Echoeing an observation made a few weeks ago by Blake Krueger, chief executive of Wolverine Worldwide, in commenting on its latest financial results, Peter Metcalf, president and chief executive of Black Diamond Inc. said that retailers are ordering conservatively, pushing more of the inventory risk over to the manufacturers and distributors that they are buying from. Both executives said they are adapting themselves to this situation, after the unpredictable changes in weather patterns of the past couple of years. For example, Wolverine is building up deeper inventories of basic items and colors and others which, it feels, will sell out well.
Black Diamond's total revenues increased by 10 percent to $38.8 million in the second quarter, but this was mainly due to its acquisition last year of Poc Sweden and Pieps Holding. In reported terms, sales declined slightly in the U.S. to $23.4 million but grew by 43 percent in international market, moving up to a level of $23.4 million as compared to $16.3 million a year ago. Operating losses increased to $2,482,000 from $1,991,000, and the company booked a net loss of $2,268,000 for the quarter, compared with a loss of $1,908,000.
The management expects to reach sales of $205 million to $210 million for the full year, implying growth of between 17 and 19 percent. It had previously forecast a range of $216 million to $221 million for the total turnover. The gross margin for the year should lie between 38.5 and 40.0 percent instead of the previously budgeted range of 40.0 to 41.0 percent. By 2014, sales should go up at an annual rate of 20 percent, accompanied by an acceleration in the company's profitability.
The protracted winter season and Gregory's transition to a new distributor for Japan, combined with the devaluation of the Japanese yen, caused Black Diamond to report a net loss of $3 million for the second quarter as compared to a net profit of $2.6 million in the year-ago period. Because of a higher level of closeouts designed to clear inventories, the gross margin fell 37.7 percent from 40.1 percent.