GANDER MOUNTAIN COMPANY 
By ST. PAUL, Minn., Sept. 1 /PRNewswire-FirstCall/ -- Gander Mountain Company (www.GanderMtn.com) (Nasdaq: GMTN), the nation's largest retail network of stores for hunting, fishing, camping, marine and outdoor lifestyle apparel and footwear, products and services today announced results for the second fiscal quarter ended August 1, 2009.
Fiscal 2009 second quarter consolidated sales were $248.4 million compared to consolidated sales of $252.9 million for the second quarter of fiscal 2008, a 1.8 percent decrease.
Consolidated SG&A costs, as a percentage of sales, increased 110 basis points to 27.6 percent of sales in the quarter, reflecting increased advertising expense.
Consolidated net loss was $7.3 million for the fiscal 2009 second quarter compared to a consolidated net loss of $4.9 million for the same quarter last year. The increased loss resulted primarily from discounts and markdowns associated with the withdrawal from PowerSports categories and increased advertising expense. Gander Mountain reported a net loss per share of $0.30 compared with a net loss per share of $0.20 for the second quarter of fiscal 2008.
Retail segment sales for the second quarter were $210.8 million, a decrease of $2.3 million or 1.1 percent, as compared to the fiscal 2008 second quarter. Direct segment sales were $37.6 million for the quarter, compared to $39.7 million for the same quarter last year, a decrease of 5.4 percent.
Comparable store sales during the second quarter of fiscal 2009 declined 2.4 percent. The firearms, ammunition, hunting accessories, fishing, marine and camping categories all experienced comparable store sales gains during the quarter. During the quarter, Gander Mountain substantially completed its withdrawal from the boat, ATV and power sport services categories. Excluding the negative 4.2 percent impact of these categories, comparable store sales were a positive 1.8 percent during the quarter.
Retail segment net loss was $9.1 million compared to a retail net loss of $6.8 million for the second quarter of last year. Net income for the direct segment was $1.7 million for the quarter, compared with $2.0 million for the second quarter of last year, reflecting start up costs related to the Gander Mountain direct business.
Improvement in inventory management resulted in a decrease in retail segment inventory of 7.1 percent per square foot year-over-year.
For the 26 weeks ended August 1, 2009, the company reported sales of $476.1 million, an increase of 3.4 percent over the same period in fiscal 2008. Comparable store sales for the 26-week fiscal 2009 period increased 2.2 percent. Excluding the negative 4.8 percent impact of boat and ATV sales and power sport services, comparable store sales were a positive 7.0 percent for the first half of 2009. The company reported a net loss for the 26-week period of $26.0 million, or $1.07 per share, compared with a net loss of $29.3 million, or $1.22 per share for the 26 weeks ended August 2, 2008.
"A difficult retail environment slowed Gander Mountain's progress during the second quarter, as overall sales declined slightly," said David C. Pratt, chairman and interim chief executive officer. "Positive comparable store sales in our core categories and continued gains in initial margin were offset by costs associated with exiting PowerSports as well as increased marketing efforts. We continue to apply a more disciplined approach to our operations, capital, and expense decisions. While we expect the retail environment to be challenging in the second half of the year, our ongoing efforts to improve operating margins, manage costs and reduce debt will continue into the second half of the year."
About Gander Mountain Company
Gander Mountain Company (Nasdaq: GMTN), headquartered in Saint Paul, Minnesota, is the nation's largest retail network of stores for hunting, fishing, camping, marine, and outdoor lifestyle apparel and footwear, products and services. Established in 1960, the Gander Mountain brand has offered an expanding assortment of outdoor equipment, technical apparel and footwear, as well as gunsmith and archery services. The stores feature national, regional and local brands as well as the company's owned brands. Focused on a "We Live Outdoors" culture, Gander Mountain dedicates itself to creating outdoor memories. There are 116 conveniently located Gander Mountain outdoor lifestyle stores in 23 states and three outlet stores. Customers may also shop at www.GanderMtn.com. For the nearest store location call 800-282-5993 or visit www.GanderMtn.com. Gander Mountain is also the parent company of Overton's (www.overtons.com), a leading catalog and Internet based retailer of products for boating and other water sports enthusiasts.
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 2008 and other required reports, as filed with the SEC, which are available at http://www.GanderMtn.com and at the SEC's Website at http://www.sec.gov.
