GoPro’s Year and Quarter: Doing the Right Things, But……..

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Let’s just jump right to a comment CEO Nick Woodman made during the conference call.

“I would say that we are more focused on revenue and margin and less focused on volume on a unit basis.”

That sounds to me like GoPro is more interested in the higher end of the market.  And they should be. But if that’s their focus (I happen to think it should be, but dare I call it a niche?) is there enough revenue growth to satisfy the requirements of being a public company?

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Deckers’ Quarter: More Sanuk Travails and the Public Company Conundrum.

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I’ve reviewed Deckers’ 10Q for the three months ended December 31, 2016 and their conference call.  The company earned $41 million on sales of $760 million in the quarter, which isn’t bad.  But that’s down from net income of $157 million on revenues of $796 million in the same quarter last year.

The problem?  I’m sure regular readers already know.  Yup, it’s mostly Sanuk again.  But’s let start at the company’s top line.

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The Buckle Has a Lousy Quarter- Kind of. Well, Not Exactly. Can the Outsized Returns Continue?

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As I’ve recently written, Tilly’s and Zumiez were kind of caught by surprise by their very positive end of October quarterly results.  But because the surprise was of the positive kind, nobody seemed to care.  Though perhaps they should.

The Buckle, on the other hand, reported a 14.6% decline in revenues from $280 million in last year’s quarter to $239 million in this years.

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Zumiez Has a Good Quarter Too

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Zumiez’s 10-Q for its quarter ended October 31 reported an increase in sales and profits.  I used the word “Too” in the article title because it sounds a bit like the Tilly’s results I reported a few days ago. Zumiez, like Tilly’s, would like to point to all the good things it’s doing as being responsible for the result.  And no doubt it’s fair to do that, but Zumiez, like Tilly’s was surprised by the strength it’s seeing and is cautious as to whether it will continue.

Net sales rose 8.4% from $204.3 to $221.4 million.  “The increase primarily reflected an increase in comparable sales of $8.2 million and the net addition of 35 stores (made up of 27 new stores in North America, 5 new stores in Europe, and 5 new stores in Australia partially offset by 1 store closure in North America and 1 store closure in Europe) subsequent to October 31, 2015. By region, North America sales increased $14.7 million or 7.8% and other international (which consists of Europe and Australia) sales increased $2.4 million or 14.6% for the three months ended October 29, 2016…”

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Tilly’s Has a Great Quarter, But I’m Not Sure They Completely Know Why

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You can’t fault the numbers.  Sales grew 7.4% for the quarter ended October 29th compared to the same quarter last year.  That got them to $152.1 million in revenue for the quarter.  Comparable store sales rose 4.4%, accounting for $6 million of the revenue increase.  “Store comps were up low-single digits and e-commerce continued to grow at a double-digit rate.”  The rest of the increase ($4.4 million) came from five stores opened since the end of last year’s quarter.

Their gross profit margin, at 31.5%, didn’t change.  A 1.1% decline in product gross margin due to higher markdowns was offset by a reduction in expenses.

This is a good time to remind you how retailers calculate cost of goods sold to arrive at their gross profit margin.  Here’s how Tilly’s does it.

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GoPro Announces a Restructuring

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As part of a press release entitled “Solid Holiday Demand in the U.S. for GoPro HERO5,” GoPro announced, further down the press release, that its board of directors had “…approved a restructuring of the Company’s business.  The restructuring includes a global reduction-in-force, the closure of the Company’s entertainment division and the consolidation of certain leased office facilities.”

“The  Company  estimates  that  it  will  incur  total  aggregate  charges  of  approximately  $24  million  to  $33  million  for  the  restructuring,  including approximately $13 million to $18 million of cash expenditures as a result of the reduction in force, substantially all of which are severance and related costs, and approximately $11 million to $15 million of non-cash expenditures, consisting primarily of stock-based compensation expense and accelerated depreciation associated with office consolidations. The Company expects to recognize most of the restructuring charges in the fourth quarter of 2016.”

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Billabong’s Annual Meeting: The Future’s Still Coming

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Billabong held its annual meeting on November 22.  Back in August, I reported on Billabong’s results for the year ended June 30.  Here’s the link to that article.  The headline numbers then (all numbers in Australian dollars) were revenue from continuing operations of $1.10 billion and a net loss after tax of $23.7 million.  I started that article with these points which seem just as relevant now as they did then.

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Finally, a Sign of Life at Sanuk: Deckers’ September 30 Quarter

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Deckers, as you know, owns Ugg, Teva, and Hoka as well as Sanuk and some other smaller brands.  Their second quarter kind of reflected the economic and competitive conditions we’re seeing as most companies report their results.  However, Deckers is making a solid overall profit.

Total revenue at $485.9 million didn’t change much.  It was $1 million higher than last year’s quarter.  Contrary to what we’re seeing in other companies, U.S. business rose $312.3 million, up from $301.5 million.  International fell from $185.3 to $173.7 million.  Wholesale revenues were $400 million and direct to consumer $86.0 million, both down very slightly.

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The Same Old Competitive Conundrum: GoPro’s September 30 Quarter

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I like GoPro’s strategy.  Or at least, I don’t know what other strategy I could choose to pursue as a public company in their space.  Here’s how they describe its evolution in the 10-Q for September 30.  “What began as an idea to help athletes document themselves engaged in sport, GoPro has become an end-to-end storytelling solution that helps the world share itself through immersive and engaging content.”  I’ll quote President Anthony Bates at some length, because it’s important to understand their concept.

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We’re All in This Together: Things to Think About from VF’s Quarterly Report

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We’re All in This Together:  Things to Think About from VF’s Quarterly Report

VF’s 10-Q for the quarter ended September 30 showed up last week.  As usual, I’ll look at the numbers.  But I want to focus on several statements and action VF highlights in their conference call and 10-Q.  They highlight the extent to which we’re all dealing with the same economic and business conditions, and how we’re mostly dealing them in the same way. There’s also a couple of good ideas in here and maybe an “AHA” moment.

I’ll start by quoting CEO Eric Wiseman’s comment on the business environment.

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