The announcement of the merger between Globetrotter and the retail side of the newly named Fenix Outdoor International group came just a few days after the latter announced better quarterly results for its brands - Fjällräven, Hanwag, Tierra, Primus and Brunton - than for its retail operations, represented essentially by Naturkompaniet and Partioaitta, plus its previously acquired 20 percent stake in Globetrotter.
Reporting its results for the first time in euros rather than in Swedish kronor, following the move of its head office from Sweden to Switzerland, the company said its retail sales were nearly stable in the third quarter ended Sept. 30, in spite of tough competition. They declined slightly, by 1.6 percent to €18.8 million, but the drop occurred in Finland, where retail sales fell to €6.5 million from €6.2 million a year ago. Sweden was stable. Fenix warned that its retail sales could be under pressure in the last quarter as well if the mild weather seen in October continues.
Operating earnings for the retail division were stable at €2.1 million in the quarter, including a positive contribution of €0.6 million from Fenix' 20 percent stake in Globetrotter. The retail division suffered a small operating loss of €0.3 million for the nine months on sales of €45.8 million, compared with an operating profit of €1.8 million on sales of €45.5 million for the same period last year. The mild weather had a significant impact on the retail side, which was amplified by the weak economy in Finland. The retail division's profits were further affected by higher IT and marketing costs.
On the other hand, Fenix reported a 15 percent gain in the latest quarter for the revenues from its own brands, which reached €57.6 million. They delivered an operating profit of €21.7 million for the quarter, up from €18.0 million in the year-ago period.
The group's brands enjoyed ample sales gains also for the nine months, up by 18.6 percent to €135.9 million. The company said that this should be “primarily” attributed to the Fjällräven brand, which enjoyed robust demand in Europe and expanded rapidly in North America and Asia, whereas the revenues from the other brands remained roughly stable or improved only slightly.
The brands division achieved double-digit sales increases in all regions other than the “other Nordics,” where its turnover was up by 4.4 percent. The Swedish market accounted for the majority of sales over the past nine months with 22.1 percent, while “other Nordics” made up 21.8 percent of sales, followed by Germany with 21.4 percent of sales.
The group's total turnover jumped by 15 percent to €78.7 million for the quarter. Its operating income soared by 24 percent to €22.4 million, including the positive contribution of €0.6 million from Globetrotter, and net profit reached €18 million, up from €12.8 million for the same quarter last year.
For the nine months, the group's total revenues increased by 14 percent to €184.9 million and net income landed at €26.2 million, up from €20.1 million for the same period last year. Fenix' operating income reached €33.2 million, up by 21 percent. It was buoyed by the higher sales of the group's brands and their slightly higher gross margins – despite negative results from Brunton and Primus in North America
Meanwhile, Fjällraven is expanding rapidly in North America. The brand is planning to open its first store in Chicago, according to a local report. Measuring 2,350 square feet in a building still under construction, it would join the two stores that it has in New York City and others already operating in Boston, Boulder, Colorado; Burlington, Virginia; Jackson, Wyoming; Seattle, Washington; and Vancouver across the border in Canada.
By August, it had added two stores to its network in the country, with four more to come before the end of this year and another five or six in the works for 2015.
The leading brand of Fenix Outdoor has also made rapid strides in the U.S. at wholesale, growing the number of accounts. Fjällräven only acquired its own distribution in the U.S. market in 2011 and currently has about 600 accounts in North America. The U.S. has turned into the largest market for the brand's iconic Kånken backpack this year.
The brand is supported by ample retail and marketing investments from its office in Boulder. Apart from aggressive print advertising, Fjällräven started advertising on national television this autumn. It has also been very active in product placement, making its way into the closets of stars such as Jonah Hill and Jake Gyllenhaal. The subsidiary has been led for over two years by John Walbrecht, previously at Dr. Martens and Spyder Active Sports, among others.