ST. PAUL, Minn., Dec. 6 /PRNewswire-FirstCall/ -- Gander Mountain Company , the nation's largest retail network of stores for hunting, fishing, boating, camping, marine and outdoor lifestyle products and services, today reported results for the 2007 third quarter ended November 3 , 2007.
For the quarter, sales increased 5.3 percent to $259.5 million and comparable store sales decreased 8.4 percent versus the third quarter of the prior year. For the quarter, the company reported a net loss of $5.1 million, or $0.25 per share, compared to net income of $2.0 million, or $0.14 per share, in the third quarter of fiscal 2006, which included a $1.4 million recovery of an insurance settlement, or $.10 per share.
For the 39 weeks ended November 3, 2007, the company reported sales of $651.8 million, an increase of 11.5 percent over the same period in 2006. Comparable store sales declined 1.9 percent. The company reported a net loss for the 39-week period of $37.6 million, or $1.86 per share, compared with a net loss of $28.5 million, or $1.99 per share for the 39 weeks ended October 28, 2006.
"These third quarter results were disappointing, coming off a solid first half. They reflect both warm weather across northern states, which affects our critical fall hunting seasons, and soft consumer demand across our store base," said Mark Baker, president and CEO. "While sales performance has continued to be challenging in the fourth quarter, we are managing our costs carefully in light of continued softness in consumer discretionary purchases."
Third Quarter 2007 Financial Highlights: -- The company completed its store opening program for the year by adding 9 stores, including 2 replacement stores, during the third quarter, bringing the number of stores operated at the close of the third quarter to 115. -- Gross profit increased 11.4 percent to $70.1 million for the quarter. As a percent of sales, gross profit increased 149 basis points to 27.0 percent, reflecting general improvement in pricing structure, clearance management, and higher penetration of owned-brand merchandise. -- Store operating expenses increased 19.8 percent to $53.4 million, driven by new store growth over the last year. As a percent of sales, store operating expenses increased from 18.1 percent in quarter three of 2006, to 20.6 percent in the comparable quarter this year, as a result of the decrease in comparable store sales. -- In the third quarter, general and administrative expense (G&A) was $13.1 million, an increase of 25.1 percent. As a percent of sales, G&A increased 80 basis points to 5.1 percent, due primarily to severance costs of $1.2 million in the third quarter. Conference Call Information
A conference call to discuss these results will be held today at 4:00 p.m. Central Time. The conference call will be Webcast from http://www.gandermountain.com/. To register for the event, please go to the Web site at least 15 minutes early to register, download and install any necessary audio software.
For those who cannot listen to the live broadcast, an archived Webcast will be available shortly after the conclusion of the call, and remain available on http://www.gandermountain.com/ for approximately 90 days. The transcript will be posted on the site as well.
About Gander Mountain Company
Gander Mountain Company , headquartered in Saint Paul, Minnesota, is the nation's largest retail network of stores for hunting, fishing, boating, camping, marine and outdoor lifestyle products and services. Since 1960, the Gander Mountain brand has offered an expanding assortment of competitively priced outdoor equipment, technical apparel and footwear, as well as gunsmith, archery, boat, ATV and marine services. The stores feature national, regional and local brands as well as the company's owned brands. Focused on a "We Live Outdoors(R)" culture, Gander Mountain dedicates itself to creating outdoor memories. There are currently 115 conveniently located Gander Mountain outdoor lifestyle stores in 23 states. For the nearest store location call 800-282-5993 or visit http://www.gandermountain.com/.
