GMTN Gander Mountain Company (MM)

Record retail revenue of $210 million ST. PAUL, Minn., June 3 /PRNewswire-FirstCall/ -- Gander Mountain Company (http://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 first fiscal quarter ended May 2, 2009. Highlights: -- Retail sales gained 11.6 percent for the quarter, reflecting strong performance in firearms, ammunition, marine and camping. -- Comparable store sales grew 7.4 percent for the quarter. Excluding the (5.4) percent impact of boat and ATV sales and power sport services, which are categories the company is in the process of exiting, comparable store sales were a positive 12.8 percent during the quarter. -- The seasonal nature of Gander Mountain's retail categories historically produces a first quarter loss, however, the reported retail segment net loss of $16.4 million is a $6.4 million, or 28.3 percent, improvement over the prior year. Fiscal 2009 first quarter consolidated sales were $227.7 million compared to consolidated sales of $207.7 million for the first quarter of fiscal 2008, a 9.6 percent increase. Retail segment sales were $209.9 million, an increase of $21.9 million or 11.6 percent, as compared to the fiscal 2008 first quarter. Direct segment sales were $17.8 million for the quarter, compared to $19.7 million for the same quarter last year, a decrease of 9.6 percent. Retail segment net loss was $16.4 million compared to a retail net loss of $22.8 million for the first quarter last year, an improvement of $6.4 million, or 28.3 percent. The improvement resulted primarily from sales gains, improved leverage in SG&A, and reduced interest expense. Consolidated net loss was $18.6 million for the fiscal 2009 first quarter compared to a consolidated net loss of $24.4 million for the same quarter last year, an improvement of $5.8 million, or 23.7 percent. Consolidated results for the quarter include a net loss from the Direct segment of $2.3 million. Comparable store sales during the first quarter of fiscal 2009 were 7.4 percent, an improvement over (0.2) percent in the fourth quarter of fiscal 2008. The firearms, ammunition, marine and camping categories all experienced strong sales performance during the quarter. Excluding the (5.4) percent impact of boat and ATV sales and power sport services, which are categories the company is in the process of exiting, comparable store sales were a positive 12.8 percent during the quarter. Improvement in inventory management resulted in a decrease in Retail segment inventory of 16.8 percent per square foot, year-over-year. Consolidated SG&A costs, as a percentage of sales, declined 110 basis points to 27.3 percent of sales in the quarter. At the end of the quarter, the Company had total debt of $308 million, which is lower than the prior year by $39 million. "Strong comparable sales performance in our retail segment allowed Gander Mountain to report continued operating improvement, even during the slowest seasonal period in the hunt-fish-camp categories and in a difficult retail environment. We continue to apply a more disciplined approach to our operations, capital, and expense decisions," said David C. Pratt, chairman and interim chief executive officer. "As expected, the 2009 retail environment remains challenging. We believe that our ongoing efforts to improve operating margins, manage costs and reduce debt will continue our momentum. I would like to thank our associates, vendors, and shareholders for their continued support." 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 http://www.gandermtn.com/. For the nearest store location call 800-282-5993 or visit http://www.gandermtn.com/. Gander Mountain is also the parent company of Overton's (http://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 ---------------- May 2, May 3, 2009 2008 ---- ---- Sales $227,654 $207,662 Cost of goods sold 180,751 165,633 ------- ------- Gross profit 46,903 42,029 Operating expenses: Selling, general and administrative expenses 62,127 58,957 Exit costs and related charges 285 776 Pre-opening expenses 299 1,627 --- ----- Loss from operations (15,808) (19,331) Interest expense, net 2,617 4,842 ----- ----- Loss before income taxes (18,425) (24,173) Income tax provision 220 272 --- --- Net loss $(18,645) $(24,445) ======== ======== Basic and diluted