Operational efficiencies boosted the bottom line:
- The gross profit percentage was up 0.5%.
- Operating expenses as a percentage of sales were down 1%.
As with Ruger, Johnson Outdoors Inc. (NASDAQ:JOUT)’s new products were the growth engines. Almost half of total sales were generated by these innovations. Two of its products took “Best in Show” awards at a premier fishing product show, ICAST.
The company’s 71% increase in net income to nearly $23 million was only partially due to operational results. Of the $9.5 million increase, $4.5 million resulted from lower income taxes and $900,000 from lower interest expenses. Overall, though, a steady performance for the first nine months.
Is Columbia well-insulated from competition?
Columbia Sportswear (NASDAQ:COLM) manufactures apparel and footwear designed to protect you from the elements and keep you comfortable — thereby increasing outdoor enthusiasts’ enjoyment of their favorite sports such as skiing, hiking and fishing.
At first glance, the company’s performance during the first half of 2013 seems average at best. Worldwide sales were up just 1%, although sales in the U.S. rose 5%, a $15 million increase over the previous year. This was offset by a $14 million sales drop in Europe, the Middle East and Africa.
Columbia Sportswear (NASDAQ:COLM)’s full-year outlook is that sales will fall around 2.5% — seemingly not too promising given the rebound in consumer confidence and willingness to spend. But with this company, you have to look beyond these near-term numbers to see the potential for the future.
Columbia incorporates advanced technology into its products. In fact, one of its innovations, Omni-Freeze Zero fabric, is designed to keep the wearers cool when they sweat from the exertion of outdoor activities.
Columbia’s strategy to deal with the unsatisfactory growth rates of the U.S. and European economies has been to expand to emerging markets, such as India — where participation in outdoor activities is surging — and China, where it will begin operations in 2014.
Columbia is also becoming a more efficient company. It was able to boost its gross profit percentage year-to-date by nearly one point, and reduced SG&A expenses as a percentage of sales from 44.5% last year to 43.7% in 2013.
What we learned
Johnson Outdoors Inc. (NASDAQ:JOUT) has an enviable mix of product segments that allows the company to achieve growth even if one or two segments are struggling, such as its diving segment doing a recent belly flop.
Columbia Sportswear should reach a higher growth trajectory as the positive effects of its overseas initiatives kick in and the U.S. economy improves. Like Johnson Outdoors Inc. (NASDAQ:JOUT), it manages costs very well. Columbia’s also laser-focused on bringing innovative products to market.
Sturm, Ruger & Company (NYSE:RGR) may not be able to sustain the revenue and profit increases it achieved in the first half of the year. Nonetheless, because of brand strength, its ability to deliver new products, and the continued demand for firearms by the American public, the company should do very well. Its new products accounted for more than 30% of sales in the first half of the year.
My own view on this industry is bullish because increasing numbers of people are taking up outdoor activities as a way of improving their fitness and dealing with stress. Considering any one of these fine companies as an investment can help reduce the stress on your portfolio as well.
The article Are Outdoor-Recreation Product Manufacturers on the Trail to Success? originally appeared on Fool.com and is written by Brian Hill.
Brian Hill has no position in any stocks mentioned. The Motley Fool owns shares of Sturm, Ruger & Company.
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