"Overton's is a unique opportunity for Gander Mountain, providing an excellent management team, a proven platform and infrastructure, and the capacity to handle substantial additional volume with minimal incremental investment," said Mark Baker, Gander Mountain's president and CEO. While accelerating Gander Mountain's multi-channel sales opportunities, Baker noted, "Overton's product mix is uniquely counter-cyclical to Gander Mountain's."
That benefit seemed highlighted by Gander Mountain's third-quarter performance, which Baker acknowledged, "is not the quarter we were hoping for." Extended warm weather, combined with consumer's spending concerns, he said, contributed to a 8.4%-drop in comp-store sales and a net loss of $5.1 million, compared with net income of $2 million for the same year-ago quarter.
Firearms, camping equipment and warm-weather apparel sales were soft, while fishing equipment benefited from the warmer weather. Baker also suggested that "discretionary spending" accounted for some of the weakness, noting that higher-priced firearms, optics and electronics were weaker than usual.
Total sales increased 5.3% to $259.5 million. Baker said, "the average sales ticket rose 3%, but the number of average store transactions declined."
During the quarter, the locally based retailer added nine stores, including two replacement units, bringing its total number of stores to 115 in 23 states. It is taking "a cautious approach to plans for 2008," he said. Plans call for the addition of just five or six new units next year, with five slated for spring, "a marked reduction in the frequency of new store openings," he said.
Overton's 2006 revenues exceeded $90 million. It distributed more than 15 million catalogs annually. News of the acquisition along with Gander Mountain's third-quarter results and conference call occurred after the close of the Nasdaq on Dec. 6. At the close of the exchange, however, shares of GMTN traded at $5.49 a share, up 16.8% for the day. This compares with a 52-week high of $16 a share and a 52-week low of $4.25 a share.
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