Black Diamond Inc. reported total sales of $51.0 million for the first quarter ended March 31, representing a 10 percent increase on the first quarter of 2012. Sales went up by 6.9 percent to $20.1 million in the U.S. and by 11.9 percent to $30.9 million in other parts of the world.
The U.S. company said that the quarterly sales figures were in line with expectations, except for the effects of the recent depreciation of the Japanese yen. The sales growth was primarily the result of the consolidation of Poc Sweden and Pieps Holding, which were acquired in the second half of 2012.
Sales in the quarter were negatively impacted by an extended late winter season, which delayed higher-margin spring/summer orders, as well as a decline in Gregory's business in Japan due to the transition from its former distributor, Kabushiki Kaisha A&F (A&F), to a fully-owned operation at the beginning of 2013.
Peter Metcalf, chief executive of the group, noted that many U.S. retailers delayed, reduced or canceled orders of spring merchandise because of a protracted winter season, and that on a global basis, outdoor retailers are shifting from pre-season orders to at-once orders. However, pre-season orders for next winter have been stronger in Europe than in the U.S. because of late snowfalls that allowed European retailers to sell winter merchandise nearer to full margins.
The group registered a net loss in the first quarter of 2013 of $3.0 million, as compared to net income of $2.6 million in the first quarter of 2012. The gross margin was down to 37.7 percent as compared to 40.1 percent in the first quarter of 2012, primarily due to the product mix and a higher level of closeout and promotional activity on winter seasonal inventory as a result of the slow start to the 2012/2013 winter season. The strengthening of the U.S. dollar against the Japanese yen also had a negative impact on both sales and gross margins.
For 2013, the company anticipates organic growth from its Black Diamond and Gregory brands, and it expects Poc and Black Diamond's new apparel line to be its strongest growth drivers, with an even more positive impact on margins. The company said that it remains enthusiastic about its 2013 apparel launch, which will be in stores in the autumn. Black Diamond has already shown its spring 2014 apparel line to selected retailers, which focuses on mountaineering and rock climbing. Some of the garments are made with merino wool.
The company's sales outlook for the first half and the full year remains unchanged. They are expected to range between $90 million and $95 million for the six months and between $216 million and $221 million for the whole year. These ranges imply sales growth of between 22 percent and 38 percent for the second quarter and between 23 percent and 26 percent for the full year. For 2014, the company maintains its forecast of a 20 percent sales increase with accelerating profitability.