OB Retail News 5/13/05

Benefit for Dena Gennerman

A terrible tragedy has happened to Backcountry.com's first employee and head buyer, Christian Gennerman. His wife, Dena Gennerman, was involved in a serious car accident and has slipped into a coma. She is now recovering in the Univ. of Utah hospital

Christian is posting updates on Dena and her recovery on the following site:
http://www3.caringbridge.org/ut/dena/index.htm

Donations for Dena & family can be sent to:

Zions First National Bank, Park City
PO Box 3899
Park City, UT 84060
435-647-0041

Checks made out to/or attention to:
Dena Gennerman Donation, Account #098345929

Backcounty.com is also holding a silent auction of outdoor product on Saturday, May 21, in Park City. All proceeds will go to Dena's recovery efforts.

Any product donations for the silent auction can be sent to:

Backcountry.com
1678 W Redstone Center Drive, Ste 210
Park City, UT 84098
Attn: Gennerman donation

The silent auction will be held on Saturday May 21st @ 7PM at Club Suede 1612 Ute Boulevard. The cost is $10, and Muddpuddle, Motherless Cowboys, and Krys Seligman will be performing.

Dates to dine out to benefit DENA are June 1st @ Bandits on Main St in Park City and Hapa Grill June 11th at Kimball Jct. in Park City. All profit of sales on these dates go towards Dena's recovery.

The Outdoor Business staff keeps Christian, Dena, and their son, and Caden, in their prayers.

Bean and American Skiing Co. Agree to Outerwear Partnership

L.L.Bean and the American Skiing Company announced a new outerwear partnership. Beginning this fall, L.L.Bean will be the official outerwear supplier to leading ski resorts including Steamboat, The Canyons, Killington and Sunday River. As part of the agreement, L.L.Bean's top product developers and designers are working in conjunction with experts from the ASC staff to develop a complete outerwear system for all on-snow resort employees.

"We got together with several top instructors, lift operators, and ski patrol personnel from ASC resorts and asked what they would like to see in the ultimate on-mountain uniform," said says Greg Houser, V.P. and merchandising manager for L.L.Bean outerwear. "Then we hit the design room with some really great ideas. We knew we wanted something that was waterproof/breathable, warm, easy to move in, and looked great regardless of whether you ski or snowboard. Then we added the bells and whistles, like a built-in neoprene lumbar pad for warmth and protection, cell phone/radio pocket, and that's just for starters. We are also planning to make a version of this outerwear available to our customers this fall as part of our new Gore-Tex/Primaloft Mountain Pro Series."

According to Chip Carey, senior vice-president of sales and marketing for American Skiing Company. "We were looking to partner with an organization that clearly mirrored the brand attributes of our resorts and our long-term goals. L.L.Bean has a reputation for high quality gear and great customer service, so we can certainly trust them to keep our staff warm and dry on the slopes."

REI To Offer National Parks Pass

Recreational Equipment, Inc. announced that it will partner with the National Park Service and the National Park Foundation to offer the National Parks Pass year round. Beginning May 14, REI will sell the Pass for $49.99 as a service to its members and other customers who visit REI retail stores and REI.com for assistance in planning and gearing up for their outdoor escapes. The annual pass provides entry to all National Parks where an entrance fee is charged. When purchasing the pass at REI, customers will also receive a free American Park Network National Park Guide, featuring content from Fodor's Road Guides USA, and the 2005 National Parks Pass Owner's Manual. The Owner's Manual is a pocket-sized guide to America's National Parks, featuring Park listings by state, user-friendly maps with a regionalized focus, helpful Park-related website addresses, and must-do's at each National Park.

"Our National Parks are places for inspiration and rejuvenation. We hope by providing the pass we will encourage people to experience these American treasures," said REI President and CEO Sally Jewell.

Wind Power Curbs Cut's Mountain Equipment Co-op's Greenhouse Gas Emissions

Mountain Equipment Co-op (MEC) and the Pembina Institute released details of the significant reduction in greenhouse gas emissions that MEC achieved through the purchase of wind power certificates for its Calgary and Edmonton store operations.

The Canadian retailer said its purchase of wind power certificates from the Wind Power by Pembina Program offsets approximately 50 per cent of the electricity-generated greenhouse gas emissions produced by the two stores. Together, MEC's Edmonton and Calgary stores will consume an estimated 1,140 megawatt hours (MWh) of electricity in 2005. Their wind power purchase will displace 570 MWh of conventionally produced electricity and reduce greenhouse gas emissions by 583 tonnes.

"Greening our operations - through energy-efficient buildings, waste reduction and now wind power purchases - is a key element in MEC's commitment to environmental leadership," said CEO Peter Robinson. "Purchasing wind power is especially important in Alberta because our stores here produce significant greenhouse gases due to the predominance of coal-based electricity in the province."

