The growth rate increased to 24 percent for the third quarter, allowing Black Diamond to reach a record level of $42.0 million for the period. While volumes increased for all the 27 product categories covered by the group, 4 percentage points of the growth came from foreign exchange currency conversions, led by the appreciation of the Swiss franc. The company's European operations are based in Switzerland.
The management is predicting that it will be on target next year with an overall organic sales increase of 12.5 percent. Gregory Mountain's European orders for next spring have risen beyond expectations, and Peter Metcalf, president and chief executive of the group, says it would have taken five more years for this brand to reach such a presence in the market without the support of Black Diamond, which took it over in May 2010 through a reverse merger.
The group booked a net profit of $1.0 million for the latest quarter, compared with a net loss of $3.3 million in the year-ago period. Excluding merger costs and other extraordinary items, Black Diamond reached an adjusted net profit of $4.0 million for the quarter, up from $2.1 million, thanks in part to an increase in the gross margin of 0.7 percentage points to $38.1 million due to a shift to higher-margin products and more favorable exchange rates.
Operating expenses grew by $4.2 million as the company continued to invest in the development of new products and the preparation for the launch of its first apparel lines in 2013. Black Diamond continued to invest in sourcing and in other initiatives including its new distribution center in Salt Lake City, an e-commerce platform and the acquisition of stakes in foreign distributors.
On the other hand, the merger with Gregory allowed the group to cut operating costs by $1.4 million in the first nine months of this year.
Meanwhile, Black Diamond Equipment has appointed more people to its apparel design and development team as the American company gears up for the launch of its first range of clothing in the autumn of 2013. Cheryl Knopp will be the design lead for Black Diamond's apparel initiative. She has been a freelance designer for Mountain Hardwear and Simms Fishing Products; has consulted for W.L. Gore & Associates; and has been vice president for product development at Arc'teryx Equipment. Ajay Badiga will be director of sourcing and development for apparel; he has been director of sourcing and development for outerwear, sportswear and athletic apparel at The Sports Authority for 10 of his 15 years with that company. In addition, Jeff Nash joins Black Diamond as vice president for engineering support services. He was previously the director of material development at The North Face.