Cautionary Note Regarding Forward-Looking Statements
Any statements in this release that are not historical or current facts are forward-looking statements. All forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward- looking statements. Certain of these risks and uncertainties are described in the "Risk Factors" section of the company's Annual Report on Form 10-K for fiscal 2006 and other required reports, as filed with the SEC, which are available at http://www.gandermountain.com/ and at the SEC's website at http://www.sec.gov/
Gander Mountain Company Statements of Operations - Unaudited (In thousands, except per share data) 13 Weeks Ended 39 Weeks Ended November October November October 3, 28, 3, 28, 2007 2006 2007 2006 Sales $259,539 $246,491 $651,799 $584,553 Cost of goods sold 189,445 183,594 496,293 450,590 Gross profit 70,094 62,897 155,506 133,963 Operating expenses: Store operating expenses 53,392 44,553 137,671 116,880 General and administrative expenses 13,128 10,490 36,281 29,449 Pre-opening expenses 3,174 1,772 5,138 3,245 Gain on insurance settlement - (1,400) - (1,400) Income (loss) from operations 400 7,482 (23,584) (14,211) Interest expense, net 5,543 5,456 14,049 14,289 Income (loss) before income taxes (5,143) 2,026 (37,633) (28,500) Income tax provision - - - - Net income (loss) $(5,143) $2,026 $(37,633) $(28,500) Income (loss) per common share Basic $(0.25) $0.14 $(1.86) $(1.99) Diluted $(0.25) $0.14 $(1.86) $(1.99) Weighted average common shares outstanding Basic 20,362 14,308 20,255 14,295 Diluted 20,362 14,325 20,255 14,295 Gander Mountain Company Balance Sheets (In thousands) November 3, February 3, 2007 2007 Assets (Unaudited) Current assets: Cash and cash equivalents $1,684 $1,342 Accounts receivable 22,445 10,337 Inventories 474,953 349,120 Prepaids and other current assets 13,332 10,681 Total current assets 512,414 371,480 Property and equipment, net 168,328 144,439 Other assets, net 10,269 5,698 Total assets $691,011 $521,617 Liabilities and shareholders' equity Current liabilities: Borrowings under credit facility $307,578 $168,485 Accounts payable 111,474 62,868 Accrued and other current liabilities 49,511 48,032 Current maturities of long term debt 5,394 1,677 Total current liabilities 473,957 281,062 Long term debt 25,901 16,421 Other long term liabilities 27,665 27,343 Shareholders' equity: Preferred stock ($.01 par value, 5,000,000 shares authorized; no shares issued and outstanding) - - Common stock ($.01 par value, 100,000,000 shares authorized; 20,362,097 and 20,027,788 shares issued and outstanding) 204 200 Additional paid-in-capital 256,734 252,408 Notes receivable from shareholders (4,100) (4,100) Accumulated deficit (89,350) (51,717) Total shareholders' equity 163,488 196,791 Total liabilities and shareholders' equity $691,011 $521,617 Gander Mountain Company Statements of Cash Flows - Unaudited (In thousands) 39 Weeks Ended November 3, October 28, Operating activities 2007 2006 Net loss $(37,633) $(28,500) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 19,770 16,618 Stock-based compensation expense 1,278 904 Loss (gain) on disposal of assets 60 (782) Change in operating assets and liabilities: Accounts receivable (12,108) (15,262) Inventories, net of acquired assets (122,435) (91,228) Prepaids and other current assets (2,651) (6,377) Other assets, net of acquired assets (1,483) (1,088) Accounts payable and other liabilities 50,407 59,687 Net cash used in operating activities (104,795) (66,028) Investing activities Purchases of property and equipment (40,548) (31,105) Acquisition of business (7,080) - Proceeds from insurance settlement - 5,197 Proceeds from sale of assets - 2,100 Net cash used in investing activities (47,628) (23,808) Financing activities Borrowings under credit facility, net of repayments 139,093 84,965 Proceeds from long term debt 13,082 5,300 Reductions in long term debt (2,463) (699) Proceeds from exercise of stock options and stock sales, net 3,053 133 Net cash provided by financing activities 152,765 89,699 Net increase / (decrease) in cash 342 (137) Cash, beginning of period 1,342 1,580 Cash, end of period $1,684 $1,443 Non-cash investing activities: During the 39 weeks ended November 3, 2007 and October 28, 2006, the Company acquired equipment totaling approximately $2.6 million and $1.2 million, respectively, that was financed through capital leases. Such amounts are excluded from Purchases of property and equipment in these statements of cash flows.