Gander Mountain Company
Consolidated Statements of Operations - Unaudited
(In thousands, except per share data)
13 Weeks Ended 26 Weeks Ended
---------------- ----------------
August 1, August 2, August 1, August 2,
2009 2008 2009 2008
---- ---- ---- ----
Sales $248,413 $252,873 $476,067 $460,535
Cost of goods sold 184,045 185,390 364,796 351,023
------- ------- ------- -------
Gross profit 64,368 67,483 111,271 109,512
Operating expenses:
Selling, general and
administrative expenses 68,484 66,939 130,611 125,896
Exit costs and related
charges 388 316 673 1,092
Pre-opening expenses - 408 299 2,035
--- --- --- -----
Loss from operations (4,504) (180) (20,312) (19,511)
Interest expense, net 2,611 4,509 5,228 9,351
----- ----- ----- -----
Loss before income taxes (7,115) (4,689) (25,540) (28,862)
Income tax provision 220 165 440 437
--- --- --- ---
Net loss $(7,335) $(4,854) $(25,980) $(29,299)
======= ======= ======== ========
Basic and diluted loss per
common share $(0.30) $(0.20) $(1.07) $(1.22)
Weighted average common
shares outstanding 24,196 24,087 24,196 24,069
Gander Mountain Company
Consolidated Balance Sheets
(In thousands)
August 1, January 31,
2009 2009
---- ----
unaudited
Assets
Current assets:
Cash and cash equivalents $1,534 $1,655
Accounts receivable 19,082 10,784
Income taxes receivable - 62
Inventories 395,183 358,127
Prepaids and other current assets 12,487 12,132
------ ------
Total current assets 428,286 382,760
Property and equipment, net 154,012 162,180
Goodwill 47,114 47,114
Acquired intangible assets, net 18,631 19,130
Other assets, net 1,693 1,936
----- -----
Total assets $649,736 $613,120
======== ========
Liabilities and shareholders' equity
Current liabilities:
Borrowings under credit facility $259,709 $204,514
Accounts payable 81,921 63,863
Accrued and other current liabilities 50,538 55,456
Notes payable - related parties 10,000 10,000
Current maturities of long term debt 18,054 15,628
------ ------
Total current liabilities 420,222 349,461
Long term debt 42,099 50,402
Deferred income taxes 6,121 5,954
Other long term liabilities 27,086 27,398
Shareholders' equity:
Preferred stock ($.01 par value,
5,000,000 shares authorized; no
shares issued and outstanding) - -
Common stock ($.01 par value,
100,000,000 shares authorized;
24,197,199 and 24,195,736 shares
issued and outstanding) 242 242
Additional paid-in-capital 278,974 278,691
Accumulated deficit (125,008) (99,028)
-------- -------
Total shareholders' equity 154,208 179,905
------- -------
Total liabilities and
shareholders' equity $649,736 $613,120
======== ========
Gander Mountain Company
Consolidated Statements of Cash Flows - Unaudited
(In thousands)
26 Weeks Ended
----------------
August 1, August 2,
Operating activities 2009 2008
---- ----
Net loss $(25,980) $(29,299)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 15,356 15,661
Exit costs and related charges 622 605
Stock-based compensation expense 275 703
Gain on disposal of assets (77) (17)
Change in operating assets and liabilities:
Accounts receivable (8,237) (6,828)
Inventories (37,055) (13,524)
Prepaids and other current assets (355) (3,072)
Other assets (65) 1,186
Accounts payable and other liabilities 12,677 25,053
Deferred income taxes 167 209
--- ---
Net cash used in operating activities (42,672) (9,323)
------- ------
Investing activities
Purchases of property and equipment (5,510) (12,299)
Acquisition related expenses - (164)
Proceeds from sale of assets 77 29
-- --
Net cash used in investing activities (5,433) (12,434)
------ -------
Financing activities
Borrowings under credit facility, net 55,195 13,959
Proceeds from short term notes payable -
related parties - 10,000
Reductions in long term debt (7,219) (3,393)
Proceeds from exercise of stock options
and employee stock purchases 8 235
--- ---
Net cash provided by financing activities 47,984 20,801
------ ------
Net decrease in cash (121) (956)
Cash, beginning of period 1,655 2,622
----- -----
Cash, end of period $1,534 $1,666
====== ======
Non-cash investing activities: During the 26 weeks ended August 1, 2009
and August 2, 2008, the Company acquired equipment totaling approximately
$1.3 million and $2.9 million, respectively, that was financed through
capital leases. These amounts are excluded from Purchases of property and
equipment in this statement of cash flows.
Gander Mountain Company
Segment Information - Unaudited
(In thousands)
Statement of
Operations data: 13 Weeks Ended 13 Weeks Ended
August 1, 2009 August 2, 2008
-------------- --------------
Retail Direct Total Retail Direct Total
------ ------ ----- ------ ------ -----
Sales $210,837 $37,576 $248,413 $213,145 $39,728 $252,873
Depreciation and
amortization 7,278 260 7,538 7,491 160 7,651
Exit costs and
related charges 388 - 388 316 - 316
(Loss) income
from operations (6,815) 2,311 (4,504) (2,973) 2,793 (180)
Net (loss) income $(9,070) $1,735 $(7,335) $(6,829) $1,975 $(4,854)
26 Weeks Ended 26 Weeks Ended
August 1, 2009 August 2, 2008
-------------- --------------
Retail Direct Total Retail Direct Total
------ ------ ----- ------ ------ -----
Sales $420,707 $55,360 $476,067 $401,138 $59,397 $460,535
Depreciation and
amortization 14,841 515 15,356 14,872 789 15,661
Exit costs and
related charges 673 - 673 1,092 - 1,092
(Loss) income
from operations (20,946) 634 (20,312) (21,716) 2,205 (19,511)
Net (loss) income $(25,429) $(551) $(25,980) $(29,645) $346 $(29,299)
Balance Sheet
data: As of August 1, 2009 As of January 31, 2009
---------------------- ------------------------
Retail Direct Total Retail Direct Total
------ ------ ----- ------ ------ -----
Total assets $558,963 $90,773 $649,736 $517,812 $95,308 $613,120
Inventories 376,679 18,504 395,183 334,868 23,259 358,127
Goodwill and
acquired
intangibles 145 65,600 65,745 400 65,844 66,244
Long term debt $17,099 $25,000 $42,099 $20,402 $30,000 $50,402
SOURCE Gander Mountain Company