MEC said that by reducing the greenhouse gas emissions of their Calgary and Edmonton's stores by half, it will reduce its overall company greenhouse gas emissions by almost 24 per cent. The reduction stems from the fact that MEC's facilities, which include three Natural Resource Canada C2000-certified green buildings, are already 47 per cent less greenhouse gas intensive than most other Canadian retail facilities.

"We are excited to see the wind power program taking off. Leading-edge businesses like MEC really set the example for others to follow," said Marlo Raynolds, Executive Director for the Pembina Institute. "MEC's support of the Pembina Institute's wind power program also helps us advance some of our other projects aimed at advancing sustainable energy systems in Canada," Raynolds added.

The Pembina Institute is a non-profit environmental organization working to advance sustainable energy in Canada. Its wind power program provides a mechanism to bolster the market for low-impact renewable energy like wind power through the sale of wind power certificates. These certificates can be purchased on-line at www.pembina.org.

MEC is Canada's largest retail co-operative serving the self-propelled outdoor recreation. Established in 1971, MEC has more than 2.1 million members throughout Canada and around the world through its catalogs, e-commerce site at www.mec.ca, and 9 stores in Canada.

The Sportsman's Guide Plans Secondary Offering

The Sportsman's Guide has filed a registration statement with the SEC for a proposed public offering of 2,500,000 shares of its common stock. The number of shares of common stock that will be outstanding after the offering is based on 7,119,105 shares outstanding as of March 31 and excludes: 997,460 shares of common stock that are issuable on exercise of employee stock options that were outstanding as of March 31 at a weighted average exercise price of $8.36 per share; and 159,494 shares of common stock that are reserved for future grants of stock options.

The company intends to use the net proceeds from this offering to repay a $5.0 million term loan incurred in connection with the acquisition of The Golf Warehouse (the term loan matures on September 30, 2007 and currently bears interest at the lender's prime rate less 0.15 percentage points or a rate equal to LIBOR plus 2.5 percentage points), acquire or develop new businesses and provide working capital.

The company plans to grant the underwriters of the offering an option to purchase up to 375,000 additional shares to cover over-allotments. RBC Capital Markets and Roth Capital Partners are acting as managing underwriters of the proposed offering, with RBC Capital Markets acting as the sole bookrunner.

Pacific Sunwear Sales Up 14%; EPS Up 21%

Pacific Sunwear's 1Q05 net profit increased 17.6% to $17.6 million. EPS increased 21.1% to 23¢ compared to 19¢ in 1Q04. Total sales were $280.0 million, an increase of 14.1%. Same-store sales increased 3.0%. In contrast to previous reports, the company did not detail comp-store results by BU.

"I am pleased with our first quarter results," commented Seth Johnson, CEO. "We achieved a strong earnings increase through tight management of our inventory and expenses. This quarter we also passed the 1,000-store milestone with the opening of 23 net new stores."

The company's board of directors has authorized the company to repurchase up to an additional $100 million of common stock in the open market from time to time as market conditions warrant. During FY04, under repurchase authorizations of $125 million, the company repurchased an aggregate of 5,264,200 shares at an average price of $20.80, for approximately $109.5 million. The company has approximately $15.5 million remaining under its previous stock repurchase program.

Profits Rise At Blacks Leisure Group

United Kingdom-based Blacks Leisure Group reported 2004 FY Pretax profit rose 17.9 percent to £21.1 million pounds. FY04 Revenues nudged up 1.5% to £295.0 million.

The Outdoor Group - which includes Blacks and Millets banners - was responsible for sales of £261.5 million. Free Spirit and Just Add Water make up its Boardwear

The company report said, "The Group remains clearly focused on two growing specialist markets. Prospects for growth remain strong given the increased demand for Outdoor products, the fragmented nature of the competitive environment, the growing markets and our relative size within these markets."

It added, "We believe all our fascias have significant potential for future expansion, but we intend to take full advantage of our strength in the Outdoor sector to develop this part of the business significantly over the next few years."

Blacks now operates from 83 stores. During the year, 10 new Blacks opened, including a new flagship suburban door. The banner is positioned as the "Outdoors Experts" and as such, operates from larger store footprints than Millets. It sells mainly branded product including Berghaus, The North Face and Merrell. The typical customer has a serious attitude about outdoor activities. Blacks has significant potential to expand its reach in location terms and the larger format development will be the model for new Blacks stores.

There were 266 Millets at the end of the year, an increase of 13. Millets is a smaller store outdoor format. It operates mainly in high street locations throughout the UK. Millets has a great value-for-money heritage and is particularly popular with families, selling mainly private label ranges at very competitive prices. The typical customer is value seeking, in most cases with children. Millets also has the potential to grow its store base into new locations as well as expanding its store footprint in existing locations.

