Question-and-Answer Session
(Operator Instructions) Our first question today will come from William Chappell, CFA – SunTrust Robinson Humphrey.
William Chappell, CFA – SunTrust Robinson Humphrey
My first question is just trying to understand the destock issue in the quarter. Should we look at each of the businesses, did they all post single digit growth and then the reported numbers are all due to the step back from destock?
Jim
From a POS performance, Bill, the products that were in season performed very well and our other products also performed well. We saw POS gains up to 7% on a year-over-year basis and what we really saw though was the fact that even though products were performing part of the reason why we changed the revenue number in December was that we just weren’t seeing the reorders.
Retailers were focused on destocking other products even if it meant a high velocity product of ours wasn’t going to be reordered. The focus really was more on reducing their overall inventory.
William Chappell, CFA – SunTrust Robinson Humphrey
Martin E. Franklin
What that does from our perspective, Bill, as you can imagine positions us very well when the buyers get their open to buy back because they know the POS performance of our product but if you like getting through the January balance sheet of all the retailers, the priority is by the bean counters not by the merchants. It’s understandable and we were kind of prepared for it from a G&A perspective but that’s just the nature of what the retailers were doing.
I can’t completely blame them for it, it’s mark it down and move it out, the slow moving inventory during that period.
William Chappell, CFA – SunTrust Robinson Humphrey
I guess what I’m confused is, it looks like on the Consumer Solutions side being down about 6% and that actually makes sense just on the POS side but the Outdoor Solutions which I guess expect for skis would be off season, had a bigger drop. I’m just trying to understand why it would have such a big drop when it’s not a big season there.
Ian G.H. Ashken
I mentioned in my comments, Bill, our Paintball business, that’s the only business within Outdoor Solutions apart from ski that the season and the season really wasn’t. Our major retailer decided to really move out of the category in a major way. That’s driving that plus the foreign exchange aspect on that business is actually more than on the Consumer Solutions side.
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