
More specifically, Marine Electronics Group revenues fell 10.6 percent behind last year's fourth quarter due to the effect of weak boat markets, according to the company. The Geonav acquisition added $2.1 million to Marine Electronic sales for the quarter. Diving revenues dipped 3 percent below last year, and Watercraft revenues compared unfavorably to the prior year quarter as customers held back reorders due to mounting economic uncertainties, diminishing solid gains for the segment during the first six months of the year, Johnson Outdoors reported. Only Outdoor Equipment revenues increased during the quarter.
For the full year, the company reported net sales of $420.8 million compared to the record revenues of $430.6 million in the prior year. Net loss for the year was $71.0 million, compared to the prior year's net income of $9.2 million.
“The outdoor recreational industry is particularly volatile during uncertain economic times, which is why we have moved decisively to align operations for greater flexibility in addressing the ebb and flow of our markets and by doing so, enhance profitability and cash flow. Importantly, targeted cost savings and spending reductions are highly strategic, intended to scale our cost structure to the current environment while maintaining our competitive position in the coming year and beyond,” stated Johnson-Leipold.
The company's cost-reduction plans include $20 million in cost-saving projects, a 26-percent reduction in capital expenditures, and a 12-percent reduction in peak working capital. Cost-saving initiatives include, among others: consolidation of dive computer manufacturing, 20 percent reduction in SKUs across all businesses, 7 percent reduction in headcount and wage freeze. Peak working capital reduction is expected to result from investments in improved forecasting, production planning and inventory control processes and systems, the company explained.
“Across every business there is an outstanding line-up of new products for 2009 which will be critical in an economically challenging year,” concluded Johnson-Leipold. “The inherent challenge of doing business amid such economic volatility demands our readiness and commitment to take actions necessary to preserve the long-term sustainability of the enterprise. We believe in the future of Johnson Outdoors, and are doing the right things to ensure we weather the storm, maintain our market leadership positions and prepare for growth once the economy and marketplace rebound.''
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