Free Spirit (which now includes the JAW stores) operates from 50 locations. It sells mainly branded lifestyle and boardwear clothing to younger customers. Ranges from Oakley, Animal and O'Neill are the cornerstones of the offering, although a substantial opportunity exists for a private label program.This was a tough year for Free Spirit, compounded by the complexity of the integration of Just Add Water. By the end of the year, inventories were clean, and higher risk hardware was eliminated in favor of apparel.

The Group holds the UK distribution rights for O'Neill. The business consists of a wholesale business and a retail business operating through 16 stores. This was a poor year for this business.Although sales increased by just 4% to £36.4 million,margins fell with operating profits falling to
£1.4 million from £4.0 million This level of performance is unacceptable to management.

Total Group sales for in the eight weeks to April 23 increased 8.6%. Comp sales increased 1.1%. Gross margins are ahead of last year. The early Easter and mixed weather have contributed to a slowdown in both Outdoor and Boardwear, with customers waiting for the warmer weather to participate fully in outdoor activities. This effect has been reduced by the very strong performance of wet and cold weather products such as
fleece, skiwear and hats, scarves and gloves, which once again demonstrated the benefits of the Group's balanced portfolio of products and stores, the company said.

Walking Co. Parent Cuts Losses

Big Dog Holdings Inc., the parent of Walking Co., reported that it cut its losses in the first quarter ended March 31, to $2.4 million from $3 million.

Sales reached $31,345,000, a 43% increase compared with $21,880,000 in the first quarter 2004. The gain was primarily due to $10,608,000 of revenue from The Walking Company (TWC) business, which was acquired on March 3, 2004.

The company, based in Santa Barbara, CA, had a total of 254 stores opened (180 Big Dog stores and 74 TWC stores) at the end of the period, as compared with 263 stores opened on March 31, 2004 (191 Big Dog stores and 72 TWC stores).

Comparable retail store sales increased 4.4% for the quarter as a 14.8% increase at the Walking Co. chain offsete a 5.6% decline for the Big Dogs chain.

Andrew Feshbach, Chief Executive Officer, stated, "Our TWC business experienced solid operating results in the first quarter, as reflected in strong positive comparative store sales increase and merchandise margin growth. The increase in The Walking Company comparable store sales is primarily related to improved inventory levels and merchandise selection at the TWC stores since the company purchased The Walking Company out of bankruptcy in March 2004."

Gross margins also improved to 51.8% from 51.3% due to higher margin contribution from both the Big Dogs and TWC chains.

Commenting on the financial results, Feshbach stated, "We are pleased with the operating efficiencies and leverage we experienced in the first quarter of this year. At this time, most of the opportunities for improved efficiencies from the acquisition of TWC have been achieved."

Gander Mountain's Baker Misses Bonus

Mark Baker, president and CEO of Gander Mountain, missed his annual bonus in the last year, according to a proxy statement filed with the Securities & Exchange Commission. Baker earned a total compensation of $563,016, mainly consisting of a base salary of $516,000. In 2003, Baker earned $760,647, primarily made up of a $373,943 base salary and $375,000 bonus. However, BAker did receive options to buy 100,000 shares of Gander Mountain stock., The rest of Gander Mountain's top management also missed bonuses, but were rewarded stock options

OPENINGS/CLOSINGS

The North Face The North Face announced plans to open a location in Hanover, NH in August. Zimmermanns, a family-owned winter sports merchant with locations in Nashua, N.H., and the Crotched Mountain Ski Area, will operate the Hanover North Face store. The 3,000 square-foot store will resemble a North Face concept store, including apparel as well as North Face apparel alongside other equipment, including head lamps and ice axes.

The Rugged Bear , the kid's outerwear and clothing chain, is opening up a store in Westborough, MA. The 7,000 square feet store, opening on East Main Street near the center of town, will include both retail and outlet sections for current and older clothing. The Rugged Bear, owned by Alan McDonough, who is also the founder of Eastern Mountain Sports, sells products from their private-label and as well as brand apparel from companies such as Speedo, Turtle Fur, Kelty, Wigwam, Teva, and Columbia. Rugged Bear will have 27 retail stores in New England, New York, and New Jersey.

RightLine Industries, LLC was awarded Best Retail Fixture by the North America Store Fixture Manufacturers (NASFM) for their work on the Val Surf Old Town Pasadena Store. Awarded at the recent retail design industry show, GlobalShop 2005, Rightline Industries and Val Surf were amongst cutting edge retail design leaders like Cartier, CompUSA, Bloomingdales and Miss Sixty to be recognized. The design for Val Surf blended the classic board shop with Main street boutique. The complete interior includes a full line of fixtures with rich wood tones to harmonize with the rustic location. Damon Richards, general manager of Val Surf said, "The design was well thought out and it expresses the Val Surf brand identity while keeping true to the core values of the board sports industry."