Quarterly, yearly losses reported for Easton-Bell
RANTOUL — Easton-Bell Sports reported dismal fourth-quarter and full-year results last week, a little over a month after both its chief executive officer and chief operations officer resigned.
Net sales for the quarter were $183.5 million, down 11.4 percent from a year earlier. Consequently, net sales for the year amounted to $827.2 million, down 1 percent from the previous year.
Easton-Bell ended up with a $3.42 million net loss for 2012, a reversal from 2011 when the company had net income of $10 million.
Terry Lee, the company's executive chairman and new CEO, said in a release that the sporting goods company had "a difficult fourth quarter due to challenging market conditions and ... disappointing weather during the snow season."
But he said certain lines — including Riddell football products, Easton baseball products and Bell power sports products — all enjoyed gains in market share.
Easton-Bell is based in Van Nuys, Calif., and has major manufacturing facilities in the Rantoul area. It's in the process of building a new 815,000-square-foot assembly and distribution center northwest of the Interstate 57-U.S. 136 interchange in Rantoul.
In mid-February, Easton-Bell announced the departures of Paul Harrington, who had been president and CEO for five years, and Donna Flood, the chief operations officer and president of the Giro/Easton Cycling business.
During a conference call last week, Lee said his main priority is to "rationalize spending" and bring it more in line with historical levels. Expenses as a percentage of sales had gotten "out of whack," he said.
When asked whether Easton-Bell would be downsizing, Lee said he would call it "right-sizing, not downsizing."
"If we see an opportunity to streamline here and there, we're going to do that," he said.
Easton-Bell divides its business into two segments: Team Sports and Action Sports.
Net sales for Team Sports were down 9.6 percent in the fourth quarter, while net sales for Action Sports were down 13.9 percent.
Lee attributed the drop in Action Sports sales to "the depressed global snow market effect on Giro (snow sports) sales, the timing of mass-channel cycling product line transitions and the decision to exit the non-core fitness business."
During the conference call, he expressed confidence that despite tougher competition in the mass market for cycling products, that business will be fine this year.
For the year, Team Sports net sales were up 1.7 percent, while Action Sports net sales were down 4.3 percent.
Lee said operating expenses rose 12 percent in the fourth quarter due in part to increased litigation expenses. The company listed $6 million in litigation expenses related to "an unfavorable judgment received against us for infringement of a product patent."
During the conference call, company officials said Easton-Bell's results for the first quarter of this year will include $8 million in severance costs, as well as $2.5 million in product-category exit costs.