loss per common share $(0.77) $(1.02) Weighted average common shares outstanding 24,195 24,051 Gander Mountain Company Consolidated Balance Sheets (In thousands) May 2, January 31, 2009 2009 ---- ---- unaudited Assets Current assets: Cash and cash equivalents $1,546 $1,655 Accounts receivable 16,539 10,784 Income taxes receivable - 62 Inventories 370,930 358,127 Prepaids and other current assets 17,943 12,132 ------ ------ Total current assets 406,958 382,760 Property and equipment, net 158,814 162,180 Goodwill 47,114 47,114 Acquired intangible assets, net 18,881 19,130 Other assets, net 1,811 1,936 ----- ----- Total assets $633,578 $613,120 ======== ======== Liabilities and shareholders' equity Current liabilities: Borrowings under credit facility $232,828 $204,514 Accounts payable 81,546 63,863 Accrued and other current liabilities 49,527 55,456 Notes payable - related parties 10,000 10,000 Current maturities of long term debt 15,486 15,628 ------ ------ Total current liabilities 389,387 349,461 Long term debt 49,313 50,402 Deferred income taxes 6,037 5,954 Other long term liabilities 27,444 27,398 Shareholders' equity: Preferred stock ($.01 par value, 5,000,000 shares authorized; no shares issued and outstanding) - - Common stock ($.01 par value, 100,000,000 shares authorized; 24,195,736 shares issued and outstanding) 242 242 Additional paid-in-capital 278,828 278,691 Accumulated deficit (117,673) (99,028) -------- ------- Total shareholders' equity 161,397 179,905 ------- ------- Total liabilities and shareholders' equity $633,578 $613,120 ======== ======== Gander Mountain Company Consolidated Statements of Cash Flows - Unaudited (In thousands) 13 Weeks Ended ---------------- May 2, May 3, Operating activities 2009 2008 ---- ---- Net loss $(18,645) $(24,445) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 7,819 8,010 Exit costs and related charges 236 605 Stock-based compensation expense 137 381 Gain on disposal of assets (35) (6) Change in operating assets and liabilities: Accounts receivable (5,779) (6,911) Inventories (12,803) (22,318) Prepaids and other current assets (5,726) (6,159) Other assets (28) (40) Accounts payable and other liabilities 11,603 32,259 Deferred income taxes 83 134 -- --- Net cash used in operating activities (23,138) (18,490) ------- ------- Investing activities Purchases of property and equipment (2,748) (6,460) Acquisition of business and related expenses - (167) Proceeds from sale of assets 35 10 -- -- Net cash used in investing activities (2,713) (6,617) ------ ------ Financing activities Borrowings under credit facility, net 28,314 28,025 Reductions in long term debt (2,572) (1,517) Proceeds from exercise of stock options and employee stock purchases - 17 --- -- Net cash provided by financing activities 25,742 26,525 ------ ------ Net (decrease) increase in cash (109) 1,418 Cash, beginning of period 1,655 2,622 ----- ----- Cash, end of period $1,546 $4,040 ====== ====== Non-cash investing activities: During the 13 weeks ended May 2, 2009 and May 3, 2008, the Company acquired equipment totaling approximately $1.3 million and $1.5 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 May 2, 2009 May 3, 2008 ----------- ----------- Retail Direct Total Retail Direct Total ------ ------ ----- ------ ------ ----- Sales $209,870 $17,784 $227,654 $187,993 $19,669 $207,662 Depreciation and amortization 7,564 255 7,819 7,381 629 8,010 Exit costs and related charges 285 - 285 776 - 776 Loss from operations (14,132) (1,676) (15,808) (18,743) (588) (19,331) Net loss $(16,360) $(2,285) $(18,645) $(22,816) $(1,629) $(24,445) As of As of Balance Sheet data: May 2, 2009 January 31, 2009 ------------ ----------------- Retail Direct Total Retail Direct Total ------ ------ ----- ------ ------ ----- Total assets $534,203 $99,375 $633,578 $517,812 $95,308 $613,120 Inventories 346,654 24,276 370,930 334,868 23,259 358,127 Goodwill and acquired intangibles 273 65,722 65,995 400 65,844 66,244 Long term debt $19,313 $30,000 $49,313 $20,402 $30,000 $50,402 DATASOURCE: Gander Mountain Company CONTACT: Investors, Bob Vold, +1-651-325-4300, or Media, David Ewald, +1-651-290-6276, Cell, +1-612-490-2650, both of Gander Mountain Company Web Site: http://www.gandermtn.com/

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