Black Diamond Inc. has started to “explore strategic alternatives to monetize the value of untapped markets” for its Gregory Mountain Products business through the Rothschild group, said Peter Metcalf, chief executive of the group, pointing out that this brand is a coveted lifestyle brand in Japan, Korea and other Asian markets offering major growth opportunities for geographical brand extension. Apparently, one of the most obvious strategic alternatives would be to license out the brand in that part of the world for a wider range of products besides its backpacks.
While discussing the company's strong recent and foreseeable sales performance ahead of the planned March 3 release of its financial results, Metcalf added that Black Diamond will define this year the strategic role of retail in its future development. As he had already announced last November, he mentioned that the company has retained an executive search firm to find a senior manager who can help raise the brand's capabilities in the area of apparel, retail and e-commerce.
For the moment, Black Diamond has only two corporate stores near its head office in Salt Lake City and in the French mountain resort of Chamonix. The further deployment and fine-tuning of its retail strategy would run in parallel with the expansion of its new range of clothing, which has received positive responses from the market. For the current spring/summer season, the apparel collection has been enlarged to 50 styles, double the number of SKUs of its first winter collection, and it is being further widened to 119 styles for autumn/winter 2014/15. At the same time, its distribution has been expanded from 240 to 400 stores worldwide and will be made available at 800 doors in the next season.
Without providing specific figures, Metcalf said the apparel line has enjoyed very good sell-through and that it is projected to generate revenues 3.5 times higher this year than in 2013. Combined with the release of many other new products, this should contribute to a projected increase of between 16 and 18 percent in the group's sales this year to a range between $235 million and $240 million, accompanied by “improved margins and accelerating profitability.”
The new product releases include Poc Sweden's new range of road bike helmets and the application of Jetforce avalanche technology across the Black Diamond, Poc and Pieps brands, which the group showcased at recent trade fairs. It collected more than a dozen industry and media awards for these and other new products at the recent Outdoor Retailer, Ispo Munich and SIA trade fairs.
For the year ended last Dec. 31, the Black Diamond group expects to report a 15 percent increase in total revenues to about $203 million, with a 24 percent year-on-year jump in the fourth quarter to $60.4 million. Double-digit increases were recorded in all the brands, product categories and major geographic areas. The introduction of Black Diamond apparel, the establishment of a subsidiary in Japan and the integration of Poc and Pieps boosted the annual turnover and the cold autumn in the U.S.gave a further push to the business, resulting in healthy inventories at the end of the year.
The gross margin for the year should have been more or less flat at around 38.2 percent, but it would have risen to around 38.9 percent without a product recall for Pieps and other charges. In the fourth quarter, it rose to around 38.0 percent of sales from 36.3 percent in the same quarter a year earlier, and it would have been higher without the impact of inventory adjustments for older and discontinued winter merchandise as well as unfavorable changes in production and shipping. Favorable exchange rates boosted the margin by 0.7 percentage points in the quarter. Sales were negatively impacted in December by lower-than-expected reorders from dealers due to milder winter weather in the western part of the U.S.,Germany, Austria and Northern Europe.
Additional results will be released by Black Diamond on March 3 (more in The Outdoor Industry Compass).
